Stop Me Before I Vote Again

The CIA's secret prisons are being shuttered. Harsh interrogation techniques are off-limits. And Guantanamo Bay will eventually go back to being a wind-swept naval base on the southeastern corner of Cuba.

But even while dismantling these programs, President Obama left intact an equally controversial counter-terrorism tool.

Under executive orders issued by Obama recently, the CIA still has authority to carry out what are known as renditions, secret abductions and transfers of prisoners to countries that cooperate with the United States.

Current and former U.S. intelligence officials said that the rendition program might be poised to play an expanded role going forward because it was the main remaining mechanism -- aside from Predator missile strikes -- for taking suspected terrorists off the street.

The rendition program became a source of embarrassment for the CIA, and a target of international scorn, as details emerged in recent years of botched captures, mistaken identities and allegations that prisoners were turned over to countries where they were tortured.

The European Parliament condemned renditions as "an illegal instrument used by the United States." Prisoners swept up in the program have sued the CIA as well as a Boeing Co. subsidiary accused of working with the agency on dozens of rendition flights.

But the Obama administration appears to have determined that the rendition program was one component of the Bush administration's war on terrorism that it could not afford to discard.

LA Times

To carry out its mission, the CTC relies on its Rendition Group, made up of case officers, paramilitaries, analysts and psychologists. Their job is to figure out how to snatch someone off a city street, or a remote hillside, or a secluded corner of an airport where local authorities wait.

Members of the Rendition Group follow a simple but standard procedure: Dressed head to toe in black, including masks, they blindfold and cut the clothes off their new captives, then administer an enema and sleeping drugs. They outfit detainees in a diaper and jumpsuit for what can be a day-long trip. Their destinations: either a detention facility operated by cooperative countries in the Middle East and Central Asia, including Afghanistan, or one of the CIA's own covert prisons -- referred to in classified documents as "black sites," which at various times have been operated in eight countries, including several in Eastern Europe.

In the months after the Sept. 11 attacks, the CTC was the place to be for CIA officers wanting in on the fight. The staff ballooned from 300 to 1,200 nearly overnight.

"It was the Camelot of counterterrorism," a former counterterrorism official said. "We didn't have to mess with others -- and it was fun."

Washington Post

Democrats will find comfort in the Camelot reference; JFK, the good old days of nuclear brinksmanship, the Bay of Pigs, domino theories and their use in justifying military adventurism. It was a more innocent time, a time of hope. Change was in the air, his supply side economics notwithstanding. Enema banditry and vengeful diapering were private pursuits, for the most part, not yet proudly on display as important tools of statecraft. And in that regard, Democratic Party supporters should be grateful to President Bush. His administration removed the shameful stigma associated with sexually molesting people in order to keep the country safe and improve our enemies' understanding of democracy.

Needless to say, he took it too far, much further than President Clinton did. There was no reason to maintain proprietary black prisons and post-kidnapping torture facilities. They're expensive and in plentiful supply in client states. Responsible managers outsource activities that can damage a brand. They retain control of only the essential parts. To his immense credit, President Obama recognizes that. He may well issue an executive order mandating a more tasteful approach. Proper guidelines make a difference! And if pressed, his supporters can point out that at least they don't gloat about spending hundreds of millions of dollars on state-sponsored molestation, not like those nasty Republicans, who administer date rape drugs after they've had their fun.

Do they all go for that expression when they're confronted with their minor sins? I tried making the same face, out of curiosity. It's terribly uncomfortable; when I checked in the mirror, I looked very silly. It felt, for whatever it's worth, like an interrupted snarl of rage. Perhaps they were repressing the urge to lunge forward and bite into the throats of their persecutors. The hard, reptilian glint to their eyes suggests as much.

This hypocrite, whose holy look and dress Seem Heaven-born, whose heart is nothing less : He preaches, prays, and sings for worldly wealth, Till old sly Mammon takes it all by stealth, And leaves him naked on a dreary shore, Where cant and nonsense draw in fools no more. -- Timothy Bobbin, The Human Passions Delineated (1773)

Al Schumann earlier posted an LA Times article explaining how Obama is going to continue kidnaping people and shipping them off to secret dungeons in friendly dictatorships (a practice known by the somewhat sanitized term "rendition").

Al's normally aquiline eye seems to have overlooked what was, for me, the best part of the story:

The decision to preserve the program did not draw major protests, even among human rights groups. Leaders of such organizations attribute that to a sense that nations need certain tools to combat terrorism.

"Under limited circumstances, there is a legitimate place" for renditions, said Tom Malinowski, the Washington advocacy director for Human Rights Watch. "What I heard loud and clear from the president's order was that they want to design a system that doesn't result in people being sent to foreign dungeons to be tortured -- but that designing that system is going to take some time."

Malinowski, like many liberal-schmiberals, has put himself in the position of serving two masters, a thing we are warned against on good authority. One of his masters is the rather nebulous but earnest ideal of "human rights". But the other, it would appear, is the Empire and its mendacious categories: "fighting terrorism", for example, is what a truthful person would call "suppressing resistance." And once you allow the validity of the Empire's claims and categories, you've given the game away.

This little item came along, happily, as I was pondering the dissociation of consciousness that my incurable-Obamaphile friends seem to be practicing. They won't actually defend any of the things I enjoy mentioning to them -- rocket attacks on Pakistani villages, for example. But there's a look on their faces that suggests I'm somehow being pedantic, or silly, or rude.

This is why I'm sometimes tempted to argue that people like Obama are actually worse than people like Bush, at least for the moral character of liberals. Back when Bush was kidnapping and torturing pro imperio, my liberal friends were quite willing to deplore these things. But now that Obie is doing it, it's sorta tacky to bring it up in good society, and there seems to be a tacit agreement that it would be asking far too much to demand that he stop it.

In practice, my friends' love of Obama has reconciled them to activities that they would otherwise reprehend.

This can't be comfortable for them. So they seem to have had recourse to what old Dr Freud referred to as a splitting of consciousness. The split components then pursue independent and indeed contradictory courses of action. One side tends the flame of high humanitarian moral standards -- by contributing, for example, to groups like Human Rights Watch -- and the other side kicks back in a cozy, well-lit, tastefully-appointed, book-lined living room of the mind with a big portrait of the Kidnapper-In-Chief above the mantelpiece.

Neither component wants to be reminded of the other's existence, and so when one is tactless enough to bring them into contact, they agree -- temporarily -- in exasperation at one's ham-fisted gaucherie.

It will be interesting to see how long they can keep this up.

Beware this creep, Jeffrey Sachs, the Quetelet Professor of Sustainable Development at Columbia University.

He is a vicious climbing grasping sanctimonious hollow pine of a grifter, the Geraldo Rivera of development economics, a lamp unto himself alone, a scorpion fire, a sickening soul, a blemish on shame itself.

Once Doctor Shock to both Poland and Bolivia, the smiley face of raw neolib market stampedes that brought misery worthy of the four horsemen in its wake, he's now Doctor African Makeover, the white rain man that wretched sub-Saharan black folks never asked for, but got right up their ass.

In the last decade, this trans-nat limited-liability emerging-economy death-wish incarnate, despite heading for deep cover as a champion of the poorest of the global poor, remains nothing but a babyfaced corporate pimp, ready to facilitate the free range profiteers and various other serial rapists of one backward nation after another.

I'll not trouble you with the details. Just never read a word he writes or believe anything he claims. If he said horse jockeys oughta all be over 7 feet tall, he couldn't get himself one inch further from the truth than he is right now, 24/7.

