Undernews For July 16, 2009

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15 July 2009

AFGHANISCAM

Norman Solomon, Counterpunch - The president has set a limit on the number of U.S. troops in Afghanistan. For now. That's how escalation works. Ceilings become floors. Gradually.

A few times since last fall, the Obama team has floated rising numbers for how many additional U.S. soldiers will be sent to Afghanistan. Now, deployment of 21,000 more is a done deal, with a new total cap of 68,000 U.S. troops in that country. . .

"Escalation" is a word for a methodical process of acclimating people at home to the idea of more military intervention abroad -- nothing too sudden, just a step-by-step process of turning even more war into media wallpaper --

THE MAN IN THE MIRROR

Chris Hedges, Truthdig - In celebrity culture we destroy what we worship. The commercial exploitation of Michael Jackson's death was orchestrated by the corporate forces that rendered Jackson insane. Jackson, robbed of his childhood and surrounded by vultures that preyed on his fears and weaknesses, was so consumed by self-loathing he carved his African-American face into an ever-changing Caucasian death mask and hid his apparent pedophilia behind a Peter Pan illusion of eternal childhood. He could not disentangle his public and his private self. He became a commodity, a product, one to be sold, used and manipulated. He was infected by the moral nihilism and personal disintegration that are at the core of our corporate culture. And his fantasies of eternal youth, delusions of majesty, and desperate, disfiguring quests for physical transformation were expressions of our own yearning. He was a reflection of us in the extreme.

His memorial service-a variety show with a coffin-had an estimated 31.1 million television viewers. The ceremony, which featured performances or tributes from Stevie Wonder, Brooke Shields and other celebrities, was carried live on 19 networks, including the major broadcast and cable news outlets. It was the final episode of the long-running Michael Jackson series. And it concluded with Jackson's daughter, Paris, being prodded to stand in front of a microphone to speak about her father. Janet Jackson, before the girl could get a few words out, told Paris to "speak up." As the child broke down, the adults around her adjusted the microphone so we could hear the sobs. The crowd clapped. It was a haunting echo of what destroyed her father. . .

The lurid drama of Jackson's personal life meshed perfectly with the ongoing dramas on television, in movies and in the news. News thrives on "real life" stories, especially those involving celebrities. News reports on television are mini-dramas complete with a star, a villain, a supporting cast, a good-looking host and a dramatic, if often unexpected, ending. The public greedily consumed "news" about Jackson, especially in his exile and decline, which often outdid most works of fiction. In "Fahrenheit 451," Ray Bradbury's novel about a future dystopia, people spend most of the day watching giant television screens that show endless scenes of police chases and criminal apprehensions. Life, Bradbury understood, once it was packaged, scripted, given a narrative and filmed, became the most compelling form of entertainment. And Jackson was a great show. He deserved a great finale. .

The memorial service for Jackson was a celebration of celebrity. There was the queasy sight of groups of children, including his own, singing over the coffin. Magic Johnson put in a plug for Kentucky Fried Chicken. .

There were photo montages in which a shot of Jackson shaking hands with Nelson Mandela was immediately followed by one of him with Kermit the Frog. Fame reduces all of the famous to the same level. Fame is its own denominator. And every anecdote seemed to confirm that when you spend your life as a celebrity, you have no idea who you are.

We measure our lives by these celebrities. We seek to be like them. We emulate their look and behavior. We escape the messiness of real life through the fantasy of their stardom. We, too, long to attract admiring audiences for our grand, ongoing life movie. We try to see ourselves moving through our lives as a camera would see us, mindful of how we hold ourselves, how we dress, what we say. We invent movies that play inside our heads with us as stars. We wonder how an audience would react. Celebrity culture has taught us, almost unconsciously, to generate interior personal screenplays. We have learned ways of speaking and thinking that grossly disfigure the way we relate to the world and those around us. Neal Gabler, who has written wisely about this, argues that celebrity culture is not a convergence of consumer culture and religion so much as a hostile takeover of religion by consumer culture. .

