Undernews For September 23, 2008

Undernews For September 23, 2008

FROM THE PROGRESSIVE REVIEW
Washington's Most Unofficial Source
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Editor: Sam Smith

23 SEP 2008

WORD

Politics is like being a football coach. You've got to be smart enough to play the game and dumb enough to think it is important -- Eugene McCarthy

PAGE ONE MUST

UNDER PLAN, PAULSON COULD PAY OFFENDERS TO SOLVE THE CRISIS

Phil Mattera, Dirt Diggers Digest - Critics are focusing on vital issues such as cost and oversight, but a lot less attention is being paid to the mechanics of Paulson’s proposal – specifically, the question of who would carry out the federal government’s purchase of $700 billion in "troubled" securities from banks. The draft legislation circulated over the weekend includes a provision that seems to allow Treasury to contract out the process. Treasury then put out a fact sheet making it quite clear it intends to use private asset managers to manage and dispose of the assets it acquires, though the document does not specifically allude to the purchasing. Paulson himself referred to the use of "professional asset managers" during an appearance on one of the Sunday morning talk shows.

It amazes me that there is not more outrage over this aspect of the plan. Paulson seems to be leaving open the possibility that the same firms that are being bailed out could be hired to run the bailout. This would mean that institutions receiving a monumental giveaway of taxpayer money could turn around and earn yet more by acting as the government's brokers. Aside from the unseemliness of this arrangement, this would be an egregious conflict of interest.

The alternative proposal floated by Senator Chris Dodd, which accepts Paulson's language on contracting out, includes a section on conflict of interest. But rather than stating what the rules should be, the draft leaves it up to the Treasury Secretary to do so. There were reports that Treasury would go along with the inclusion of a conflict-of-interest provision.

Paulson's approach to the Big Bailout, particularly the insistence that there be no punitive measures for the banks, shows he is not the right party to oversee ethical issues. Paulson apparently can't help himself. He still has the mindset of a man who spent more than 30 years working on Wall Street, at Goldman Sachs. He is a living example of the perils of the reverse revolving door: the appointment of a private-sector figure to a key policymaking position affecting his or her former industry.

CLINTON'S MARGINAL ENTHUSIASM

Craig Crawford, CQ - Comedian Chris Rock nailed it on "Late Night with David Letterman" shortly after Bill Clinton's appearance on Monday's show: "Is it me, or did he not want to say the words Barack Obama?"

Clinton is launching a barrage of television appearances and campaign speeches supposedly on behalf of the Democratic nominee, but, as Rock also noted on Letterman's CBS show, the former president seems more interested in talking about his wife, Obama's former rival Hillary Rodham Clinton.

"Hilary ain't running! One of those guys needs to tell him," Rock told Letterman. "I love Hillary but she lost. She got a lot of votes. She lost. The Patriots got a lot of points too, but they lost to the Giants."

Earlier Monday, on ABC's "The View," Clinton also did no heavy lifting for Obama's race against Republican John McCain. "I genuinely like both. I genuinely admire both of them. We make a terrible mistake believing we have to find something wrong with the people we can't vote for."

Rather than echo the Obama camp's attacks on GOP running mate Sarah Palin, the former president went out of his way in an interview Monday with reporters in New York to describe why he thinks she is popular. "I get why she's hot out there. Why she's doing well."

On the pregnancy of Palin's unmarried daughter, Clinton said, "People look at her, and they say: 'All those kids. Something that happens in everybody's family. I'm glad she loves her daughter and she's not ashamed of her. Glad that girl's going around with her boyfriend. Glad they're going to get married.'"

And on the health status of another Palin child, Clinton observed that many Americans react by saying, "I like that little Down syndrome kid. One of them lives down the street. They're wonderful children. They're wonderful people."

BUOYING UP THE POWER GRID



Tree Hugger - Earlier in the summer the world's first commercial-scale tidal turbine began feeding power to the grid. New York City's Roosevelt Island Tidal Energy project is up and running, after a few set-backs. Last week the US Department of Energy announced that it will be spending $7 million to further clean tech water power research.

Now another wave power technology, Ocean Power Technologies' PB 40 Power Buoy, has been deployed in what will be a 1.39 MW wave power project off the coast of Spain. Yeah, that's really not that much power in the grand scheme of things, but the technology is pretty interesting:

While most tidal power uses a underwater mounted turbine of some sort, the Power Buoy relies instead on the rising and falling of the waves to generate power. Power is transmitted to the shore via underwater cable. .

OPT touts an additional benefit of the PB 40 Power Buoy: Because of its size (7 meters in diameter and 20 meters tall, most of which is below the water) it is visually unobtrusive, which is a good thing considering that power station using the technology are designed to be located 1-3 miles offshore.

More on the Spanish Project OPT's Power Buoy project in Spain is being done in partnership with renewables giant Iberdrola and is located 4.8 kilometers off the coast of Santoña. When completed it will consists of 10 buoys, generating 1.39 MW of power, enough the company says to power 2500 homes.

SCIENTISTS FINE METHANE TIME BOMB IN ARCTIC

Steve Connor, Independent, UK - The first evidence that millions of tons of a greenhouse gas 20 times more potent than carbon dioxide is being released into the atmosphere from beneath the Arctic seabed has been discovered by scientists. The Independent has been passed details of preliminary findings suggesting that massive deposits of sub-sea methane are bubbling to the surface as the Arctic region becomes warmer and its ice retreats.

Underground stores of methane are important because scientists believe their sudden release has in the past been responsible for rapid increases in global temperatures, dramatic changes to the climate, and even the mass extinction of species. Scientists aboard a research ship that has sailed the entire length of Russia's northern coast have discovered intense concentrations of methane – sometimes at up to 100 times background levels – over several areas covering thousands of square miles of the Siberian continental shelf

Methane is about 20 times more powerful as a greenhouse gas than carbon dioxide and many scientists fear that its release could accelerate global warming in a giant positive feedback where more atmospheric methane causes higher temperatures, leading to further permafrost melting and the release of yet more methane.

OBAMA BACKTRACKS ON HIS POLICIES

Politico - Sen. Barack Obama (D-Ill.) said in an interview that the cost of the mortgage bailout plan may rein in his ambitious plans for health care, energy, education and infrastructure. . . Obama told NBC's Matt Lauer on the "Today" show that he doesn't expect the mortgage plan to cost the full $700 billion right away, and all the money won't be lost. "Does that mean that I can do everything that I've called for in this campaign right away?" Obama said. "Probably not. I think we're going to have to phase it in. And a lot of it's going to depend on what our tax revenues look like."

BERNIE SANDERS' PLAN

Senator Bernie Sanders - For years, as a member of the House Banking Committee and now as a member of the Senate Budget Committee, I have heard the Bush administration tell us how "robust" our economy was and how strong the "fundamentals" were. That was until a few days ago. Now, we are being told that if Congress does not act immediately and approve the $700 billion Wall Street bailout proposal these "free marketers" have just written up, there will be an unprecedented economic meltdown in the United States and an unraveling of the global economy.

This proposal as presented is an unacceptable attempt to force middle-income families (and our children) to pick up the cost of fixing the horrendous economic mess that is the product of the Bush administration's deregulatory fever and Wall Street's insatiable greed. If the potential danger to our economy was not so dire, this blatant effort to essentially transfer $700 billion up the income ladder to those at the top would be laughable.

If the economy is on the edge of collapse we need to act. But rescuing the economy does not mean we have to just give away $700 billion of taxpayer money to the banks. (In truth, it could be much more than $700 billion. The bill only says the government is limited to having $700 billion outstanding at any time. By selling the mortgage-backed assets it acquires--even at staggering losses--the government will be able to buy even more resulting is a virtually limitless financial exposure on the part of taxpayers.) Any proposal must protect middle income and working families from bearing the burden of this bailout.

I have proposed a four part plan to accomplish that goal which includes a five-year, 10 percent surtax on the income of individuals above $500,000 a year, and $1 million a year for couples; a requirement that the price the government pays for any mortgage assets are discounted appropriately so that government can recover the amount it paid for them; and, finally, the government should receive equity in the companies it bails out so that when the stock of these companies rises after the bailout, taxpayers also have the opportunity to share in the resulting windfall. Taken together, these measures would provide the best guarantee that at the end of five years, the government will have gotten back the money it put out.