This undauntable guy's ever-boring, ever-ready ambition will never give up the hustle. His foul spirit wants in on everything, and he'll get in on everything too, if he ain't sent rocketing down to the circle of Hell reserved for oily human corkscrews like him.

On the other hand, this shrewd witty chap --

... Dani Rodrik, despite -- or more likey because of -- an odd Sancho as Quixote side, must have a place waiting for him somewhere up there in God's own sugar bowl.

I quote from a recent light and popular advice piece of his, intended for the same array of emerging states the above Sachs man has tried poisoning, states now obviously confronting a fast submerging "order" here on market Earth:

"First on the agenda must be new rules that make financial crises less likely and their consequences less severe.Left to their own devices, global financial markets provide too much credit at too cheap a price in good times, while they deliver too little credit at bad times. The only effective response is counter-cyclical capital-account management. -- discouraging foreign borrowing in good times, and preventing capital flight in bad. "

But soft! Here entereth the villain --

"Instead of frowning on capital controls and pushing for financial openness, the IMF should be in the business of actively helping countries implement such policies. It should also enlarge its emergency credit lines to act more as a lender of last resort to developing nations hit by financial whiplash. "

"Second, the crisis is an opportunity for achieving greater transparency on all fronts, including banking practices in the advanced countries that facilitate tax evasion in the developing nations. Wealthy citizens in the developing world evade more than a hundred billion of US dollars worth of taxes in their home countries each year thanks to bank accounts they maintain in Zurich, Miami, London, and elsewhere. Governments of these nations should ask for and be given information on their nationals’ accounts."

"Third, developing nations should also push for a Tobin tax (**) – a tax on global foreign currency transactions. Set at a small enough level – say 0.25% – such a tax would have little adverse effect on the global economy while raising considerable amount of revenue. At worst the efficiency costs would be minor; at best the tax would discourage excessive short-term speculation. The revenues collected – which would easily amount to hundreds of billions of US dollars annually – could be spent on global public goods such as development assistance, vaccines for tropical diseases, and the greening of technologies in use in the developing world."

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(**) While we dream -- a Tobin tax rate might work better if structured to move up and down dynamically, like a congestion tax.

There I was, reading a column by the New Yorker's James Sourkraut, about who precisely oughta be afraid of the big bad wolf called moral hazard -- and it's just rolling along in the usual commonplace fashion when this pops up:

"The moral-hazard argument -- assumes that the most important factor shaping corporate decisions is the interest of the company as a whole. But, more often, what’s shaping those decisions is the interest of individuals.... The fact that people can reap enormous [personal] rewards... is likely to lead to [more] reckless behavior, regardless of whether companies are bailed out or not.... Even if we allow Citigroup to fail... Chuck Prince, the former C.E.O., will still have walked away with a package reportedly worth more than seventy million dollars."

Well, for starters, these Chucky Prince critters, prolly already planning their next scamarama, can be rounded up, branded on the forehead, and slung into a detention center. That's what.

Possible site? I suggest inside the 9/11 crater, right there in lower Manhattan. I'm thinking of maybe a system of all-glass cages, suspended from a pair of gleeming steel trade-tower sized armatures, Calderesque fashion. You know, let the fuckers twist up there in the trade winds, so to speak. Glitter and rattle away like obscene chimes day and night. Inside each cage a financial Houdini, all of 'em gyre-ing about like a flock of secular Simeon Styliteses.

If we were to consult a good constitutional scholar on this, I'll bet my trust fund we'll be told the power to do such noble deeds rests comfortably within the scope of our federal House of Representatives.

I can see it now: la Nan sets up a special task force "to investigate the Wall Street debacle," Pujo Committee style. You know, one of those "never again" type scrambles.

A viciously seductive she-cat is appointed to head up the staff of crack investigators -- think Vishinsky in a tank top:

Provisional lists are drawn -- long and grossly unfair lists -- regrettably, in the frenzy to mete out a higher justice, very few innocent assholes with even a remote connection to "the Street" are spared.

Much too much is leaked to the press before a wave of belated decency arrives, and the list is winnowed from tens of thousands to it's final "minimalist" tally of three hundred putrid souls.

Of course, these despicable, finally-named fiends -- many of them at any rate -- will take flight, but just as often they'll be apprehended, Ninja style -- plucked like wood lice from their places of betrayed hiding.

Some, alas, will die along the way -- manhunts are like that -- a few will be fired apon while fleeing -- others will doubtless die by their own hand -- hopefully, in a few totally unsavory cases, prior to giving their testimony before the sub committee.

Let's pray there will be secret waterboarding, and that full truths will be extracted, and these egregious toads will each tell their heinous tale in full

The reduce the stories to boilerplate -- carefully and scrupulously scripted boilerplate, needless to say. Every phrase inspired by real actual interogation notes. I imagine this oughta be the work of a team of the finest writers known to the DNC.

And then there's the recitations themselves. Feature this: the bastards themselves -- battered, unshaven, beltless, stumbling and mumbling and staring vacantly about them -- each moaning out his own individual story, all in a weird lock step.

Why comrades, the effect will be a miracle -- a billion viewers gasping, fuming, gnashing, weeping; a hardcore 50 million drunk with an unquenchable rage will storm the nearest ATM machine and -- there's enough potential zip zap here -- to begin the world anew!

This just in, from the ACLU:

Obama Endorses Bush Secrecy On Torture And Rendition (2/4/2009)

NEW YORK – After the British High Court ruled that evidence of... torture at Guantánamo Bay must remain secret because of threats made by the Bush administration to halt intelligence sharing, the Obama administration [said]: "The United States thanks the UK government for its continued commitment to protect sensitive national security information and preserve the long-standing intelligence sharing relationship that enables both countries to protect their citizens."

"Hope is flickering. The Obama administration's position is not change. It is more of the same. This represents a complete turn-around and undermining of the restoration of the rule of law. The new American administration shouldn't be complicit in hiding the abuses of its predecessors."

Oh, the ACLU also

... sent a letter to Secretary of State Hillary Rodham Clinton urging her to clarify the Obama administration's position [and] reject the Bush administration's policy of using false claims of national security to avoid judicial review of controversial programs.

From the New York Times:

Boldface Names From the Madoff Customer List

For weeks, the list of prominent people known to be caught up in Bernard L. Madoff’s investing scandal has been growing. And the roster got a flurry of new additions late Wednesday, when the names of thousands of customers of Mr. Madoff’s now-infamous firm... were made public in bankruptcy-court filings....

From baseball: Sandy Koufax, the Hall of Fame pitcher and Dodgers legend (also an old friend of Fred Wilpon, the Mets owner who was also burned by the Madoff scheme) and Tim Teufel, a former Mets second baseman.

From entertainment and the media: John Malkovich, the actor; the estate of John Denver, the late singer; and Larry King, the talk-show host.

From politics: Frank Lautenberg, the Democratic senator from New Jersey, and Mark Green, the former public advocate of New York City.

From the business world: Larry Silverstein, the New York real estate developer.

Did I mention John Malkovitch? O bliss!

Bernie is my favorite guy these days. At least he took money from some of the most despicable human beings on the planet. Unlike Obama, who is busy giving money to the most despicable human beings on the planet.

The brain at the core is -- as might be expected -- old Paul and Harry's theory of "secular stagnation 2.0". Here it is in their acolytes own words:

"..stagnation [is] the normal state of the monopoly-capitalist economy [characterized by] slow growth... rising excess capacity and unemployment/underemployment.... The economic surplus controlled by corporations [is] poured in an ever-increasing flow into an exotic array of financial instruments.... Little of the vast economic surplus [is] used to expand investment, which remains... geared to mere replacement (albeit with new, enhanced technology), as opposed to expansion....