The saturation coverage of Jackson's death is an example of our collective flight into illusion. The obsession with the trivia of his life conceals the despair, meaninglessness and emptiness of our own lives. It deflects the moral questions arising from mounting social injustice, growing inequalities, costly imperial wars, economic collapse and political corruption. The wild pursuit of status, wealth and fame has destroyed our souls, as it destroyed Jackson, and it has destroyed our economy.

The fame of celebrities masks the identities of those who possess true power-corporations and the oligarchic elite. And as we sink into an economic and political morass, as we barrel toward a crisis that will create more misery than the Great Depression, we are controlled, manipulated and distracted by the celluloid shadows on the wall of Plato's cave. The fantasy of celebrity culture is not designed simply to entertain. It is designed to drain us emotionally, confuse us about our identity, make us blame ourselves for our predicament, condition us to chase illusions of fame and happiness and keep us from fighting back. And in the end, that is all the Jackson coverage was really about, another tawdry and tasteless spectacle to divert a dying culture from the howling wolf at the gate.

More. . .

HOUSE HEALTH PLAN

Dave Lindorff, Counterpunch - Real health care reform of the kind that Democratic candidates were promising during last year's presidential campaign is dead, killed by the timidity of the promiser-in-chief, President Barack Obama (and by the massive corruption of the Democrats in Congress, who have accepted the tainted coin of the health care industry). . .

This president who, in years past as a senator, as a state representative and as an activist had praised the idea of single-payer, has taken to saying it's important do keep the private health insurance industry in business. . .

But let's note that Obama's sell-out on health care reform was aided and abetted by the progressives, the left groups and political organizations and the unions that failed to hold him to his earlier espousal of single-payer, that instead of calling him out on his cave-in, bought into his initial compromise of a so-called "public option" insurance alternative, and even into his subsequent back down to an even more watered-down version of possibly state-run or "cooperative" plans.

Now his political cowardice and mendacity have caught up with him. His "plan," if it can even be called that, of mandating employer health coverage and then adding a government-run alternative "public option" to existing private insurance, has understandably failed to excite the public, while still arousing the passionate opposition of conservative Republicans and conservative members of his own party, and meanwhile does nothing to limit soaring health costs, which already eat up a fifth of the entire gross domestic product of the nation, requires an increase in taxes and reductions in Medicare, will probably, if established, lead to more companies actually dropping their current benefit programs in favor of a cheaper, stripped-down government plan, and yet will still leave millions of people unable to get access to timely, quality, affordable medical care.

Furthermore, his apparent failure to deliver on this key initiative will deal a body blow to his political clout on other initiatives, such as tackling climate change and dealing with an acute economic crisis.

If I'm right that health reform is dead, so is Barack Obama's presidency. President Bill Clinton's new administration foundered early on following his shameless backdown on a pledge to guarantee the right of gays and lesbians to serve openly in the military. It never recovered. President Obama's new administration is foundering on his equally shameless backdown on a promise to establish a system of quality affordable health care for all.

Healthcare for America Now - Senator Grassley pays $356.59 per month for health care, and the most he pays when visiting a doctor or hospital is $300. Senator Grassley's health care bills are paid by you and me.

Will Senator Grassley vote for health care reform that gives your family coverage that's as affordable as his? So far his answer is no. Instead, Senator Grassley says you should get a job with the feds.

So, fill out your name below to apply for a job with Senator Grassley so you can get the same benefits he gets. We'll deliver your job application to his office so you can get the care you deserve.

Wall Street Journal - The House measure would bar insurance companies from denying coverage to individuals who are sick, while also requiring most Americans to carry health insurance or pay a penalty equal to about 2.5% of their gross income. It would provide families earning up to $88,000 a year with subsidies to help them buy coverage. And it would expand health-insurance coverage through the Medicaid federal-state insurance program for the poor.

The Senate legislation is also expected to include mandates on insurers to provide coverage and individuals to carry it, although the details may differ. The bigger differences will come on the financing side, where many senators are cautious about introducing major new taxes on the wealthy to pay for health care.

CQ Politics - Democrats still lack an official cost estimate for their [health] bill, which the Congressional Budget Office has not yet scored. But a preliminary CBO estimate of the insurance expansion provisions of the bill put the total spending at just over $1 trillion over 10 years and said it would cover all but 17 million of the nation's estimated 46 million uninsured. Half of the remaining uninsured would be illegal immigrants. . .