Second, in addition to protecting the average American from being saddled with the cost, any serious proposal has to include reforms so that we end the type of behavior that led to this crisis in the first place. Much of this activity can be traced to specific legislation that broke down regulatory safety walls in the financial sector and allowed banks and others to engage in new types of risky transactions that are at the heart of this crisis. That deregulation needs to be repealed. Wall Street has shown it cannot be trusted to police itself. We need to reinstate a strong regulatory system that protects our economy.

Third, we need to address the needs of working families in this country who are today facing very difficult times. If we can bail out Wall Street, we need to respond with equal vigor to their plight. That means, for example, creating millions of jobs through major investments in rebuilding our crumbling infrastructure and creating a new renewable energy system. We must also make certain that the most vulnerable Americans don't freeze in the winter or die because they lack access to primary health care.

Finally, we need to protect ourselves from being at the mercy of giant companies that are "too big to fail," that is, companies who are so large that their failure would cause systemic harm to the economy. We need to assess which companies fall into this category and insist they are broken up. Otherwise, the American taxpayer will continue to be on the financial hook for the risky behavior, the mismanagement, and even the illegal conduct of these companies' executives.

These are the last days of the Bush administration, the most dishonest and incompetent in modern American history. It is imperative that, at this important moment, Congress stand up for the middle class and for fiscal integrity. The future of our country is at stake.

A SCHOOL CHANCELLOR WHO CAN'T EVEN SPELL OR ADD RIGHT

DC school chancellor Michelle Rhee is getting a lot of puffery from places like the PBS News Hour, but we'd advise readers to ignore it. We won't go into the whole dismal story but this item will give you a bit of the flavor:

Qawi Robinson, DC Watch - Granted, DC Public Schools needed some overhauls, but Rhee and company, in their effort to fix the things that are broken, have broken things that didn't need fixing. The latest example of this is school naming. Once upon a time there were Elementary Schools, a Middle School, Junior High Schools, and High Schools. As part of the consolidation, the Junior High Schools were completely eliminated, creating more Middle Schools and Hybrid K-8 schools. The resulting name of the hybrids: "EleMiddle Schools." This concatenation of Elementary and Middle isn't even an accepted word in the English language, yet we are naming educational campuses (nee schools) with this name. . . When the name was debuted at a "Back to School Night" last week, several parents were more than befuddled by the name, from which even the principal sought distance. The principal clearly said, "We didn't think this up. This came from the Chancellor's Office." . . .

After receiving a brochure about the "Capital Gains" program [in which students are paid to do well], I was interested not only in the funding but also in the math surrounding the awards. I read and was told that students can get up to $50 every two weeks, or $100 a month. With school being roughly nine months, that totals at most $900 or $950, including a leap day and regular calendar shifts. On the brochure, it also said that students can earn up to $1500 in a school year, for which there is no explanation. If school were held for twelve consecutive months, even at the biweekly maximum payout of $50, $1300 would be the limit. . .

EMENDATION

Brady Wiseman in Bozeman MT writes to note, "Bailing out the banks is not socialism. The government and the Fed are not becoming exactly the creditors of the banks. Because the numbers are so large, they are now partners. It's not a bailout so much as a merger. What do you call the merger of government and corporations? Mussolini called it fascism."

Wiseman is quite right. We let ourselves get caught in the rhetoric of the day in which you can call anything you don't like socialism, but god forbid you use the term fascism. In the past, however, we have addressed this matter:

Sam Smith, 2006 - One needs to look not at Hitler but at the founder of fascism, Mussolini. What Mussolini founded was the estato corporativo - the corporative state or corporatism. Writing in Economic Affairs in the mid 1970s, R.E. Pahl and J. T. Winkler described corporatism as a system under which government guides privately owned businesses towards order, unity, nationalism and success. They were quite clear as to what this system amounted to: "Let us not mince words. Corporatism is fascism with a human face. . . An acceptable face of fascism, indeed, a masked version of it, because so far the more repugnant political and social aspects of the German and Italian regimes are absent or only present in diluted forms.". . .

Adrian Lyttelton, describing the rise of Italian fascism in The Seizure of Power, writes: "A good example of Mussolini's new views is provided by his inaugural speech to the National Exports Institute on 8 July 1926. . . Industry was ordered to form 'a common front' in dealing with foreigners, to avoid 'ruinous competition,' and to eliminate inefficient enterprises. . . The values of competition were to be replaced by those of organization: Italian industry would be reshaped and modernized by the cartel and trust. . .There was a new philosophy here of state intervention for the technical modernization of the economy serving the ultimate political objectives of military strength and self-sufficiency; it was a return to the authoritarian and interventionist war economy."

Lyttelton writes that "fascism can be viewed as a product of the transition from the market capitalism of the independent producer to the organized capitalism of the oligopoly." It was a point that Orwell had noted when he described fascism as being but an extension of capitalism. Lyttelton quoted Nationalist theorist Affredo Rocco: "The Fascist economy is. . . an organized economy. It is organized by the producers themselves, under the supreme direction and control of the State.". . .

Article 48 of the constitution of the Weimar Republic stated, "In case public safety is seriously threatened or disturbed, the Reich President may take the measures necessary to reestablish law and order, if necessary using armed force. In the pursuit of this aim, he may suspend the civil rights described in articles 114, 115, 117, 118, 123, 124 and 153, partially or entirely. The Reich President must inform the Reichstag immediately about all measures undertaken . . . The measures must be suspended immediately if the Reichstag so demands."

It was this article that Hitler used to peacefully establish his dictatorship. And why was it so peaceful and easy? Because, according to Childers, the 'democratic" Weimar Republic had already used it 57 times prior to Hitler's ascendancy.

There are eerie similarities between Article 48 and George Bush's approach. When you add to this the remarkable incompetence of the current regime, the collapse of both traditional liberal and conservative politics, and the economic crises, it feels like a new Weimar Republic setting the stage for awful things we can not at this point even imagine. It may be that history has something to tell us after all.

THE NOT ALL THAT SMART GROWTH MOVEMENT

Sam Smith, Progressive Review - A movement to reduce the number of parking spaces in urban areas has attracted an odd coalition of developers and environmentalists. DC, one of the most developer abused cities in the country, is currently considering such a move. But, so far as one can see, developers are the only ones who will truly benefit from it, reducing their apartment/rental costs by $20-50k a unit from what it would be if they were required to provide parking for their clients.

To some environmentalists it has a nice anti-car ring to it, but on closer look a number of issues come up:

For example, if you don't want people to use their cars, give them less need to do so. I'm lucky to live in one of the best urban 'hoods you'll find - DC's Capitol Hill - one that owes a part of its charm and utility to the fact that much of it was built before automobiles yet provides - thanks to a lack of high rises and some of the biggest and best alleys you'll find - plenty of parking spaces for residences. It is one of the most dense parts of the city, achieved not with modern big boxes, but with attractive row dwellings, many with basement apartments. But that doesn't mean those on the Hill are excessively car dependent. In fact, thanks to the convenience and number of neighborhood commercial services available, it encourages walking in a big way. I could go to the gas station, hardware store, auto repair shop, UPS, Kinko's, Radio Shack, post office, fire and police station, public library, medical center and more than a dozen eating spots and never be more than ten blocks from my house. In addition, we have two convenience stores and two laundries within a three blocks walk.

This is in no small part thanks to places that were grandfathered into modern zoning - one of the major reasons we now use our cars so much. All over urban America are communities where it would be against the zoning law to emulate Capitol Hill. Little attention is paid to this issue by planners or environmentalists but it is far more important than reducing the number of parking spaces.

Further, people on Capitol Hill use their cars far, far less than the average person in the metropolitan area, yet it is precisely the sort of neighborhood the developers would like to densify, preferably without having to provide parking spaces for the their customers.

And who pays the price of this? The person buying or renting the apartment or condo adds it into the calculations when they move there in the first place. But the neighbors aren't consulted at all. They just find themselves with fewer places to park. Another neat developer trick.