With corporations unable to find the demand for their output -- a reality reflected in the long-run decline of capacity utilization in industry -- and therefore confronted with a dearth of profitable investment opportunities, the process of net capital formation becomes... more and more problematic. Profits [are] increasingly directed away from investment in the expansion of productive capacity and toward financial speculation."

Example: "Stagnation in the 1970s led capital to launch an accelerated class war against workers to raise profits by pushing labor costs down. The result was decades of increasing inequality."

"Accelerated class war" -- I like the sound of that, going the other way. Class war is a two way street -- isn't it?

But seriously, folks -- where's the whole export of capital / import of products gig gone to here? Global empire trans-nat corporate style, maybe we are assuming a one-world closed system model -- but if so, is stagnation theory able to get its chin over the raised bar?

I doubt it -- but in the spirit of comrades to comrades, I'll proceed as if there was only America.

First off, let my get something cleared up here. I like vintage stuff -- even if it's basically patois-studded, circular, isometric gabbling like the following:

"The underlying growth of surplus value falls increasingly short of the rate of accumulation of money capital -- a shift from the “general formula for capital” M(oney)-C(commodity)–M' (original money plus surplus value), in which commodities were central to the production of profits—to a system increasingly geared to the circuit of money capital alone, M–M', in which money simply begets more money with no relation to production."

To me, it sounds like clownish mock-wizardry, worthy of the local Shriners' club. But back to the substance of things.

Okay, so we ain't accumulatin' any more -- where's the beef? Maybe stagnation is good. Maybe it's part of a better whole. Maybe it's green. Maybe it's best that us advanced systems slow our expansion, new emerging systems speed theirs up. Maybe its the best possible national role we Yanks can play in a global process of multinational convergence (oops, I went global again -- sorry!).

Or maybe -- as the Greens never tire of pointing out to us -- maybe we don't need no stinking national accumulation round here anymore anyway. Maybe all we need is a hyper-employment macro policy -- which yeah, I know, we don't have -- but is that because of stagnation?

Indeed, it's likely if we did have hyper-employment, everyday on-the-job stuff would be quite a different arrangement than we got now. Wages and work would fly up their own ass. Imagine if job offers exceeded job applicants...!

"Hey, straw boss, take this threepenny opera of a job and shove it!"

At any rate, here's Mag Jr. and Foster's takeaway:

"Our argument in a nutshell is that both the financial explosion in recent decades and the financial implosion now taking place are to be explained mainly in reference to stagnation tendencies within the underlying economy -- a real economy experiencing slower growth, giving rise to financial explosion as capital seeks to “leverage” its way out of the problem by expanding debt and gaining speculative profits -- The overall effect has been a massive increase in private debt relative to national income."

But what if here entereth Irv Fisher to play Dutch boy, stuffing the holes with limitless new and safe Uncle securities to shift private wealth to?

You might argue that's only more debt, if now public debt, and more debt only creates the preconditions for a next-time debt crisis, and that next time eventually must be "a major crisis of the financial system, [which]" -- cue the bugles here, ta-daaah! -- "overpowers the lender of last resort."

Let me repeat that punch line: "overpowers the lender of last resort." That would be Uncle Fed.

Parenthetically, these are almost Paul Krugman's exact words:

"Our main line of defense against recessions — the Federal Reserve’s usual ability to support the economy by cutting interest rates — has already been overrun. The Fed has cut the rates it controls basically to zero, yet the economy is still in free fall."

This amounts to the old maxim: there's always a weight too great to hold -- but is this really such a gig? Sure, eventually something that keeps getting heavier will get too heavy. But this is all paper. Gang, what are we talking about? It can be rendered weightless if we so desire. Is the Fed suffering a failure of horsepower, or just of will power? Why not a peaceful clever massive Fisherian debt restructuring?

Let me indulge some jargonation here. Are vital interests of the hegemonic class at stake here? Would a full Fisherian fix wreck the main gig -- overpower the system's ruling class? Okay, ghostbuster jargonian hiccups like this, true or untrue, hardly move us a single centimeter closer to the answer we need, if we want to not just understand but change.

Question Numero Uno oughta be: does this crisis have a solution reachable from inside the system itself?

Let me caution those who say no -- at least a scientific socialist hearty proletarian nyet of a no -- with the memory of the stinking "Third Period" blooper, don't ever count Kong out on his feet

At any rate, if despite my caveat, you still wanta get intoxicated on a longer swig of this here backyard-still 180-proof histo-mat elixir, feature this:

"Stagnation in the 1970s led capital to launch an accelerated class war against workers to raise profits by pushing labor costs down. The result was decades of increasing inequality [and yet] household consumption continued to rise from a little over 60 percent of GDP in the early 1960s to around 70 percent in 2007 [through] a constant ratcheting up of consumer debt. Household debt was spurred, particularly in the later stages of the housing bubble, by a dramatic rise in housing prices, allowing consumers to borrow more against their increased equity... Household debt increased from about 40 percent of GDP in 1960 to 100 percent of GDP in 2007.... The deleveraging of the enormous debt built up during recent decades is now contributing to a deep crisis. Moreover, with financialization arrested there is no other visible way out for monopoly-finance capital. The prognosis then is that the economy, even after the immediate devaluation crisis is stabilized, will at best be characterized for some time by minimal growth, and by high unemployment, underemployment, and excess capacity."

Yes indeed, if wages fail to rise fast enough to keep up with household debt obligations, once the lot Ponzi stumbles, bingo! a crisis -- but why can't we inflate our way out of here anymore?

Okay, nominal house lot prices must fall, but why can't nominal wages rise? Why can't the innocent widow-and-orphan petty rentiers holding all the old-maid inventory of existing dollar debt take the hit?

So long as real wages don't rise up to squeeze profit margins -- but that's what price increases are for! We're not talkin' real here, man, we're talkin' purely nominal.

But Mag minor and Foster sez:

"financialization[their word for the paper pyramid] is so essential to the monopoly-finance capital of today, that... a “euthanasia of the rentier” cannot be achieved, in contravention of Keynes’s dream of a more rational capitalism, without moving beyond the system itself."

But proof by assertion is for show trials, boys. Why is this escape hatch not available? Why, when the paper pandemonium whirls out of control, instead of letting the system spontaneously try deflating asset prices to conform with product prices and wages, and only send product prices and wages down with 'em -- why not inflate the product system's prices and wages up to the level of the paper assets? What sinister class forces would scotch this, and why? Rentiers? Please! They are taking a thumping already.

Questions, questions, questions! Instead of answering 'em, we get this seductive gibberish:

"U.S. financial profits have deviated from the mean over the past decade on a cumulative basis… The U.S. Financial sector has made around 1.2 Trillion ($1,200bn) of ‘excess’ profits in the last decade relative to nominal GDP… So mean reversion [the theory that returns in financial markets over time “revert” to a long-term mean projection, or trend-line] would suggest that $1.2 trillion of profits need to be wiped out before the U.S. financial sector can be cleansed of the excesses of the last decade."

To be fair, much of use can be rescued from this midden-heap of Marx-think, and who can quarrel with its lovely next-year-in-Jerusalem coda:

"If... elementary prerequisites of any decent future look impossible under the present system, then the people should take it into their own hands -- turn it all inside-out -- create a more rational social order -- seize control of political economy --replace the present system of capitalism with... socialism."

I gotta face it -- playing Lord Keynes, junior, like I have recently, while sitting in a soft metropolitan chair here near the city of the bean and the cod -- ain't exactly rugged collectivism at its finest.