The Medicare and Medicaid sections will include cuts to those programs that will help pay for the bill, along with a surtax on the wealthy that would raise $544 billion over a decade, according to the Joint Committee on Taxation. Other tax provisions raise the revenue total to $581 billion. . .

One concession to the Blue Dogs was the inclusion of $8 billion to help make sure rural hospitals and doctors are paid adequately by Medicare. The Blue Dogs had threatened not to support any bill that they thought would treat unfairly health care providers in their mostly rural districts. . .

According to a summary of the bill, most of the proposed coverage expansions would not begin until 2013. By that year, a government-run "public option" for insurance would be available for people to buy through a health insurance "exchange," essentially a government-organized marketplace where private plans would compete with the public option.

Most people in the exchange are expected to purchase private plans, said senior House Democratic aides. They said that by 2019, CBO estimates that about 9 million people would be in the public plan, while 21 million who bought coverage through the exchange would choose private plans.

Republicans have slammed the Democratic bill as a "government takeover" of health care that would result in most people ending up in the government-run plan. The CBO estimate appears to contradict those claims; the number of people covered through their employers would increase over the implementation of the bill, according to the estimate.

By 2013, there would be a mandate for individuals to buy coverage or pay a fine of 2.5 percent of their income - but the fine would be capped at the cost of the average plan in their area. Businesses would face a similar mandate, with a requirement to offer insurance coverage to employees or pay a fine equal to 8 percent of their payroll costs.

With the opening of the exchange, the government would provide subsidies to help buy coverage. People with incomes below 400 percent of the federal poverty level and down to the eligibility level for Medicaid would get the credits, on a sliding scale.

According to a CBO analysis, there would be five "tiers" of subsidies to help people buy at least a "basic" insurance plan on the exchange. People in the poorest tier, with incomes between 133 percent and 150 percent of the federal poverty level, would have to spend no more than 3 percent of their income on insurance premiums. At the highest level, 400 percent of federal poverty, spending on insurance premiums would be limited to 11 percent of income.

According to the CBO estimate, the government would contribute, on average, $4,600 for each person getting a subsidy in 2014, rising to $6,000 by 2019. . .

Open Left - Businesses with a payroll for $400,000 or more must either provide health insurance, or pay 8% of payroll to "subsidize" healthcare for their employees.

Take a look at the graph. It's a little out of date (2005) but it shows payroll percentage costs of insurance. The numbers are higher than the government numbers, because it only includes companies which do provide insurance and doesn't average costs in of employees they don't provide insurance for.

In other words, as of 2005, this was the cost of actually providing insurance for employees. Since then it's only gone up, rising faster than inflation. You'll notice, that for companies of all sizes, it's more than 8%, although this doesn't include the value of any tax deductions to the companies. . .

What's clear is that from a pure price perspective, for most employers, dropping their health coverage and paying the 8% "subsidy" is the price effective option. . .

The end result of this will be that more and more employers will simply drop their insurance plans and throw their employees onto the public insurance exchanges. Assuming that the public option is cheaper and generally comparable to the private plans, this will mean that large numbers of people will wind up in the public plan. Larger numbers, I think, than the current scoring expects.

Unless the public plan can reduce costs to what would be 8% or less of payroll, this means the cost of the public plan may be higher than expected, and since the private companies shedding their insurance plans won't be making up the difference . . . that means premiums will also be higher than

OBAMA'S COMMUNITY COLLEGE PLAN

The good news. . . .

Washington Post - [Obama's ] proposed American Graduation Initiative would pump $12 billion into community colleges and add 5 million new graduates by 2020. The program, he said, would offer training to millions of students who cannot afford four-year universities and opportunity to older workers who need new skills. . . As the national unemployment rate has steadily risen, the White House has come under increasing pressure to explain why the president's economic policies are not translating into better news for workers. . . Obama's new higher-education initiative includes $2.5 billion for construction and renovation at the nation's community colleges, $500 million to develop new online courses and $9 billion for "challenge grants" aimed at spurring innovation at the colleges.

The bad news. Once again the Obama administration is exercising too much centralized control. On what basis are Obama and Duncan wiser than college presidents and deans on such matters?