These are the same folks who convinced the Washington area to build a subway that did far more for scattered suburban development than it did for real urban transportation. Meanwhile the bus system - which far more heavily serves poorer residents - is being short changed and the same government that claims to want people to leave their cars at home has also changed the taxi fare system in such a way as to drive many drivers out of the business.

Developers are also pushing for an end to the height limit that helps to give Washington its special character and for more high rise apartment cellblocks in the name of "smart growth."

Environmentalists would be wise to distance themselves from such cons, remembering that communities are ecologies, too. If, as DC has done, you close about a score of public schools (some undoubtedly to be sold to developers), you are hurting the community ecology. When you stuff a public library into a high rise as if it were just another Starbucks, you are hurting the community ecology. And when you dump cold, isolating high rises into an urban village you are harming that village's ecology. But few ever talk about things like that.

Here are a few far better ways for environmentalists to spend their time in our cities:

- Increase the amount of commercial services available within walking distance. This may mean some zoning changes, but it can still be kept attractive and pleasant through rules on signage etc.

- Oppose mass transit plans that are really development plans in drag. This was the great failing of the Washington Metro and there are lots of similar proposals around today. Favor truly urban transit plans that encourage people to stay with a reasonable area.

- Bring back the two or three story apartments over shops and offices that used to be common in America.

- Provide neighborhood business services - including copying facilities, desk space and teleconferencing - to help encourage telecommuting.

- Encourage large businesses to decentralize within an urban area.

- Follow the motto of Henry Thoreau who once said, "I have traveled widely. . . in Concord."

LIVE ON IMAGINARY MONEY; DIE BY IMAGINARY MONEY

One of the important things not being discussed about the financial crisis is that the money that is gone was not real in the first place, something we have mentioned from time to time. . .

Sam Smith's Great American Political Repair Manual, 1994 - The total federal state, local and private debt in this country in 1996 was around $14 trillion. The actual money supply was just under $6 trillion. So what happened to the rest of the money? Most of it doesn't exist and never did. We call this imaginary money debt. This debt is money that we (as individuals, companies and government) have borrowed, primarily from private sources. As Bob Blain, a professor at Southern Illinois University, put it:

"Most debt is not the result of people borrowing money; it is the result of people not being able to repay what they owed [to banks or individuals] at some earlier time. Instead of declaring them bankrupt, creditors just add more to their debt."

This new debt is called interest. Many people think the idea of the government printing money is shameful, yet our laws permit private financial institutions to create money all the time. Every time you fail to pay off your credit card, you're letting a banker print some more money.

You're not the first, of course. For example, when the Congress met in February 1790 to figure out how to pay off the Revolutionary War debt of $75 million, Alexander Hamilton strongly advocated issuing debt certificates and using them as money. Congressman James Jackson of Georgia warned that this would "settle upon our posterity a burden which [citizens] can neither bear nor relieve themselves from. . . Though our present debt be but a few millions, in the course of a single century it may be multiplied to an extent we dare not think of."

An alternative to Congress borrowing money to pay off its debt would have been to have created the $75 million, using Congress's constitutional power to "coin money and regulate the value thereof." Instead Congress began a long tradition of borrowing the money that -- five trillion dollars of debt later -- many believe we can neither bear nor relieve ourselves from.

In the early 19th century, the little British Channel island of Guernsey faced a smaller but similar problem. Its sea walls were crumbling. its roads were too narrow, and it was already heavily in debt. There was little employment and people were leaving for elsewhere.

Instead of going still further into debt, the island government simply issued 4,000 pounds in state notes to start repairs on the sea walls as well as for other needed public works. More issues followed and twenty years later the island had, in effect, printed nearly 50,000 pounds. Guernsey had more than doubled its money supply without inflation.

A report of the island's States Office in June 1946 notes that island leaders frequently commented that these public works could not have been carried out without the issues, that they had been accomplished without interest costs, and that as a result "the influx of visitors was increased, commerce was stimulated, and the prosperity of the Island vastly improved." By 1943, nearly a half million pounds worth of notes belonged to the public and was so valued that much of it was being hoarded in people's homes, awaiting the island's liberation from the Germans.

About the same time that Guernsey started to fix its sea walls, the town of Glasgow, Scotland, borrowed 60,000 pounds to build a fruit market. The Guernsey sea walls were repaid in ten years, the fruit market loan took 139. In the first part of the 20th century, Glasgow paid over a quarter million pounds in interest alone on this ancient project.

How did Guernsey avoid the fiscal disaster that conventional economics prescribed for it? First and foremost by understanding that when you build roads or sea walls or colleges or houses, you are not reducing your society's wealth. In fact, if you do it right, you are creating something that will add to its wealth. The money that was created was simply backed by public works rather than gold or "full faith and credit." It was, in fact, based on something more solid than the dollar bills in our wallets today. In contrast, tacking on an interest charge to public works -- as we do in the US -- creates no new wealth, but merely transfers claims on existing wealth from debtors to creditors.

The privilege of creating and issuing money is not only the supreme prerogative of government, but is the government's greatest creative opportunity. By the adoption of these principles, the taxpayers will be saved immense sums of interest. -- Abraham Lincoln

INTERNET SIGHTINGS: A LETTER TO AMERICANS

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude. I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you. . .

I am working with Mr. Phil Gramm, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully
Minister of Treasury Paulson

YOU GOT SOME BAD ASSETS? ADD THEM TO THE SHIT PILE

Buy My Shit Pile - With our economy in crisis, the US government is scrambling to rescue our banks by purchasing their "distressed assets", i.e., assets that no one else wants to buy from them. We figured that instead of protesting this plan, we'd give regular Americans the same opportunity to sell their bad assets to the government. . .

Use the form to submit bad assets you'd like the government to take off your hands. And remember, when estimating the value of your 1997 limited edition Hanson single CD "MMMbop", it's not what you can sell these items for that matters, it's what you think they are worth. The fact that you think they are worth more than anyone will buy them for is what makes them bad asset.

WHERE HAVE ALL THE BOYS GONE?

Tree Hugger - Martin Mittelstaedt of the Globe and Mail writes about how "Researchers tracking childhood behavioural disorders, sperm counts, testicular cancer and even the shrinking size of male gonads are convinced that something is amiss. The University of Pittsburgh's Devra Davis, in a study issued last year, found that the U.S. and Japan combined had a staggering tally of 262,000 "missing boys" from 1970 to about 2000 because of a decline in the sex ratio at birth. Although it could be a statistical anomaly, she says the figure is "very worrisome." Some think it might be due to endocrine disruptors in the environment. He lists "science's top five worries over the fate of the human male."

1. Lost boys: Studies on births from the U.S., Japan, and Canada have found a drop in the percentage of boys born compared with girls. The reason isn't known.

2. Declining harvest: Men in farm country can be half as prolific when it comes to making sperm as their city counterparts, raising the possibility that pesticides undermine male fertility.

3. Downsizing: It's disputed by chemical companies, but some researchers say they have found an everyday plastic compound - phthalates - that feminizes baby boys, causing penises and other reproductive organs to be smaller.

4. Hormones not so raging: If you're a middle-aged man, you're likely to be less virile than your father because you make less testosterone. In recent decades, the decline has averaged about 1 per cent a year. If it continues over another generation or two, the consequences could be dire.

5. Equipment failure: Rates of testicular cancer, hypospadias and other genital abnormalities have soared over recent decades, rising by more than 50 per cent each.

Mittelstaedt then lists the four chemicals that are causing the biggest concern: Bisphenol A, Phthalates, Polybrominated diphenylethers (PBDE). Polychlorinated biphenyls (PCB)

ONLY 28% SUPPORT BAILOUT PLAN

Rasmussen Report - Most Americans are closely following news reports on the Bush Administration's federal bailout plan for the country's troubled economy, but just 28% support what has been proposed so far.

Over one-third of voters (37%) oppose the $700-billion plan, and nearly as many (35%) are undecided, according to a new Rasmussen Reports national telephone survey taken Sunday night. Details of the plan were made public on Saturday.

Investors, who account for 62% of the nation's voters, are evenly divided on their views of the plan: 36% favor it, and 36% oppose it. Twenty-eight percent (28%) are undecided.

Among non-investors, only 15% support the plan, while 41% oppose it. A plurality of non-investors (43%) are not sure yet what they think of it. .