I like to scruple myself about this -- at least once a week -- every Saturday night after I've let the three Hun amigos out one last time to lift a hind leg or two, and maybe defecate somewhere obvious in the side yard. And after I've re-caged the little bastards and I'm back warmly tucked in my midnight bed, domestic partner closely beside me in a fragrant purring sleep, it is my habit -- no, it is my discipline to set myself this poser:

Okay, comrade, so your party has just seized power -- absolute power -- in -- wait for it -- Bangladesh! Okay, wise guy. So go make it happen, cap'n.

Not so easy there, eh? Scylla and Charybdis await me. One way spells the howling savagery of primitive accumulation, the other the pusillanimous oozy slope to red corporate comprador.

If the choice gets that stark, I opt for -- but soft. Let's delve a bit first.

His fearless leader, Mr Pot here, armed with Khieu's "development model", took the Cambo people to places no radical makeover-type outfit dared to go since the early days of Thomas Munzer and the Anabaptists.

It might be claimed in hindsight that these Paris-educated boys from the jungles and court palaces of Cambodia took what we now call anti-globalization to its logical conclusion. Well, maybe that's a bit unfair. Maybe there are other logical conclusions.

I like to think of "dependency theory" as a model, or better, a cluster of kissin'-cousin models of economic globalization, as viewed through the wrong end of the system's international sewer pipes.

Back in the 50's of the last century, our man Khieu was an Amin acolyte, during his university days spent up there at the Gallic metropole. In fact, Mr Samphan, Citizen Samphan, became Doctor Samphan, PhD, with a dissertaion entitled "Cambodia's Economy and Industrial Development."

Its thesis, strongly guided by Amirite wisdom, comes to this: Backward peoples of the world! Wanna develop your national economy a pro-people way? Then pull out all the trans-nat plugs -- and cold turkey, too, as it turned out, for when in the spring of 1975, after a few bombs and a scrap or two along the way, Mr Pol and Comrade Khieu and their posse of rouge bandits entered the bloated phantasm doing business at the times as Lon Nol's Phnom Penh, they did indeed set about pulling the plugs.

No more dependency.

No more crumb begging.

No more supine cargo culting.

No more -- well, my guess: Khieu back in Paris worked this all out very neatly. Just start from the top down, lopping off one layer after another of social hierarchy, until you arrive at some thing remarkably close to Billy Bryan's populist insight about the relative necessity of cities and countryside.

Once under the sway of Ankor, Cambodia would in effect start from Square One, go it all on its own.

Unfortunately, Square One, like all of Clio's legacies, was a nasty place indeed, including not just the antique parasite city of the Sihanouk years, but a Frankenstein's monster of massive aerial counterinsurgence, where roughly half the nation's population, fleeing devastation from bombing and civil war, now languished in utter useless idle beggary, cliency, and sycophancy in the back alleys of the royal city, having survived for years, not off the sweat of their brows, but off the kindness of a stranger named Uncle Sam.

Now Sam, quite understandably, given the utter defeat of his stooges, had also pulled a few plugs of his own just then, including the food plug of course Talk about dependency, not in theory but in fact!

So what was to be done? Send em all to the countryside to fend for themselves -- create a system of volkish communes -- and under the guardianship of Ankor, let the people themselves, with only the means and skills at hand, discover or rediscover the limits and the present possibilities of living directly off our motherland!

Anybody else hearing the ghostly smug voice of old Neddie Burke in your mind's ear?

Okay, score one for half-measures. Indeed, there was a dark destructive Jacobin oversoul at work here.

Let's move on. Returning to the present, with its komforting Klintonian kompromises, recently I suggested here that development economist Dani Rodrik, unlike such dancing death heads as Doc Sachs, might well be one of Clio's goodly social agents.

I must add it's not because he's a stout battler against the Yankee empire. No, it's just because his heart and his brain are solidly on the side of the emerging world, as evidenced in his three wishes for a reformation of our planetary market order.

Regrettably, Dani has not, and probably never will declare jihad against the rule of the transnat corporations, nor the essence of their joint program to make the whole earth sustainably safe for their type of free range limited liability adventures in private profit.

Instead he presents his trilemma. You can't have all three of these goodies, brothers and sisters:

• An open world market
• National self-determination
• Democracy

Owen's lemma: sometimes you can end up with none.

We will return to Bangladesh in a later installment.

There seems to be a lot of back-and-forth just now about whether to include, in the "stimulus" package, a $15,000 tax credit for people who buy what I call a "house", but which conventional diction calls a "home".

Now this credit will not, of course, be available to renters.

Or, for that matter, to people who stay in their present home, or house. No. We can't stand pat. Buy a new home, or house -- or the terrorists will have won!

The Senate seems to be very keen on this idea:

The U.S. Senate on Wednesday voted unanimously to approve a home buyer tax credit of $15,000 or up to 10 percent of the purchase price... The amendment to the Senate’s economic stimulus package [was] co-sponsored by Sen. Johnny Isakson (R-Ga.) and Sen. Joe Lieberman (I-Conn.)....

Isakson... spent more than 30 years in the real estate business....

Note that word "unanimously". So the Dem majority -- fruit of the Last But One Most Important Election In The History Of The Universe -- and the defeated forces of darkness, the orcs of the Republican Party, are entirely on the same page here.

This profoundly bipartisan particular measure will spend about $35 billion -- let me write that out: $35,000,000,000.00 -- of our dollars to encourage Joe Schmo to keep speculating in real estate.

Because if Joe ever stopped -- Christ, where would we be?!

So.... will Obie sign it? Bets, anybody?

Owen will grouse, no doubt, but my fellow New Yorker Doug Henwood has some cogent stuff to say:

Tomorrow will bring the unveiling of the Obama administration’s overhaul of the Henry “Hank” Paulson bank bailout, the Troubled Asset Relief Program (TARP)..... [I]t looks like a significant portion of the scheme will amount to this: the government will lend money to hedge funds and the like at subsidized rates to buy toxic assets from banks - and the gov will guarantee the investors against losses. Evidently, the administration thinks the toxic assets are being underpriced by the markets. If they’re right, the buyers will make money. If they’re wrong, then we all pay.

From the hedgies' point of view, it’s all reward, no risk... What the public gets out of this is impossible to specify, aside from the risk of massive losses.

I hope this isn’t really what will emerge. But if it is, the Obama administration will have broken new ground in awfulness. The same formula that brought us this mess... will be applied towards solving it....

Hedge funders like Chicago’s Kenneth Griffin wrote Obama big checks during the campaign season.... Obama’s top economic advisor, Larry Summers, worked for a hedge fund (D.E. Shaw) after he got fired from Harvard. And no doubt Treasury Secretary Tim Geithner would like a multimillion dollar job on Wall Street after he leaves public service, just like Robert Rubin got at Citigroup after engineering the repeal of Glass-Steagall.

Can things really be this bad?

NEW YORK (CNN) -- IBM employees being laid off in North America now have an alternative to joining the growing ranks of the unemployed - work for the company abroad.

[cut]

Only "satisfactory performers" who are "willing to work on local terms and conditions" should pursue the jobs, the document says. IBM would not immediately confirm if it means that the workers would be paid local wages and would be subject to local labor laws.

CNN

One need only look at the compensation and stock options available to IBM's CEO and Chairman Sam Palmisano to grow angry: his salary alone is $1.8 million. On Feb. 1st he sold 55,253 shares worth $5,103,167. Let's see him go to India and work for local pay.