The heart of the program, White House officials said, is the grants, which will require colleges to compete by designing innovative new programs or revamping their existing curricula. The grants are similar to the "Race to the Top" funding that Education Secretary Arne Duncan has proposed for the K-12 school systems.

"We're going to take a careful look at how well these things work, and only the ones that demonstrate results will receive continued funding," said James Kvaal, a special assistant to the president for economic policy. . .

MISSING EMBASSY

Al Kamen, Washington Post - Secretary of State Hillary Rodham Clinton kicks off her worldwide "I'm Ba-aack" tour today, starting with what's being billed as a "major policy address" at the Council on Foreign Relations here. She's then off tomorrow on a week-long trip to India and Thailand.

This will give her a chance to, um, reset her image following a month on the sidelines after breaking her elbow and then some embarrassment this week over a comment she made in May: "The Iranians are building a huge embassy in Managua. And you can only imagine what that's for."

Turns out, as this paper reported Monday, that no one in Nicaragua has been able to find any super-embassy, and they've been looking hard. "We don't have an Iranian mega-embassy," a Nicaraguan official told The Post. "We have an ambassador in a rented house with his wife."

State Department spokesman Ian Kelly was obliged to tell reporters Monday that "right now, there is no major Iranian presence in Nicaragua." That jibed with the view of one U.S. diplomat in Nicaragua, who told The Post, "There is no huge Iranian Embassy being built, as far as we can tell."

HOUSE HEALTH PLAN WOULD HURT SMALL BUSINESS BADLY

Wall Street Journal - House Democrats unveiled sweeping health-care legislation that would hit all but the smallest businesses with a penalty equal to 8% of payroll if they fail to provide health insurance to workers. . .

Under the House measure, employers with payrolls exceeding $400,000 a year would have to provide health insurance or pay the 8% penalty. Employers with payrolls between $250,000 and $400,000 a year would pay a smaller penalty, and those less than $250,000 would be exempt. Certain small firms would get tax credits to help buy coverage.

The relatively low thresholds for penalties triggered the sharpest criticism yet from employer groups, who said the burden on small business is too high and doesn't do enough to help them expand insurance coverage.

"This bill costs too much, it covers too few and it has way too much government involvement," said Michelle Dimarob, a lobbyist with the National Federation of Independent Business, the main trade group for small firms. "Small business doesn't want any of those things."

According to 2006 data from the federation, businesses with between five and nine workers, representing about one million employers, had an average payroll of around $375,000 a year. A report from the Kaiser Family Foundation found that only about half of firms with three to nine workers offered health benefits in 2008.

WHAT JOHN ENSIGN, HILLARY CLINTON & THE HONDURAN RIGHT WING HAVE IN COMMON

Wayne Madsen Report - The extramarital sex scandal surrounding Senator John Ensign (R-NV) is increasingly involving the Fellowship Foundation, also known as "The Family," and, as previously reported by WMR, "the Christian Mafia.". . .

Adding to the Fellowship's perception as a powerful and secretive organization is its ownership of a boarding house and conference center around the corner from the U.S. Capitol at 133 C Street, SE, Washington, DC. At any given time, eight members of the Senate and House have resided at the C Street Center where they sleep, pray, and eat for a mere $600 a month. . .

Past and current residents of the C Street Center have included former Representatives Steve Largent (R-OK) and Ed Bryant (R-TN), former Representative and current Democratic Governor of Maine John E. Baldacci, Senators Sam Brownback (R-KS) (Brownback is also a member of the right-wing Fascist-oriented Opus Dei sect within the Catholic Church), Senator Jim DeMint (R-SC), John Ensign (R-NV), and Tom Coburn (R-OK),Representatives Mike Doyle (R-PA), Bart Stupak (D-MI), Zach Wamp (R-TN), and former Senator Don Nickles (R-OK).