PAULSON UNDERSTATED THE PROBLEM EVERY STEP OF THE WAY

Dean Baker, Prospect - In March of 2007, after the first shock waves of the housing meltdown had already hit, the Associated Press reported Mr. Paulson's view that the credit difficulties linked to the housing slump would be limited.

In August of last year, after the second round of financial shock waves disrupted markets worldwide, Paulson commented, "We have the strongest global economy I've seen in my business lifetime."

Just last March he warmly endorsed a reduction in the capital requirements for Fannie Mae and Freddie Mac, saying "additional capital [invested in mortgages by Fannie and Freddie] will enable the companies to help more homeowners and will strengthen the underlying fundamentals of the mortgage market."

At every point along the way, Secretary Paulson has failed to see the extent of the crisis resulting from the collapse of the housing bubble. This raises serious questions about his judgment.

MCCAIN WOULD NAME SUBPRIME BOOSTER CUOMO TO SEC SPOT

Ragged Thots - Last week was hardly John McCain's finest moment when, deciding that the Securities and Exchange Commission bore major responsibility for the Wall Street madness, he essentially called for SEC Chairman Chris Cox to be fired. . . On "60 Minutes" tonight, McCain amended that by saying that, yes, he recognized that, technically, after nomination by the president and confirmation by the Senate, the head of the SEC can't be "fired" by the president who appointed him in the first place. However, he asserted, "When I'm president, if I want somebody to resign, they resign."

So, correspondent Scott Pelley asks, who would McCain replace Cox with. The response: "This may sound a little unusual, but, I've admired Andrew Cuomo. I think he's someone who could restore some credibility, lend some bipartisanship to this effort."

Pelley points out that Cuomo "served in the Cabinet of Bill Clinton." McCain responds, "Yes, and he did a good job and he has respect and he has prestige.". . .

There's a strong case to be made that, as Clinton's HUD secretary, many Cuomo decisions actually may have exacerbated the mortgage meltdown that is at the heart of the current financial industry crisis.

In fact, the best case for that was made, in of all places, the Village Voice. Author Wayne Barrett is an ideological journalist (as, is, of course, the publication for which he writes), but in this case, that very bias gives more strength to the argument that Barrett makes in tying the Cuomo-led HUD's decision to push Fannie Mae and Freddie Mac into the subprime mortgage markets:

"Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that-in combination with many other factors-helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded 'kickbacks' to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why."

THE LIST: WHAT A TRILLION DOLLARS WILL BUY

Andrew Davis, Libertarian Party:

One trillion dollars ($1,000,000,000,000) is enough money:

To buy everybody living in Los Angeles at least one Lamborghini Gallardo.

To buy 88,052, 394' custom mega yachts; enough to stretch around ¼ of the world.

To buy everyone living in Belize and Malta a Manhattan apartment.

To get half of the Democratic Party into a fundraiser for Barack Obama at the $28,500 admission price.

To give one out of every two men in the United States a Men's Presidential Rolex watch.

To buy every woman in the United States a Tiffany Diamond Starfish Pendant.

To get two Mitsubishi 73" HDTVs for every household in America.

To buy four copies of The Office: Season Four on DVD, to every person on earth.

To send everybody in America on an all-inclusive vacation to Tahiti (and some people can stay a few extra days). AND…

$1 trillion is enough money for everyone in Buffalo, NY to buy their own 65-acre island in Panama.

This is how much the government is going to cost you (roughly $3,278 for every man, woman and child in the United States).

CRASH TALK

Washington Post - Democratic leaders have broadly embraced the administration's proposal to spend up to $700 billion to take troubled assets off the books of faltering firms and are not questioning the need to give the Treasury Department expansive authority to halt the meltdown in world markets. But by attempting to limit executive pay, they risk alienating key Republicans who object to such restrictions and delaying passage of the rescue plan, which in turn may stir renewed fear in the markets. . .

Under the proposal drafted by House Democrats, the Treasury would be required to force faltering firms that want to sell their troubled assets to the government to "meet appropriate standards for executive compensation." Those standards would include a ban on incentives that encourage chief executives to take "inappropriate or excessive" risks, a mechanism to rescind bonuses paid for earnings that never materialize and limits on severance pay. . .

The Democratic measure also would require the Treasury to use its status as the new owner of billions of dollars in mortgage-backed assets to reduce foreclosures by forcing banks to rewrite loans for distressed homeowners and forgive a portion of their debt. And it calls for a strict regimen of oversight, including independent audits and regular reports to Congress.

Senate Democrats yesterday were still assembling a list of provisions they hope to add, including new powers for bankruptcy judges to modify mortgages on primary residences, an idea House Democrats said yesterday that they had abandoned. . .

"It's the biggest amount of money with the least amount of detail I think I've ever seen in my life," said Douglas W. Elmendorf, a Brookings Institution economist who has worked in the Treasury Department and at the Federal Reserve. "The secretary does whatever he wants and spends whatever he wants."

Lawmakers across the spectrum are demanding more oversight of the bailout. House Democrats have the most specific proposal, which would order the Government Accountability Office to establish a permanent outpost within the Treasury to monitor the bailout program. That office would have unfettered access to the activities and financial documents of the rescue program, and would be required to submit reports to Congress every 60 days. . .

Sean-Paul Kelley, Agonist - Dear Senator Obama: Having worked for many years in the banking industry and been closely involved with risk management and derivatives, I can tell you that it looks like catastrophe is already here.

What Sec. Paulson wants you to believe is that catastrophe is approaching, but it can be averted if only Congress acts urgently to give him the extraordinary authority he is requesting. The implication is if you don't give him $700 billion in borrowing authority within a week, markets will collapse and it will be all your fault.

We've seen this drill before, with the Patriot Act and with the Iraq War authorization. The scare tactics, the urgency, the implied threat of blame for any failure - this is what the Bush administration does. Some of you in the Senate were able to stand up to this pressure, and that type of strength is desperately needed now.

John Halle - What is missing from all of the discussion is any mention of how the plan will be paid for, as it is taken for granted that the average taxpayer is sure to be stuck with the ultimate cost of the $700 billion dollar price tag. But we don't need to pay. And in this case we should not. For very few Americans have benefited from the giant casino which Wall Street has become over the past generation. Yes it has spun off enormous wealth but this has gone overwhelmingly to a small number at the top. . . It is time to make those who have danced their jigs on our backs pay the fiddler. And that means that not one dime of the bailout should come from the 99.9% of Americans who are the victims of Wall Street. All of it should come from the enormous store of assets controlled by the upper . 1%.

The way to do this is by instituting a wealth tax - a tax on accumulated assets above $10 million. . . Eight-figure salaries have been routine in investment banking firms for two decades with Henry Paulson himself having earned $35 million in 2005 on the road to socking away accumulated assets of more than $700 million (not including stock options). His Democratic Party counterpart and predecessor at Goldman Sachs, key Obama advisor Robert Rubin, received similar compensation before moving to Citibank, where his wealth ballooned still further. Hedge fund operators, who have benefited from the absurd exemption on capital gains tax, have accumulated wealth beyond their dreams of avarice, one of them, John Paulson, of Paulson & Co. raking in a cool $3.7 billion for one years work. . . Simple arithmetic demonstrates that more than enough is available from these and other charter members of the plutocracy to fully finance the bailout, as well any additional items those with sufficiently resourceful minds would like to make part of the package.. . . Pushing for all of this, and more, should be the bottom line of progressives right now and we should be in the streets and in our representative offices demanding it.
If insolvency is here now for the big banks, the last thing you want to do is throw $700 billion of money that is not yours at bailing out the banks who created this disaster. You'll need every bit of that money to protect the taxpayers and their deposits in these banks when these financial companies are thrown into the bankruptcy courts. You'll need that money to make sure consumer deposits are protected with insurance, and you'll need it to keep the healthy parts of these banks that deal with consumers and businesses functioning until they come out of bankruptcy.

And forget about comparing Paulson's plan to the RTC. These L3 assets aren't homes, condos, or commercial real estate that can be easily sold at the right price. They are bits of paper giving the bond holder the right to some small portion of thousands of mortgages, a right that is shared with all the other investors, who are required to agree on what is done with foreclosed properties in the pool. This is one of the reasons no one wants to buy this stuff, and no one will for many years until it is crystal clear what the final losses will be.