Tech-Ex

Workers at IBM say the technology company launched a round of layoffs Wednesday, a day after announcing a boost in profits. A union official estimated the cuts at 2,900, but said an exact count isn't available.

On Tuesday, IBM reported a 12 percent increase in earnings in the fourth quarter of 2008 over the same period in 2007.

The next day, Alliance@IBM, an affiliate of the Communications Workers of America, posted news that job cuts had begun. Laid-off workers began leaving comments about their own statuses on the Alliance@IBM Web site. "I was whacked yesterday," wrote one, who signed the comment as Lexington. "29 years 10 months."

Doug Shelton, an IBM spokesman, declined to say how many people were being let go. "We are not communicating that information," he said.

NPR

International Business Machines Corp.'s chief executive, Samuel Palmisano, advised the Obama transition team last month that $30 billion in government investments in expanding broadband access, computerizing health-care records and improving the electrical grid could create more than 900,000 U.S. jobs.

The IBM presentation came in response to a November request from the Obama advisers for an analysis of the job-creation impact of information-technology investments. IBM said that Mr. Palmisano made the presentation in a conference call with transition team members including Carol Browner, who has been named the White House coordinator of energy and climate policy, and Julius Genachowski, a top technology adviser for the president-elect.

WSJ

There's a certain inevitability to that last. In the quest for really horrible advice from cretinous IT CEOs, Obama was handicapped. Carly Fiorina, Hewlett Packard's quondam destroyer, had already been snapped up by McCain. Poor old Democrats. Always having to settle for second best.

My man Doug Henwood is in fine form again today:

They’ve botched the stimulus, and they’re botching the financial rescue. They’re worse than I expected, and I wasn’t expecting much in the first place.

Parturiunt montes, nascetur ridiculus mus!

It makes you wonder: Who's minding the store? And I think the answer is: No one, actually.

Times like this reveal a weakness in the picture that we Lefties tend of have of our society and its ruling elites. We imagine the commanding heights populated by shrewd, crafty, far-sighted strategists, the devoted servants of capital and empire, whose mission in life is to keep capital and empire afloat and thriving, and who will do whatever it takes to discharge that mission.

This picture is wrong. The brain of the body politic is not animated by such spirits. Rather it is infested with spirochetes, bloodworms, flukes, annelids, larvae, fungi, amoebae -- parasites, in short. Critters whose goal in life is not to keep their host organism alive, but to devour its tissues and secrete their toxins into its bloodstream.

Normally, the organism is healthy enough to carry a rather heavy parasite load. But a point arrives when the toxins build up. The mighty beast goes blind and deaf. It staggers. It drools. It startles at imaginary noises and finally blunders off a cliff.

Do the parasites care? They don't. They just want to keep their parasite party going, and enjoy their parasite lifestyle. If that means they have to chew into an important ganglion -- well, hell, dude, I'm a parasite. This is what I do.

Parasites are highly evolved but not very intelligent, in the ordinary sense of that term. They're excellently adapted for lodging themselves in the soft rich flesh of their host, and what they do, they do well. But their repertoire is sharply limited; and in particular, they have no capacity at all for understanding what is happening to their host, or how to keep their host alive even for their own benefit.

This fact explains the remarkable stupidity of what passed for "debate" over the stimulus program, and the staggering, unbelievable, world-historical stupidity of the final product. The spirochetes of Wall Street, and the hookworms of the Republican Party, and the liver flukes of the Democratic Party -- very much including Ali 'Bama and his band of Clintonite theives -- didn't do anything, couldn't do anything, but what they always do: gnaw away at their host's vital organs -- and secrete poison.

From the Wall Street Journal:

Rendition Case Under Bush Gets Obama Backing

By EVAN PEREZ WASHINGTON -- The Obama administration backed the Bush administration's arguments in a lawsuit involving the practice of seizing terror suspects abroad and sending them to third countries for questioning. The case involves five men who claim U.S. operatives abducted them and sent them to be tortured in other countries. The men are suing a unit of Boeing Co., which they say provided aircraft to the Central Intelligence Agency for the "extraordinary rendition" program. Boeing declined to comment on the case.

Monday, Justice Department lawyers told the Ninth Circuit federal appeals court in San Francisco that the government believes state secrets and national security would be put at risk if the court allows the suit to proceed. That is the same argument the department used under President George W. Bush....

While President Barack Obama has promised to close the Guantanamo Bay prison and revoke other Bush antiterror policies, he is moving more cautiously on renditions. The practice dates back at least to the Clinton administration, and Obama officials have signaled they will continue the policy....

Behold the mouse:

"The final bill includes -- a scaled-back version of Mr. Obama’s middle-class tax cut proposal,which would give credits of up to $400 for individuals and $800 for families within certain income limits. It will also provide a one-time payment of $250 to recipients of Social Security and government disability support."

"Scaled back"? I'll say -- from nugatory to microscopic. Those oughta be 12K returns, doled out over 12 months, constituting the disbursement of the trust fund frauds ending Uncle Sour's 30-year reverse-Madoff scandal.

Plus: a retirement tax holiday -- till further notice -- employee side only, comrades! -- Of course.

Talk about your Gyro Gearloose -- this young Icelander, working inside the New York Fed, has taken a "state of the art" macro model used widely by Ivy policy wonks, set it up to deal with our zero short rate T-note market and made it talk to us in looking glass logic: "Forget yer massive payroll tax cut plan, Owen!"

Because according to this analyst, "it would be ideal to raise payroll taxes to stimulate the US economy today."

Yup, don't cut 'em -- that will cause further real output contraction. Nope, raise 'em. Just goes to show ya -- build it right, turn the crank, and you can get the voice of Satan.

To be fair to our sorcerer's apprentice here, he adds, "I am bit hesitant to draw the lesson from this paper -- although this clearly is a direct implication of the analysis"

Okay, I'll spoil the fun: it's all just Mankiwish hijinx. Note this in the author's conclusion:

"It is worth stressing that the way taxes are modelled here, although standard, is special in several respects."

"In particular, tax cuts do not have any "direct" effect on spending. The variation in taxes only has an effect through the incentive it creates for employment and thus "shifts aggregate supply", thus lowering real wages and stimulating firms to hire more workers."

"One can envision various environment in which tax cuts stimulate spending, such as old fashioned Keynesian models, or models where people have limited access to financial markets. In those models there will a be positive spending effect of tax cuts, even payroll tax cuts like the ones in the standard New Keynesian model."

"Models where people have limited access to financial markets."

After watching the courtship of those three ultra-odious senatorial aisle-crossin' repugs -- if I were a Hoper, I'd scream "just do it -- end the 60 vote rule!" (As our dear father S pointed out here miles and miles back.)

Now you got the helm, Dems, so do not quibble! Have no scruple! Go directly to the nuclear option and do it immediately! Just push down the plunger, boys and girls. You got the 51 votes. Blow away the senate's "qualified majority" 60 vote rule. Flush the filibuster right down the drain.

Once and for all, end this vicious anti-people blight. Far from its horrendous Hollywood inversion, shown above, in "Mr Smith" -- no relation to our abbot here -- this rule ain't there to shield decent little guys when they stand up against the corrupt steam roller.

This rude vestige of the slave power, perpetuated by the slave power's rough-knuckled nephew Jim Crow, nurtured by clownish reaction from all points of the compass -- like Strom Thurmond here, the reality beneath the Frank Capra sugarcoat --

... was ever the comfort of the comfortable few, a legal lead pipe, ever ready to sap the people's will, and not in a dark alley, either, but right out there on the Senate floor in broad daylight.