Other past members included Senators Sam Nunn (D-GA), John Chafee (R-RI), Roger Jepsen (R-IA), Charles Percy (R-IL), Strom Thurmond (R-SC), David Durenberger (R-MN), Jennings Randolph (D-WV), Paul Trible (R-VA), Phil Gramm (R-TX), William Armstrong (R-CO), Lawton Chiles (D-FL), Dan Coats (R-IN), Jeremiah Denton (R-AL), John Stennis (D-MS), Al Gore, Jr. (D-TN), and Larry Pressler (R-SD), and former Representatives J. C. Watts (R-OK), Robert Dornan (R-CA), and Tony Hall (D-OH). George W. Bush named Hall, who purported to be a strong defender of human rights, to be U.S. ambassador to the United Nations for World Hunger. In typical Fellowship fashion, Hall immediately began to lobby the UN on behalf of Monsanto to accept genetically-modified foods.

Other significant members of the Fellowship are Senators Charles Grassley (R-IA), Pete Domenici (R-NM), Conrad Burns (R-MT), Richard Lugar (R-IN), James Inhofe (R-OK), Bill Nelson (D-FL) (Nelson's wife Grace serves on the Fellowship Foundation's Board of Directors), and Rick Santorum (R-PA), Senate Majority Leader Bill Frist (R-TN), and George Allen (R-VA), Speaker of the House Dennis Hastert (R-IL), Representatives Frank Wolf (R-VA), Tom DeLay (R-TX), Tom Feeney (R-FL), Curt Weldon (R-PA), Jerry Weller (R-IL), and Joseph Pitts (R-PA).

Friends of the Fellowship, if not outright members, include Senators Mitch McConnell (R-KY), Jon Kyl (R-AZ), House Majority Whip Roy Blunt (R-MO), and former Senator Zell Miller (D-GA).

One of the more interesting affiliates of the Fellowship is Senator and former First Lady Hillary Rodham Clinton (D-NY). A former "Goldwater Girl" in the 1964 presidential campaign, Mrs. Clinton seemed to have partially recovered some of her earlier conservative underpinnings. According to her autobiography, Living History, after her husband became president, Clinton paid a visit to a women's meeting at the Cedars on February 24, 1993. Present were Susan Baker (wife of the first Bush's Secretary of State, James Baker III), Grace Nelson (wife of Florida's Bill Nelson), Joanne Kemp (wife of former HUD Secretary Jack Kemp), Linda LeSourd Lader (wife of Clinton ambassador to Britain and founder of the Renaissance Weekend Phil Lader -- the Renaissance Weekend in Charleston, South Carolina is billed by Lader as a "spiritual" event), and Holly Leachman of the Falls Church Episcopal Church (one of the churches taken over by the Fellowship). Leachman and her husband Jerry had been involved in 1997 with a Cleveland, Ohio Fellowship adjunct called the Family Forum. The Leachmans were interviewed by ABC's Nightline on February 25, 2004. They extolled the virtues of Mel Gibson's controversial film," The Passion of the Christ," along with other evangelicals, including some Jewish converts to Christianity.

Senator Clinton admits to having a continuing close relationship with Susan Baker, through Baker's visits to Capitol Hill and the letters she and other Fellowship wives wrote her during the impeachment proceedings against President Clinton. Even Bill Clinton seemed to have been taken in by the Fellowship. In his autobiography, "My Life," Clinton brags that he never missed a National Prayer Breakfast. In his autobiography, Bill Clinton erroneously writes that it was not until 2000 that Coe invited the first Jew, Senator Joseph Lieberman (D-CT), to speak at the breakfast. However, New York Mayor Ed Koch spoke at the National Prayer Breakfast in 1981, Senator Jacob Javits in 1984, and Arthur Burns in 1986.

Ironically, it was Susan Baker's husband James Baker who served as the political fix-it man for George W. Bush and against Clinton's Vice President Al Gore in delivering Florida's 25 electoral votes to George W. Bush in 2000, costing Gore the White House. In fact, Senator Clinton wrote that all of her relationships with the Fellowship began with the luncheon she attended in 1993. In her biography, Senator Clinton writes of Douglas Coe, "[he] is a genuinely loving spiritual mentor . . . Doug Coe became a source of strength and friendship." Of course, Clinton is referring to the period of time when her husband was being harassed by conservative Republicans out for blood -- the Whitewater investigation and impeachment hearings brought about by what she called the "vast right-wing conspiracy" against her husband. It is amazing that Mrs. Clinton would have established such a trusting relationship with people who were the "vast right-wing conspiracy" that she complained about so vociferously.