Once you give Paulson the authority he seeks, he will buy these securities at 65 cents/dollar, then quietly auction them off at a nickel each. It will be "unfortunate but necessary" to revitalize the banking industry, even though you will discover the banks won't be lending after this is all over to any but the finest credits. You will have rewarded the banks for their calamitous decisions, stuffed the taxpayers with huge losses, squandered your remaining ability to shore up the FDIC, not prevented the big banks from collapsing anyway, done nothing to help the community banks that will constitute the new banking system in this country when these problems are solved, and in the end made the situation much worse.

If you want to do something practical, require the SEC to go into these banks, open up their L3 holdings to public scrutiny, auction off a sampling of these securities, and apply those prices to the L3 portfolios of all the banks. In this way we will know which banks are insolvent. You won't need to go through this charade of having the Treasury take ownership of these assets, because the core of the problem is not that these assets are clogging up bank balances sheets, as Paulson says (which is tantamount to saying, by the way, that no one will buy them). The core of the problem is that there is no transparency about these portfolios and their real worth. Congress doesn't need $700 billion of our money to create that transparency, and if it shows as I suspect that many of these banks are insolvent, that's why we have bankruptcy courts. You can certainly protect the banks from bank runs while they are in bankruptcy.

Paulson is basically rolling you and the rest of Congress into giving him unprecedented power to protect his friends on Wall Street. This decision you are making is probably as momentous as the Iraq War resolution. Don't fall for this bailout disguised as the only way to prevent Armageddon. Armageddon is already here - at least for the big banks - and it needs an entirely different solution. Spend our money protecting us, by ensuring the FDIC is properly funded, by throwing these too-big-to-fail banks into bankruptcy if they truly are insolvent, by preserving the healthy parts of these banks while in bankruptcy, and bringing them back out again so they function under much better safety and soundness regulations. We've had airlines functioning properly and safely for years while in bankruptcy, and there is no reason we can't do the same with banks.

Please, please, do not fall for some useless compromise or bipartisan agreement that gives the administration what it wants in the end. Kill this proposal here and now, protect us from this bailout, and deal with the real problem - the insolvency of the major banks, not the paper that is supposedly blocking their lending capabilities.

Willaim Greider, The Nation - If Wall Street gets away with this, it will represent an historic swindle of the American public--all sugar for the villains, lasting pain and damage for the victims. My advice to Washington politicians: Stop, take a deep breath and examine what you are being told to do by so- called "responsible opinion." . . .

Christopher Whalen of Institutional Risk Analytics, a brave conservative critic, put it plainly: "The joyous reception from Congressional Democrats to Paulson's latest massive bailout proposal smells an awful lot like yet another corporatist lovefest between Washington's one-party government and the Sell Side investment banks.". . .

The scandal is not that government is acting. The scandal is that government is not acting forcefully enough--using its ultimate emergency powers to take full control of the financial system and impose order on banks, firms and markets. Stop the music, so to speak, instead of allowing individual financiers and traders to take opportunistic moves to save themselves at the expense of the system. . .

A serious intervention in which Washington takes charge would, first, require a new central authority to supervise the financial institutions and compel them to support the government's actions to stabilize the system. Government can apply killer leverage to the financial players: accept our objectives and follow our instructions or you are left on your own--cut off from government lending spigots and ineligible for any direct assistance. If they decline to cooperate, the money guys are stuck with their own mess. If they resist the government's orders to keep lending to the real economy of producers and consumers, banks and brokers will be effectively isolated, therefore doomed. . .

Paulson and the Federal Reserve are trying to replay the bailout approach used in the 1980s for the savings and loan crisis, but this situation is utterly different. The failed S&Ls held real assets--property, houses, shopping centers--that could be readily resold by the Resolution Trust Corporation at bargain prices. This crisis involves ethereal financial instruments of unknowable value--not just the notorious mortgage securities but various derivative contracts and other esoteric deals that may be virtually worthless. . .

If government acts responsibly, it will impose some other conditions on any broad rescue for the bankers. First, take due bills from any financial firms that get to hand off their spoiled assets, that is, a hard contract that repays government from any future profits once the crisis is over. Second, when the politicians get around to reforming financial regulations and dismantling the gimmicks and "too big to fail" institutions, Wall Street firms must be prohibited from exercising their usual manipulations of the political system. Call off their lobbyists, bar them from the bribery disguised as campaign contributions. Any contact or conversations between the assisted bankers and financial houses with government agencies or elected politicians must be promptly reported to the public, just as regulated industries are required to do when they call on government regulars.

More important, if the taxpayers are compelled to refinance the villains in this drama, then Americans at large are entitled to equivalent treatment in their crisis. That means the suspension of home foreclosures and personal bankruptcies for debt-soaked families during the duration of this crisis. The debtors will not escape injury and loss--their situation is too dire--but they deserve equal protection from government, the chance to work out things gradually over some years on reasonable terms.

The government, meanwhile, may have to create another emergency agency, something like the New Deal, that lends directly to the real economy--businesses, solvent banks, buyers and sellers in consumer markets. We don't know how much damage has been done to economic growth or how long the cold spell will last, but I don't trust the bankers in the meantime to provide investment capital and credit. If necessary, Washington has to fill that role, too. . .

Michael Hudson, Global Research - The last time the government let banks earn their way out of negative equity was in 1980. Interest rates to bank customers topped 20 percent, driving down prices for real estate, stocks and bonds so low that the leading U.S. banks saw their net worth wiped out. Their debts to depositors and bondholders exceeded the collateral they held in their reserves to back these deposit obligations. But as soon as Ronald Reagan led the Republicans back into office, the Federal Reserve began to flood the economy with free credit, driving down the interest rates that banks had to pay. They were allowed to act as a monopoly and keep credit-card interest rates high, at 20 percent, and above 30 percent with penalties, thanks to the fact that America's high post-Vietnam interest rates led state after state to repeal anti-usury laws to keep credit flowing. . .

It is bad enough for the government to buy $700 billion of bad bank investments at prices that no private-sector investor has been willing to approach. This itself is an undeserved giveaway to the financial institutions that caused the problem by living recklessly in the short run. But making them - and indeed, helping them - pay back this gift with the aid of favorable tax and deregulatory policies will simply shift the cost off their shoulders onto those of bank depositors, credit-card users, mortgage borrowers and hapless pension-fund contributors to the money managers who have taken most of the current income in the form of commissions, salaries and bonuses to themselves. This will sharply add to the price of doing business in the United States, and specifically to the economy's debt overhead by the banks making even more predatory loans.

It gets worse. In order for the existing junk mortgages to be "made good," real estate prices must be raised further above the ability to pay for this year's five million homeowners in arrears and facing default. Is this a good thing? Is it good to raise access prices for housing even more, forcing new homebuyers to go further into debt than ever before to gain access to housing? Mr. Paulson has directed the Federal Reserve, Fannie Mae, Freddie Mac and the FHA (Federal Housing Authority) to re-inflate the real estate market. They are to pump nearly a trillion dollars into the mortgage market.

Fiscal policy is also to be brought to bear to turn the real estate market around by pressuring cities and states to "help homeowners pay their mortgage debts" by cutting property taxes. The idea is to leave more revenue available for property owners to pay mortgage bankers. Unfortunately, this will oblige cities to make up these cuts by taxing labor and sales, running deeper into debt than they already are, or cutting back their spending on basic infrastructure, education and public services and continue shortchanging their pension funds. This is the price to be exacted to "protect the taxpayer's interest" by bailing out irresponsible banks. The solution is to let them make even more money by acting in a yet more predatory way. . .

Mr. Paulson has made it clear that aid for homeowners is not part of the Treasury's plan. On Sunday, September 21, he resisted suggestions that his program be amended to include further relief for homeowners facing mortgage foreclosures. . .