Of course the Democrats never will untie their own hands. That would be to take full responsibility for their repeated rollovers.

As all of you SMBIVA rovers know, from that blunt fact hangs the real tale.

From Reuters:

Obama to unveil foreclosure plan, big lenders wait

U.S. President Barack Obama will unveil a plan to stem home foreclosures on Wednesday, a spokesman said, and major U.S. lenders said they had stopped foreclosing until details of the program have been firmed up....

Bank chief executives said at a Congressional hearing earlier this week that they would agree to temporarily halt foreclosures until the White House can unveil a program to help mortgage borrowers....

A suspicious person might entertain the thought that the bankers are maybe not all that happy about the idea of owning tens of thousands of unsaleable piece-o-shit McMansions. Perhaps... they'd rather not foreclose? Perhaps they prefer debt slavery, on a mass scale?

A Reuters report on Thursday of the Obama administration's mortgage plans triggered a U.S. stock market rally.

The National Association of Realtors said on Thursday that sales of foreclosed homes helped drag the median price of existing homes to its lowest level since 2003.

Here's the URL, in case the embedding doesn't work:

http://www.youtube.com/watch?v=M5T-bIb0rDs

Father Smiff's pal, Dougwood Hen, has it right here -- "They’ve botched the stimulus" -- but then he goes and lays this lead egg: "They’re botching the financial rescue."

Botching? Looks like a fine heist to me, so far, and only likely to get more clever as it unfolds. This is their home course, after all.

Let's begin at the beginning. Here's Henwood:

"The only thing that makes any sense is to nationalize the weakest banks, kick out management, wipe out the shareholders, clear the decks, and start over with a tightly regulated system."

Well, Sweden's hi-fi sector was back looking like it did before the crisis in under 5 years, so it "makes sense" for who? The Wall Street rexheads?

To be fair, you note "This isn’t even all that radical a position anymore."

Indeed not. In fact, who gives a flying frog's leg about clever solutions that preserve the system? Hey, clever solutions might help Uncle "win" in Iraq too!

That being said, I think so far you are the reporter from the inside; but then you go righteous on us: "If these sick and devious “public-private partnership” schemes don’t work out, which seems likely...."

Devious, perhaps, but sick as in morbid? I think maybe that's a case of counting out Kong while he's still on his feet:

(Recall Carl Denham: "Don't worry, boys -- we've taken a lot of the fight out of him since he left his island.")

You point out correctly that "they’re doing absolutely everything they can to avoid even an orthodox nationalization." Maybe that's not because they're sick and foolish and blind, but because a string of nationalizations would not advance their interests.

I also agree that "This is looking more and more like Japan’s disastrous indulgence of their “zombie banks” in the 1990s than Sweden’s successful bailout." Indeed. The Swedes didn't indulge their zombies -- talk to Wallenbergerbitzstein.

And you're probably right, too, that "Instead of a few rough years, we’re likely to get a miserable decade" That's because the time out to regroup serves the corporate agenda quite nicely -- if we let 'em pull it off, that is.

You leave me thinking your take is something like this: these fucking bowtie-heads are taking us through purgatory just because they're driven like zombies to follow their ideological compulsions as much as their love of gain, and that they're gonna go Japan's way, not Sweden's way, and make our lives far far worse than they have to be.

But why give advice -- even if it's good advice -- to the enemies of humankind? Why should we the weebles, the job smurfs of America, care whether the rescue is well done or botched? We the weebles don't need no stinking private credit system. Say that -- not to the bankers, but to your fellow weebles -- and be done with it. Say we don't need no savings, no stockholders, no bondholders. They all suck the fruit of our toil.

Why should we small tubers give a rusty fart about the great bail? It's all just double-entry bookkeeping -- as in double talk, double back, double shuffle, double duty, double cross, double steal. Hell, if you like authoritarian farce, watch an episode of Hogan's Heroes.

When it comes to the real world of poli econ-con, we the road kill need to keep our focus on Uncle's recovery plans, now caught in a process that has indeed been, utterly, as Doug sez, "botched" from January of '07, at least -- and botched on purpose.

But if we must talk balance-sheet magic tricks, let's look at 'em from street level. Whatever is done for the big banks, Swedish massage or Japanese teac ceremony, life out here in mortgaged Middle America continues the slow seepage of rising delinquency and default.

Father Smiff is a great admirer of Alex Cockburn -- hell, the Reverend probably likes Cockburn even better than Doug Henwood -- but I don't entirely share his admiration. Alex has a very silly piece up on Counterpunch online at the moment. He warns:

"Obama’s bailout plan, added to the FY 2009 budget deficit he has inherited from Bush, opens a expenditure hole of about $3 trillion."

“Who is going to purchase $3 trillion of US Treasury bonds? Not the US consumer. The consumer is out of work and out of money. Private sector credit market debt is 174 per cent of GDP.” The sum is too big for the increasingly wary Chinese and Saudis to underwrite by buying Treasury bills where interest yields are... so low...."

Now this is all a mare's nest of hooey, as imbricated with holes as a quick wit's quick study can produce. Holes upon holes -- a nestle ring of parlor goblins and dancing tables.

In fact, most of the buying of Uncle's trillions in refuge safe debt, will be by red-blooded American institutions that are simultaneously selling Uncle their present holdings of toxic shit.

And as to the Hans and the burnoose boys -- fuck 'em if they can't take a joke, as Jack Nicholson says somewhere.

Unless the Han want the dollar to sink and further wipe out their exports -- better eat this Yankee paper, fellas. And the towel-topped Midases of the petrodesert? Where else or where better do they have to park their loot? In overvalued currencies like the Swiss franc?

Up now, down later -- that's the North currency game, no matter which angle or sequence of angles you play it all through.

So -- buy they both will.

That room of the haunted castle being passed, Alex gives us this Aunt Nellie turn:

"Failing everything else, there’s the government printing press, which can roll out the dollars and add inflation to unemployment."

How? In the present state of the global economy a combination -- a one-two punch -- of low nominal rates and high inflation is plain and simply impossible -- as impossible as a flying shark.

"Nationalize 'em! Nationalize 'em! Fuck the stockholders! Scalp 'em bare! " -- comes now the cry of Alan Greenspan joining the anvil chorus, apparently ready to find at long last a fellowship with radical rectifiers like Father Smiff's hero Dougwood Hen.

What music they'll make, this broad bloc of prudent children of the night.

Caveat pre-emptor.

Do I really need to emphasize: credit system saving of any sort is not even for opportunists -- it's for idiots, useful, useless, and otherwise.

Note the Greenstain's proviso: Save "the senior debt" -- the credit system's "anchor".

"Mr. Obama has unveiled a,,, plan to prevent as many as nine million Americans from losing their homes."

Translation: 9 million rubes hornswoggled into keeping the mortgage monkey on their back.

Here it is, Mr and Mrs Honest Godfearing Dumbcluck -- Uncle's helium rescue: re-fi credit balloons to lighten that nasty house on your back. Imagine! Up to 105% of market value!

Underwater never felt so good.

"Moody's Economy.com says nearly 27 percent of America's 52 million homeowners with a home loan owe more on their mortgages than their homes are worth."

Hmmmm. That's a big negatory, good buddy. What we job goons really oughta do is not pay as we go till we get relief, but walk away free now, all of us, and rent back each others "homes" from the foreclosure ghouls.

Free at last! Free at last! Thank God almighty, free at last!

Why continue this game of pass-it-along, anyway? " In whose pocket -- after all -- does the money end up?", as our dear backwoods troublemaker, Father Smiff, is wont to add.