Nevertheless, Mrs. Clinton remained close to Coe, whom she invited to accompany her as a member of the U.S. delegation that attended Mother Theresa's state funeral in Calcutta in 1997. Mother Theresa had spoken at Coe's National Prayer Breakfast meeting in Washington in 1994. .

Using tax-free religion dodges, the 133 C Street house, which was once reistered to the non-profit C Street Center, is now registered with the "Youth With a Mission of Washington, DC," also a non-profit entity. The Fellowship maintains its headquarters at The Cedars in nearby Arlington, Virginia, another facility that attracts Washington's power elite, as well as foreign dignitaries. . .

It is not only the Fellowship's involvement with the Ensign and Sanford sex scandals that has raised eyebrows but also Secretary of State Clinton's milquetoast response to the military coup in Honduras that ousted President Manuel Zelaya, a progressive. The National Prayer Breakfast, sponsored by the Fellowship, has, in the past, attracted the right-wing elite of Honduras, including Zelaya's predecessor, Ricardo Maduro, who was backed by the same Christian evangelical forces that forced Zelaya from power.

WMR also previously reported on another link between the Fellowship and Honduras's right wing through the DeMoss Foundation, which is linked to Fellowship ministry operations: The DeMoss Foundation is anti-gay, anti-abortion, and favors close links between church and state.

Arthur [DeMoss] dropped dead of a heart attack at age 53 while playing tennis at his ritzy Main Line estate in Bryn Mawr, outside of Philadelphia.

In addition to supporting [Charles] Colson's [Prison Fellowship] group, the foundation gives generously to the American Center for Law and Justice, the legal group run by Pat Robertson. DeMoss also supports the Plymouth Rock Foundation, an extreme right-wing Christian Reconstructionist movement that advocates the imposition of Biblical law in the United States and the death penalty for adulterers, homosexuals, heterosexual sodomists, non-Christians, and witches.

DeMoss's son, Mark, a former employee of Jerry Falwell, is also a member of the DeMoss Board of Directors. It is significant that Sun Myung Moon has bailed out Falwell's Liberty University on a number of occasions.

A daughter of Arthur DeMoss, Deborah DeMoss-Fonseca, worked for 10 years for Senator Jesse Helms and was the senator's liaison to a number of Latin American dictators and death squad leaders, including Chilean dictator General Augusto Pinochet and Salvadoran pro-Nazi anti-Semitic death squad leader Roberto D'Aubisson.

Deborah DeMoss's husband is retired Honduran Colonel Hector Rene Fonseca, a one-time Honduran presidential candidate for the right-wing National Party. The DeMoss-Fonsecas, as well as Senator Orrin Hatch, were among the primary backers of Honduran immigrant Miguel Estrada to be a judge on the U.S. Court of Appeals for the District of Columbia. After Democrats on the Senate Judiciary Committee called into question Estrada's credentials, including debunking the myth that he was from a poor Honduran family (in fact, Estrada hailed from one of Honduras's elite families), the right-wing judicial hopeful withdrew his name from nomination.

The Fellowship's "Youth Corps" is also very active in Honduras.

The involvement of the shadowy and slippery Fellowship in the Ensign and Sanford extramarital scandals and its ties to the Honduran right wing suggests that the Christian Mafia is as powerful as before. And the advent of the Obama administration with the secretary of state's links to the Fellowship serves as a warning for progressive governments and leaders who may end up in the same predicament as Honduras's beleaguered President Zelaya.

THE GOLDMAN SACHS RIP-OFF CONT'D

Robert Reich - Goldman's resurgence should send shivers down the backs of every hardworking American who has lost a large chunk of retirement savings in this economic debacle, as well as the millions who have lost their jobs. Why? Because Goldman's high-risk business model hasn't changed one bit from what it was before the implosion of Wall Street. Goldman is still wagering its capital and fueling giant bets with lots of borrowed money. While its rivals have pared back risks, Goldman has increased them. And its renewed success at this old game will only encourage other big banks to go back into it.

"Our model really never changed, we've said very consistently that our business model remained the same," Goldman's chief financial officer tells Bloomberg News. . .