You hear no talk from Mr. Paulson or Mr. Bernanke about bailing out homeowners by writing down their debts to match their ability to pay. This is what economies have done from time immemorial. Instead, the Republicans - along with their allied Wall Street Democrats - have chosen to bail out investors in junk mortgages presently far exceeding the debtor's ability to pay, and far in excess of the current (or reasonable) market price. The Treasury and Fed have opted to keep fictitious capital claims alive, forgetting the living debtors saddled with exploding adjustable-rate mortgages and toxic "negative amortization" mortgages that keep adding on the interest (and penalties) to the existing above-market balance. . .

To appoint a single regulator would prevent all other regulators - and law enforcement officers, attorneys general, the SEC and so forth - from enforcing honest financial policies in the event that an incoming president should appoint another Greenspan, Gonzales or other ideological extremist averse to the idea of applying existing regulations and honest laws. Under these conditions "consolidated regulation" would mean a free ride for crooks much like J. Edgar Hoover gave the Mafia under his tenure.

Justin Raimondo, Anti War - The policy of bank credit expansion, which enriches the already wealthy at the expense of the rest of us, has a fatal allure. It induces an initial euphoria, the false promise of permanent prosperity. This Panglossian view is the perfect economic system for an emerging empire, especially one with such inflated pretensions as ours. It is the economics of hubris - the same grandiosity that let us imagine we could implant "democracy" in the arid soil of Iraq and make the desert bloom. . .

The failed policies that led to our current economic predicament - the whole system of central banking and fiat currency - are precisely those policies that benefited those who are now demanding to be bailed out. . .

When the bill comes due, American taxpayers - and grieving parents and loved ones of the fallen - will have to pay, while the authors of our suicidal foreign policy get off scot-free. . . What's becoming increasingly clear is that the bailout brothers are all members of the same clan: think of them as a Mafia family, with a strict hierarchy of authority and command, albeit an informal one. At the top is the Don, finance capital, which controls the engine and sits at the dashboard pressing buttons according to a pattern: first inflation, then deflation, boom then bust, peace and then war again. But the bailout boys always parachute to safety before disaster envelopes the rest of us. Which is why failure only emboldens them.

Our rulers really do believe their empire is too big to fail, but of all the would-be lords of creation, our own ruling elite may have the shortest reign - and the hardest fall. . . For the truth of the matter is that the very bigness of the American Imperium, the sheer scope of its rulers' ambition, is precisely what is fated to bring about its downfall, and a very messy and painful descent it will surely be.

Dean Baker, Prospect - Those waiting for any mea culpas from the Washington Post editorial will have to wait a bit longer. Instead of acknowledging its failure to report accurately on the circumstances that led up to this crisis, the Post is using it as an opportunity to push its agenda for cutting Social Security and Medicare. The reasoning powers of the Post's editors are still lacking. The loss of trillions of dollars of equity in housing has just wiped out most of the wealth of baby boomers nearing retirement. Their dependence on Social Security and Medicare will be greater than ever as a result (and these people vote). That's what happens when you rely on David Lereah (the former chief economist of the National Association of Realtors) as your main source on the real estate market. . .

When the government supports a bailout, it is not directly creating demand for new goods and services. It is simply ensuring that money that we thought was already there (e.g. funds in a money market account) does not disappear through a financial collapse. No one is going to spend more because their savings account did not disappear. (They obviously would have spent less if their savings account actually did disappear.)

For this reason, the cost of this bailout (like the S&L bailout in the 90s) should be considered an addition to the debt, but not part of the annual deficit. That doesn't make it cheap, but the people who try to scare us with lines about $900 billion or $1 trillion deficits in 2009 are being dishonest. Adding $500 billion to $1,000 trillion to the national debt is a big deal (and it shows the cost of ignoring a housing bubble), but it should not be an excuse to ignore important social needs, like fixing the health care system.

John Halle - What is missing from all of the discussion is any mention of how the plan will be paid for, as it is taken for granted that the average taxpayer is sure to be stuck with the ultimate cost of the $700 billion dollar price tag. But we don't need to pay. And in this case we should not. For very few Americans have benefited from the giant casino which Wall Street has become over the past generation. Yes it has spun off enormous wealth but this has gone overwhelmingly to a small number at the top. . . It is time to make those who have danced their jigs on our backs pay the fiddler. And that means that not one dime of the bailout should come from the 99.9% of Americans who are the victims of Wall Street. All of it should come from the enormous store of assets controlled by the upper . 1%.

The way to do this is by instituting a wealth tax - a tax on accumulated assets above $10 million. . . Eight-figure salaries have been routine in investment banking firms for two decades with Henry Paulson himself having earned $35 million in 2005 on the road to socking away accumulated assets of more than $700 million (not including stock options). His Democratic Party counterpart and predecessor at Goldman Sachs, key Obama advisor Robert Rubin, received similar compensation before moving to Citibank, where his wealth ballooned still further. Hedge fund operators, who have benefited from the absurd exemption on capital gains tax, have accumulated wealth beyond their dreams of avarice, one of them, John Paulson, of Paulson & Co. raking in a cool $3.7 billion for one years work. . . Simple arithmetic demonstrates that more than enough is available from these and other charter members of the plutocracy to fully finance the bailout, as well any additional items those with sufficiently resourceful minds would like to make part of the package.. . . Pushing for all of this, and more, should be the bottom line of progressives right now and we should be in the streets and in our representative offices demanding it.

Naked Capitalism reports receiving this e-mail from a reader - I worked at [Wall Street firm you've heard of], but now I handle financial services for [a Congressman], and I was on the conference call that Paulson, Bernanke and the House Democratic Leadership held for all the members yesterday afternoon. It's supposed to be members only, but there's no way to enforce that if it's a conference call, and you may have already heard from other staff who were listening in.

Anyway, I wanted to let you know that, behind closed doors, Paulson describes the plan differently. He explicitly says that it will buy assets at above market prices (although he still claims that they are undervalued) because the holders won't sell at market prices. Anna Eshoo pressed him on how the government can compel the holders to sell, and he basically dodged the question. I think that's because he didn't want to admit that the government would just keep offering more and more.

Joshua Holland, Alternet - The plan doesn't specify what, if anything, U.S. taxpayers will get in return for their largesse. The government isn't spending more than a trillion dollars to nationalize failed institutions in order to protect stakeholders and liquidate those overvalued assets in an orderly manner. That might make a lot of sense, and it would essentially make Joe and Jane taxpayer owners of something that might rebound in value down the road.

Instead, Bush's proposal would take bad paper off the books of institutions that are ailing but haven't yet gone belly-up, and we wouldn't necessarily get a stake in those institutions; they'd only become "financial agents of the government," according to the draft released Saturday.

As Paul Krugman notes, "historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets.". . .

Making matters even worse is the fact that it's almost impossible to put a fair market value on this massive pile of bad debt. As Peter Goodman of the New York Times notes, "no one really knows what this cosmically complex web of finance will be worth, making the final price tag for the taxpayer unknowable. One may just as well try to predict the weather three years from Tuesday.". . .

What's clear is that there is going to be a massive transfer of public wealth to the private sector, and at least the lion's share of that cash, if not all of it, will end up in the hands of an investor class whose recklessness got us into this mess in the first place. . .

Without fear of a regulatory backlash, the banks pushed their new investments hard, and investors gobbled them up with glee. Writing in the Columbia Journalism Review, Dean Starkman cited reports from the business press about loan agents at Ameriquest being ordered to watch "Boiler Room," the film about sleazy financial brokers pushing bad investments on gullible retirees (Ameriquest was a predatory subprime lender that went down last year). Starkman quoted an executive with Morgan Stanley's mortgage unit as saying, "It was unbelievable. We almost couldn't produce enough to keep the appetite of the investors happy. More people wanted bonds than we could actually produce."

In the end, investors were basically buying up paper that had only a distant relationship with anything concrete. The link that had long existed between homeowners and lenders was broken, and debt -- in this case debt tied to housing, but also commercial and consumer debt -- became a hot investment vehicle. . .

With the Bush administration pumping more than a trillion dollars into the private sector, Jim Bunning, the junior senator from Kentucky, lamented that the "free market for all intents and purposes is dead in America." As more mainstream economists talk about the possibility of sliding into a full-blown depression, we may well be in the grip of a kind of economic "Grotian Moment." The term, named for the 17th century Dutch legal philosopher Hugo Grotius, describes an event that has such a great impact that it results in fundamental changes to the prevailing system.