Okay, so there's lots to be said for Sweden as a producer of models. But as a model for our economic crisis -- Miss Sweden is, well, a miss.

Nationalizing a couple of banks never solved Sweden's real problems back then, and nationalizing 12 or 17 of our fattest banks now won't solve our problems either.

Fact: Sweden ultimately dug her way out of her economic hole in the early 90's by devaluing her currency and conducting a nice export-led recovery.

Fact: Sweden is a lovely but tiny piece of the global economy. If big Uncle Hegemon tried -- right now -- to pull off such a rapid dollar devalue, the whole global trade system and financial system would react and react badly.

So enough of this Sweden model nonsense.

We need to focus for now on an internal recovery. This spells one thing and one thing only: a huge huge huge string of fiscal deficits.and credit swaps. So huge in fact must this be that all the ridiculous either-or'ing chitter over tax cuts vs spending, buying poison or purging poison, has one and only one obvious answer: We damn well better do all of the above, plus more, and fast.

This is in fact the lesson out of Japan -- go full-throttle on all fronts, or you're in for ten years of damnable dorkdom.

Even infamous bloviator Martin Wolf has a few sound words on this score....

"Those who argue that the Japanese government’s fiscal expansion failed are... mistaken. Despite a loss in wealth of three times GDP and a shift of 20 per cent of GDP in the financial balance of the corporate sector, from deficits into surpluses, Japan did not suffer a depression.... The explanation was the big fiscal deficits."

"When, in 1997, the Hashimoto government tried to reduce the fiscal deficits, the economy collapsed...."

"The Japanese lived with zombie banks for nearly a decade. The explanation was a political stand-off: public hostility to bankers rendered it impossible to inject government money on a large scale, and the power of bankers made it impossible to nationalise insolvent institutions."

Returning for a moment to the land of the ice and snow -- are they nicely chastened and prudent non-plungers?

Well, nope -- seems they got into the post-Soviet lot-and-loot bubble big time for such a small player:

"Fears of a full-blown economic crash in Eastern Europe shook the region's currencies and the share prices of Western banks doing big business there, helping to spur a new shock to financial confidence around the globe.

Some market analysts warned of a regional economic collapse on the scale of the Asian crisis in the late 1990s, as a report by the Moody's ratings agency warned it may downgrade banks active in Eastern Europe.

The cost of insuring government debt from Poland to Russia rose further, while currencies fell. The Hungarian forint slid to an all-time low Tuesday against the euro. Poland's zloty fell to a near-low against the euro."

"A "special comment" published Tuesday by Moody's Investors Service Inc. warned that euro-zone banks... with significant exposure to East European economies may be downgraded."

On that hot list of blasted banks -- why, Swedish banks, and they're in for $140 billion. For a scale-up, thats like chancing $4.2 trillion here in good ole Sweden x 30, DBA the SS America.

We ought to pay homage to this man, Milo Reno. He was the embodiment of just what we the weebles need about now -- a fiery confronter and tireless leader of direct action.

In fact, the direct actions of his farmers' union and farmers' holiday association probably contributed more to the swiftness and depth of New Deal "mortgage remediation" than any other single social force of the time -- except maybe the CP's National Federation of Unemployed Councils.

A book about the man:

http://books.google.com/books?id=Epx8gVs9F3MC&dq=milo+reno&source=gbs_summary_s&cad=0

(or: http://tinyurl.com/miloreno )

In particular, discover this nice episode:

"On Oct. 26, 1932, Reno's association declared a moratorium on tax and mortgage payments.... this developed into a strike against farm mortgage foreclosures"

http://boards.ancestry.com/localities.northam.usa.states.missouri.counties.clay/558/mb.ashx

(or: http://tinyurl.com/milorenobio)

The kissin' cousins, Fanny and Freddie, got something too out of Obie's "keep our mortgages flying" program. Ask the Washpost, they'll tell ya:

"The federal government yesterday doubled its commitment to Fannie Mae and Freddie Mac, promising to reimburse the companies for up to $400 billion in losses on their investments in mortgage loans. "

It's on the loan portfolio front, however where you get to see clearly "feeble is as feeble does." Though Obie has authorized a new higher limit on mortgages the two can "buy", the total is way way way too low. The buy limit oughta be -- well, unlimited.

No problem here. The master plan already calls for "The Treasury -- to buy securities created by the two companies, easing the pressure to find private investors."

And we all know the Treasury has no credit limit. So why not swing for the fences here? In plain fact, these two chubby chillin' of our dear uncle Sammy could buy up all the residential mortgages in America, all 10 trillions worth, and we'd each of us citizen taxpayers be the better off for it.

More on this in a future post.

Can you say TALF? It rhymes with Ralph, and it's what Father Smiff's mentor Dougwood Hen was clucking and fluttering about back a ways. I think he called it "sick", which rhymes with slick.

Seems suddenly it might be "not so fast there pard" time, what with the fourth estate on the case. Even the grey lady has her long ugly nose past the green door now, and yikes, read all about it: Obie plans to lend a trillion bucks to pathological profit hogs -- at 2% -- allow 20 to one leverage -- cover most losses -- privatize "returns of 20 percent or more" -- assume almost all the downside risk.

Wow. I want in on that caper. Wouldn't you?

"But Owen--" you start to say. And I interrupt: Yeah, yeah, I know, if we all got in at the ground floor -- that would spoil the whole fuckin' scam.

What's pleasant is that it seems all sorts of inside-the-loophole, behind-the-curtain games are going "public" on our lonesome privateers these days, and I mean public in a bad way, baby!

A few choice passages from the genuine NYT article mentioned earlier:

Most banks no longer hold the loans they make, content to collect interest until the debt comes due. Instead, the loans are bundled into securities that are sold to investors, a process known as securitization.

But the securitization markets broke down last summer after investors suffered steep losses on these investments. So banks and other finance companies can no longer shift loans off their books easily....

The Obama administration hopes to jump-start this crucial machinery by effectively subsidizing the profits of big private investment firms in the bond markets. The Treasury Department and the Federal Reserve plan to spend as much as $1 trillion to provide low-cost loans and guarantees to hedge funds and private equity firms that buy securities backed by consumer and business loans.... Some worry it may benefit only select investors at taxpayer expense.

The program also does not try to change securitization practices that, many investors say, spread risks throughout the world and destroyed financial institutions. Policy makers acknowledge that for now, fixing credit ratings, reducing conflicts of interest and improving disclosure can wait.

Under the program, the Fed will lend to investors who acquire new securities backed by auto loans, credit card balances, student loans and small-business loans....

Depending on the type of security they are borrowing against, investors will be able to borrow 84 percent to 95 percent of the face value of the bonds. Investors would not be liable for any losses beyond the 5 percent to 16 percent equity that they retain in the investment.

Simon Johnson, an economics professor at the Massachusetts Institute of Technology and a former chief economist at the International Monetary Fund, said many people might take a dim view of the TALF program because it provided government subsidies to investors like hedge funds. Investors who borrow from the Fed could enjoy annual returns of 20 percent or more.

“The TALF,” he said, “raises a lot of questions.”

From Reuters:

U.S. sticks with Bush position on Bagram detainees

WASHINGTON (Reuters) - The Obama administration on Friday told a federal judge it would not deviate from the Bush administration's position that detainees held at a U.S. air base in Afghanistan have no right to sue in U.S. courts.

...[T]he new administration faced a February 20 deadline to tell U.S. District Court Judge John Bates whether it would "refine" the Bush administration's position....