Meanwhile, Goldman is still depending on $28 billion in outstanding debt issued cheaply with the backing of the Federal Deposit Insurance Corporation. Which means you and I are still indirectly funding Goldman's high-risk operations. . .

Recall that last fall, at a closed meeting between Treasury Secretary Hank Paulson (formerly Goldman's CEO), Tim Geithner (then at the New York Fed), and a handful of others to decide on the fate of giant insurer AIG, Goldman's chief executive, Lloyd Blankfein, was at the table. The decision to bail out AIG resulted in a $13 billion giveaway to Goldman because Goldman was an AIG counterparty. Indeed, Goldman executives and alumni have played crucial roles in guiding the Wall Street bailout from the start.

Wall Street Journal - Yesterday saw one TARP recipient, Goldman Sachs, report $3.44 billion in profits even as another, CIT, teeters on the edge of either bankruptcy or another taxpayer bailout. Which way CIT will tip remained unclear as we went to press, but its very plight shows how the government's approach to systemic risk has created groups of financial "haves" and "have nots."

What the Goldmans of the world have in addition to profits is the widespread belief that they are too big to fail. Both Goldman and CIT converted into bank holding companies at the height of the financial panic last fall, which made them eligible for TARP injections. Goldman also benefited at a crucial moment from the Federal Reserve takeover of AIG, and it received the additional filip of FDIC-guaranteed debt issuance through the Temporary Liquidity Guarantee Program. CIT was excluded from the latter program on grounds that it didn't pose a systemic risk, even as larger competitors like General Electric were allowed in. . .

Goldman's traders profited in the second quarter from taking advantage of spreads left wide by the disappearance of some competitors (Lehman, Bear Stearns) and the risk aversion of others (Morgan Stanley). Meantime, Goldman's own credit spreads over Treasurys have narrowed as the market has priced in the likelihood that the government stands behind the risks it is taking in its proprietary trading books.

Goldman will surely deny that its risk-taking is subsidized by the taxpayer -- but then so did Fannie Mae and Freddie Mac, right up to the bitter end. An implicit government guarantee is only free until it's not, and when the bill comes due it tends to be huge. So for the moment, Goldman Sachs -- or should we say Goldie Mac? -- enjoys the best of both worlds: outsize profits for its traders and shareholders and a taxpayer backstop should anything go wrong.

LOS ANGELES RANKED 'MEANEST CITY' FOR HOMELESS

Reuters - Two major advocacy groups for the homeless ranked Los Angeles as the "meanest" city in the United States, citing a Skid Row police crackdown they say has criminalized poverty and homelessness there.

L.A.'s so-called Safer City Initiative was singled out in the groups' report as the most egregious example of policies and practices nationwide that essentially punish people for failing to have a roof over their heads.

Others include making it illegal to sleep, sit or store personal belongings on sidewalks and other public spaces; prohibitions against panhandling or begging; and selective enforcement of petty offenses like jaywalking and loitering.

Such measures are widespread in the face of a deep economic recession and foreclosure crisis that have increased homelessness over the past two years, according to the National Law Center on Homelessness & Poverty and the National Coalition for the Homeless.

Their report examined laws and practices in 273 cities across the country, with Los Angeles topping the list of the 10 "meanest cities" for what the study called inhumane treatment of homeless.

Top Ten Meanest Cities:
1. Los Angeles , CA
2. St. Petersburg . FL
3. Orlando , FL
4. Atlanta , GA
5. Gainesville , FL
6. Kalamazoo
7. San Francisco
8. Honolulu
9. Bradenton
10. Berkeley

HOW MANY HOMELESS?

National Coalition for the Homeless - The best approximation is from a study done by the National Law Center on Homelessness and Poverty which states that approximately 3.5 million people, 1.35 million of them children, are likely to experience homelessness in a given year.

These numbers draw their estimates from a study of service providers across the country at two different times of the year in 1996. They found that, on a given night in October, 444,000 people (in 346,000 households) experienced homelessness - which translates to 6.3% of the population of people living in poverty. On a given night in February, 842,000 (in 637,000 households) experienced homelessness - which translates to almost 10% of the population of people living in poverty.

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