OTHER NEWS

GREAT MOMENTS IN MILITARY EDUCATION

Daily Princetonian - The University band faced physical abuse, harassment and taunting on Saturday while accompanying the football team to its away game against The Citadel, a military college in Charleston, S.C.
Following the game, Citadel commanding officers and the president of the Citadel student body apologized to the band for the cadets' behavior, several band members said.

The altercation began when the band marched, with prior approval from The Citadel's administration, through a guarded entrance onto the campus. The band's traditional march through the home team's campus brought the performers into contact with The Citadel's cadets, who were outside for field activities.

"Some of [the cadets] started running towards us and ran back . . but it didn't seem threatening at all," Simon Fox Krauss '11 said.

Yet when the band tried to continue its march, Krauss said, the cadets surrounded the Princeton students and began booing loudly, linking arms to form a line blocking their path.

In response to the blocked path, Lucas Giron '09, the band's drum major, gave the order to "scramble" - break formation and leave.

Band conductor R.W. Enoch '09 said that at this point, "a number of cadets broke ranks and got into physical altercations with some of our members."

In the skirmish that followed, several band members were physically attacked and spit on, band members said, adding that at least one member had his instrument broken. . .

Jordan Bubin '09 said he was tackled by "three or four cadets" and pushed up against a tree.

"The booing was so loud, [and] the cadets who were on the field were yelling at us, ‘Cut your hair, long-haired faggots' and ‘You go have fun in college, I'll go fight the war,' " he said.

The cadets also stole band members' hats and spit on female members of the band, some members said. . .

Barnard said his immediate response was to direct the band to leave campus.

Several of The Citadel's commanding officers, however, brought the situation under control asked the band to continue its pre-approved march.

The band was escorted on the rest of its march around campus by commanding officers without further altercations, Barnard said. Bubin said, however, that the band was "pursued and taunted" in spite of the escort.

Later in the day, when the band appeared on the football field to perform its halftime show, the taunting continued.

"During the halftime, there was booing as soon as we went onto the field," Enoch said. Though the cadets avoided any further physical confrontation, Enoch noted that for the entire nine-minute half time show, the jeers were so loud that the band's act could hardly be heard. .

"During the game itself, somewhere between 50 and 70 cadets circled the band in plain sight of an Army captain and Marine Corps Lieutenant Colonel," Dan Jaffe ‘10 said in an e-mail. "When ordered back to their seats by [higher ranking officers] they were slow to obey."

Jaffe, who has trained in the Marine Corps, said he found the behavior of the cadets "astounding."

He added that he thought the fact that the cadets "lacked the discipline to maintain proper military bearing should, at the very least, make their superiors question the wisdom of awarding them commissions in the United States Armed Forces."

SANDISK'S NEW SLOTMUSIC

Wired - As the world seems to march toward downloaded or streamed digital music, SanDisk today is unveiling a new physical medium for music. It's called slotMusic, and it's basically an album on a thumbnail-size microSD card. Four of the major music labels -- Warner, Universal, Sony, EMI -- are supporting it with MP3, unprotected music. So you'd go into a Wal-Mart, pay about $10 for the card, and slip it into your cell phone or any other gadget with a card slot. SanDisk says it will be almost as simple to use as putting a CD in a player. The MP3 songs can be moved around or copied anywhere. . .

I talked to SanDisk executive Dan Schreiber about slotMusic. Unable to imagine the iPod generation wanting anything to do with going to a store to buy music on anything made of atoms, I asked if this is aimed at, like, old people. "Some of it is an age thing," he said. "But it's about instant entertainment. Downloads continue to thrive, but not everybody wants to spend half their day curating playlists." He added that slotMusic "tested well with young guys who liked the gee-whiz factor." Although, I always take those kinds of results with a grain of salt. Young guys can think a lot of things are gee-whiz .. for about five minutes. Whether they'll actually buy it or not is a whole different question.

BREVITAS

MORE CRASH TALK

One of the scariest things we've heard: ""I think we have to recognize the reality that we don't have a choice now of debating whether this is a good or a bad thing." - Barnie Frank, chair of House Banking Committee

Wall Street Journal - The Federal Reserve, unleashing its latest attempt to inject more cash into the nation's ailing banks, loosened longstanding rules that had limited the ability of buyout firms and private investors to take big stakes in banks. It marks the latest move by the Fed to rewrite the rulebook in response to the financial crisis. Regulators have grown worried about a shortage of capital at banks, in particular smaller thrifts and regional institutions. The Fed has been crafting this policy for at least two years, and private-equity firms have been aggressively lobbying for more lenient policies.

Dean Baker, Prospect - The Washington Post complained in a front page article that the Presidential candidates have not adjusted their tax and spending plans to accommodate the new fiscal realities implied by the bailouts. The article calls for them to advocate spending cuts and/or tax increases. While this reflects the Post's editorial position, it is not clear that it reflects the fiscal and economic reality. At this point, neither the Post or anyone else knows how much a bailout will cost. It is possible that it will be structured so that most of the burden will be placed on the banks. The Post also doesn't know how severe the current recession will be. There are few economists who would advocate cutting spending or raising taxes in the middle of a serious recession. In short, this article is reflecting the editorial perspective of the Post, not economic or fiscal necessities.

Wall Street Journal - With stocks falling, credit tightening and unemployment rising, small investors have been raiding their 401(k) accounts or slashing contributions to the popular retirement plans, according to the latest tallies of plan administrators. Others, eager to shield their portfolios from further damage, are reducing their exposure to stock mutual funds to near record lows. The behavior -- described by some market watchers as panicky in the past week -- has led to worries that the retirement prospects are dimming further for Americans, most of whom no longer have private-sector pensions to rely on. Recent 401(k) winnowing is coming in the form of "hardship withdrawals" -- removing cash from the fund, with a 10% tax penalty, for exigencies such as job loss, the prospect of losing your home to foreclosure or a big medical expense.

Wall Street Journal - "Is there anyone who isn't a backlasher?" asked Jared Bernstein, senior economist at the Economic Policy Institute, a left-of-center think tank. "I haven't seen people saying, 'Good plan -- like it.'"Mr. Bernstein noted that the government is in a bind: Paying rock-bottom prices for shaky mortgage-backed securities might hurt the firms that the bailout is supposed to rescue, but if the government pays a higher price, taxpayers might end up with securities it can't resell except at a big loss.

"I think it's awful," said Allen Meltzer, a former Reagan economic adviser now teaching at Carnegie Mellon University. "It puts private interests ahead of the public interest." Mr. Meltzer pointed to past occasions when, he said, doomsayers warned of financial panic, the government resisted the urge to bail out the markets, and nothing terrible ensued. Among those he cited was President Richard Nixon's decision not to rescue the commercial-paper market in the aftermath of the collapse of the Penn Central railroad.

Former St. Louis Federal Reserve Bank President William Poole, a senior fellow at the free-market Cato Institute, said, "The Treasury will be stuck with the least-attractive paper, and that means taxpayer losses will be large."

C. Fred Bergsten, director of the Peterson Institute for International Economics, called the package essential, given the unusual circumstances. He predicted taxpayers would ultimately be on the hook for about $100 billion, once the government resells the securities it plans to take off financial firms' hands.

Rep. Frank said the Treasury agreed to an independent board to monitor the bailout and report on its progress to Congress and the public. The board wouldn't have authority to veto Treasury investment decisions, and the bailout's launch wouldn't be delayed while a board was being put in place.

While details are still being worked out, both sides have also agreed to a measure that would allow -- but not require -- the Treasury to take an equity stake in a financial institution that sells assets to the government. Whether it did so might be dependent on the size of the capital injection the government makes when it buys the assets, according to a person familiar with the matter.

OUTLYING PRECINCTS

Stateline - Hoping to boost voter turnout in a historic presidential election year, civil rights groups and other advocacy organizations are trying to get as many ex-felons as possible to cast ballots in November. . . Both in little-contested states such as Texas and in perennial presidential-election battlegrounds such as Ohio, activists are knocking on doors trying to find former prisoners and inform them of their voting rights, visiting state prisons and jails to speak with soon-to-be-released inmates and helping to register those who are interested and allowed to vote. Looking beyond November, the American Civil Liberties Union is waging a broader campaign to persuade state legislatures to do away with so-called felony disenfranchisement laws, which keep an estimated 5.3 million Americans with felony convictions from the polls, including 2.1 million who no longer are in prison. Only two states -Maine and Vermont -allow incarcerated felons to vote. . . Eleven states restrict ex-offenders' voting rights even after their sentences are served: Kentucky and Virginia bar almost all ex-felons from going to the polls, unless they petition the governor to restore their rights, while nine states either ban some ex-felons from voting or have waiting periods before they can vote again. In addition, 35 states prevent parolees from voting, while 30 ban those on probation from casting ballots.

Rob Richie, Fair Vote - The Washington Post has a front page article on its new poll in the tight presidential race in Virginia -one that is newsworthy in showing Democrat Barack Obama leading Republican John McCain in a state that a Democrat hasn’t carried since 1964. The Post highlights Obama’s lead as 3% (49% to 46%), showing that result in a page one chart. Then, as an aside on page A6, it reports "When third-party candidates - Ralph Nader and Bob Barr - were included in the questioning. Obama edged to a five-point lead." Nader and Barr in fact are on the ballot in Virginia, as they each are in at least 45 states according to Ballot Access News. So are the Green Party’s Cynthia McKinney and the Constitution’s Party’s Chuck Baldwin, who recently picked up the endorsement of former Republican presidential candidate Ron Paul. Why on earth wouldn’t the poll lead with the full results as its main story? Which is more accurate: reporting the results of a hypothetical two-candidate election or reporting the results of what voters will actually see on their ballot - and indeed are seeing on their ballot, as early voting has already begun in Virginia?

USA Today - Voters by the thousands will begin casting ballots for president this week in an early voting process that's expected to set records this year. Residents of Virginia, Kentucky and Georgia are among the first in the nation eligible to vote in person, as well as by mail. During the next few weeks, at least 34 states and the District of Columbia will allow early in-person voting for Nov. 4 elections. Experts such as Paul Gronke of the Early Voting Information Center predict nearly a third of the electorate will vote early this year, up from 15% in 2000 and 20% in 2004. In closely contested Colorado, Nevada and New Mexico, about half the voters are expected to cast ballots before Election Day. Florida could be 40%.

Governing - The [Vermont] poll shows Republican Gov. Jim Douglas at 48%, Democrat Gaye Symington at 33% and independent Anthony Pollina at 7%. In any other state this would be unequivocally good news for Douglas. In Vermont, though, if no gubernatorial candidate makes it past 50%, the election is thrown into the state House of Representatives. With 12% still undecided, Douglas isn't in bad shape, but there's a realistic chance state legislators will be deciding this one. . . The best news for Douglas is that it looks increasingly likely that he will be the candidate who gets the most votes, which, from a public relations standpoint, would put him in an excellent position to win a vote in the House (despite the large Democratic majority).

Political Wire - Gov. Sarah Palin drew a crowd of nearly 60,000 people to a rally she held in the battleground state of Florida, according to the Fort Myers News-Press.

Maine Today - Republican John McCain's campaign claims the endorsement of the Maine Snowmobile Association, which has more than 30,000 members. Snowmobilers Executive Director Bob Meyers says McCain and Sarah Palin are on the side of the snowmobilers when it comes to public access to land for recreation.

THE MIX

AJ Press - The percentage of Californians opposing a constitutional amendment that would reinstate a ban on same-sex marriages have grown over the past year, according to the Field Poll, an independent and nonpartisan organization. The surveys revealed that 55 percent of Californians opposed while 38 percent favored Proposition 8, the initiative to ban same-sex marriage In May, the Field Poll’s first survey on the subject found that 51 percent had opposed the proposition.

Ms Magazine - The United Nations Development Fund for Women has released a report that details an increase in women's participation in politics by 8 percent worldwide since 1998. Globally, 18% of parliament-level officials are women. . . Ellen Johnson Sirleaf, President of Liberia, is quoted in the report: "Half, even more than half, of 'the people' are women. Yet for far too long, women's will, women's voices, women's interests, priorities, and needs have not been heard, have not determined who governs, have not guided how they govern, and to what ends. Since women are amongst the least powerful of citizens, with the fewest social and economic resources on which to build political power, special efforts are often needed to elicit and amplify their voice."

Black Press USA - A group of seasoned black community activists and organizers will gather in New Orleans Nov. 19-23 well after the Nov. 4 election - to discuss the "state of the black world." . . . "We’re excited about the prospect of Obama winning the White House," says Dr. Ron Daniels, convener of the conference. "But we must work to create and advance a progressive black agenda no matter who wins the White House. . . We must not make the mistake of believing that the new president will be able to resolve all our problems without a powerful grassroots movement to promote our agenda."

THE WORLD

Reuters - Russian warships set sail on Monday for maneuvers in the Caribbean area calculated to demonstrate to the United States Moscow's return as a global power on the military and political stage.The exercises, drawing on a strong alliance with Venezuela's anti-American President Hugo Chavez, will be closely watched by Western navies as the first such projection of Russian power close to U.S. shores since the collapse of the Soviet Union. Navy spokesman Igor Dygalo said the nuclear-powered heavy missile cruiser Peter the Great and antisubmarine destroyer Admiral Chabanenko left their base near Murmansk with two support ships for the 15,000 mile passage to Venezuela. Washington denounced Moscow for its crushing of pro-Western Georgia in a brief conflict last month over two rebel provinces. Russia then expressed anger over the appearance of U.S. warships in the Black Sea region -- which it considers its sphere of influence -- to deliver aid to Georgia.

SCHOOLS & THE YOUNG

BBC - Tiffin boys' school, in Kingston, south west London, has limited homework to 40 minutes per night, saying pupils should have more time for their own interests. Head teacher Sean Heslop said boys had been doing up to four hours a night, and that what had been set was often "mechanistic" and "repetitive". Homework is not compulsory in England's schools but is officially encouraged. The government's guidelines for schools in England say children should be doing homework from the day they start primary school. . . But research has cast doubt on its effectiveness, and has even suggested that too much is counter-productive. Some independent schools have abolished the practice. And earlier this year a teaching union, the Association of Teachers and Lecturers, called for an end to homework in primary schools and for it to be scaled back in secondary schools. Mr Heslop said the school had spent two years looking at teaching and learning in class time which inevitably had led staff to look at what homework was being set. Now it sets just 40 minutes per night plus 20 minutes of independent learning, which could include playing music or doing sport, for example. . "The boys absolutely love it. But there has been a mixed response from parents."

BOOKS

Public Housing That Worked: New York in the Twentieth Century

ARTS & CULTURE

Boing Boing - Boris Kachka's long feature on NY publishing's crisis in New York Magazine is a sad but important read. But Kachka puts a lot of emphasis on greed and foolishness and media and bookstore consolidation, while ignoring the largest contraction in book-sales since the heyday: sales through non-bookstore venues like Wal-Mart and the local grocery store. Historically, these outlets have sold more books than bookstores, and were a vital induction system that coaxed people who didn't (yet) love books into the bookstores. When these chains went national, they demanded national distributors to stock them from coast-to-coast. The result: a huge shift in the way these shelves are stocked: once stocked by local distributors who chose from a very wide range of titles and hand-picked the right books for each little grocery store and pharmacy, now they are supplied by a national database totalling somewhere around 100 titles. The consolidated distributors demand gigantic discounts from publishers -- and even so, they go bankrupt with dismal regularity, often with FBI arrests of top execs for corruption.

MONEY & WORK

Mark Weisbrot , Portside - "Battle in Seattle" opens in movie theaters across the country, a rare combination of high drama and history-making events as they actually happened when thousands of protesters shut down the World Trade Organization in Seattle nearly nine years ago. It has an all-star cast including Oscar-winning beauty Charlize Theron, Woody Harrelson, Michelle Rodriguez, Ray Liotta, and Andre Benjamin (of Outkast hip-hop fame). Perhaps most unusual for a feature film, it gives the protesters credit for what they accomplished: they changed the debate over what has been deceptively marketed as "free trade." They were beaten and jailed, choked with tear gas and shot with rubber bullets, but they succeeded in raising awareness about what these organizations and international agreements really do

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