Barbara Olshansky, lead counsel for three of the four detainees and a visiting professor at Stanford Law School, said she was deeply disappointed that the Obama administration had decided to "adhere to a position that has contributed to making our country a pariah around the world for its flagrant disregard of people's human rights."

She said she hoped that the Obama administration was merely signalling it was still working on its position....

When these items come across the ticker, sometimes I like to check the response on Daily Kos -- see how the teeter-totter stands between recognition and rationalization. It's pretty evenly poised on this one. A Kosnik with the sobriquet "givenoquarter" reported the dismal news, and added:

The Muslim world will see this for what it is: hypocrisy. Fanatical Islamists like bin Laden will use this evidence that, despite all the rhetoric, Obama is just more of the same--another Christian Crusader trying to destroy Islam. And some who were on the fence will be convinced by this and join the jihadists.

Once again, the terrorists win. Somewhere in Pakistan, bin Laden is laughing.

Comment on this post ran, as far as I could tell, about half and half pro-con. The first comment laid out the defense case:

My sense is that in court proceedings (2+ / 0-)
any incoming administration's default position is going to be to back their predecessors' line. That will be their position unless and until they've been able to look into the matter sufficiently to develop their own position.

by brainwave on Fri Feb 20, 2009 at 09:17:33 PM PST

In reality, though, chances are that Obama hasn't (2+ / 0-)
even appointed the person who will be in charge to hammering out the Obama administration's policy on this matter.

Folks brought up on the Bible -- as I was -- will recall the surly older brother in the parable of the Prodigal Son. (I think he's the scowling chap next to the sawhorse on the right in Tissot's lovely picture above).

The Prodigal took his inheritance and went catting around the ancient Near East, spending his substance in riotous living.

The elder brother, good dutiful fellow that he was, stayed home and did his duty.

When the Prodigal finally returned home, and was met with rejoicing by his Pop, the elder brother was understandably aggrieved.

The story, as told by its distinguished author, puts the elder brother obscurely in the wrong. But perhaps because I am an elder brother myself, I always felt a certain sympathy for the sullen, pouting non-prodigal.

These old memories have come to the fore recently as I read about the mortgage bailout. Here's a sample from the Boston Globe:

Bailout lament: What about me?
Many who played by rules see unfairness

Brian Carpenter bought his Woburn home [sc. 'house' -- MJS] in 1980, and 29 years later, he has never missed a mortgage payment. It wasn't always easy. With three kids, it meant driving old cars, clipping coupons, and brown-bagging it to work.

Now, he sees the federal government committing nearly $1 trillion to bail out banks and struggling homeowners, and nearly $800 billion to offset economic damage caused by reckless lending and borrowing. What's in it for him? Probably $13-a-week, the middle-class tax cut in the stimulus bill.

"What about people like me who are playing by the rules, who got a mortgage we could afford?" said Carpenter.

The other day on NPR -- I was driving at the time, that's my excuse -- some "economist" was trying to explain this problem away. One of Mr Carpenter's fellow-elders had called in with precisely the Carpenter complaint: Where's the justice here?

The "economist" gabbled and stammered. For quite an agonizing long time. I nearly drove off the road, I was laughing so hard.

Finally the "economist" came up with his answer: it's not about justice, it's not about fairness, it's not about keeping the promises the system made. It's about saving the "system" itself.

To the "economist", this seemed like a pretty good response, no doubt. But I wonder whether Mr Carpenter will be convinced. If I were Carpenter, I would be asking myself whether virtue is really worthwhile.

Personally, I asked this question years ago, and answered it in the negative. But this was a quirky non-standard contrarian response, back then. The "system" seemed to have a certain moral authority at the time.

The moral authority is now shot. It's clear what the "system" was about in fact. It wasn't about rewarding virtue. It was about encouraging speculative frenzy.

Saving the system means: let's keep the suckers speculating, at all costs. Virtuous or not, they must stay in the game. Or all is lost.

Will that work, I wonder, if the moral story that the Carpenters like so much is undermined? Didn't the scam need that?

I guess we'll find out.

Meanwhile -- where did I put that damn fiddle? All this moving around, from rented anthill to rented anthill -- it's next to impossible to keep track of what little movable property you have.

Perhaps the Brits could send a bit of this rage across to us, as they gave us the gift of the Beatles and Stones... although a comparison to The Who or Slade might be more appropriate.

Oh, yeah, c'mon feel tha noize, 'cause mama, weer all crazee now:

http://www.guardian.co.uk/uk/2009/feb/23/police-civil-unrest-recession

Police are preparing for a "summer of rage" as victims of the economic downturn take to the streets to demonstrate against financial institutions, the Guardian has learned.

Britain's most senior police officer with responsibility for public order raised the spectre of a return of the riots of the 1980s, with people who have lost their jobs, homes or savings becoming "footsoldiers" in a wave of potentially violent mass protests.

Superintendent David Hartshorn, who heads the Metropolitan police's public order branch, told the Guardian that middle-class individuals who would never have considered joining demonstrations may now seek to vent their anger through protests this year.

He said that banks, particularly those that still pay large bonuses despite receiving billions in taxpayer money, had become "viable targets". So too had the headquarters of multinational companies and other financial institutions in the City which are being blamed for the financial crisis....

Hartshorn said he also expected large-scale demonstrations this year on environmental issues, with hardcore green activists "joining forces" with middle-class campaigners over issues such as airport expansion at Heathrow and Stansted. With the prospect of angry demonstrations against the economy, that could open the door to powerful coalitions.

"All you've got to do then is link in with the environmentalists, and look at the oil companies. They're seen to be turning over billions of pounds profit in issues that are seen to be against the environment."

Apparently Chas W. Freeman, president of the Middle East Policy Council (MEPC), really has been appointed chair of the National Intelligence Council (NIC).

It's Obie's first interesting appointment if so; Freeman is an old diplomatic hand who formerly served as ambassador to Saudi Arabia, and he and MEPC have been strikingly severe critics of Israel.

Needless to say the Israel lobby and its noise machine have been going crazy.

Just a gesture toward the Saudis, maybe? Or will Freeman actually have some influence on policy? It would be fun to see him and Rahm Emmanuel in the same room; Freeman is no dope and has a sharp tongue in his head.

This will be interesting to follow. There have been some recent indications that Israel and its advocates are beginning to wear on the nerves of at least some elite elements in US society. I would love to believe that this is another straw in the wind.

It's a great irony, this notion of nationalization of the banks -- at least the version that guys like Greenstain call for.

They not only want as quick as possible a return to private hands, but they'd only euthanize the asshole Lilliputian common stockholders.

Like a chorus of Russian baritones they all bellow, "Save the bondholder class!"

As far as they're concerned Uncle Sugar can go ahead and nationalize the big banks -- so long as he don't touch a hair on the hairy ass of any "senior debt".

"Preserve it, cherish it, reward it -- at all costs, make senior debt feel loved," they cry -- and hey, don't you get why? Aren't they the spine of the global economy?

Horse feathers!

Here's the real skinny, mates, here's Owen's plan:

Recall the two-bank option? -- Take banks in trouble and turn 'em into a pair of good and bad daughter banks. Very Madame Moa-ish that -- very Red Guard -- recall the slogan, "one becomes two"?

I buy it. Let's do that. Lets split the bastards in two. But here's how:

If you peer into 'em you'll find.all these toxic banks have basically two types of liability on their balance sheet: two sets of obligations.

One is to the aforementioned bond holders of various ilks and seasons, and the other is to us -- the ignorant innocent depositors of America.

This centaur of finance comes from the merger of the commercial and investment banks, way way back in the Clinton restoration, when "two became one" -- a very reactionary idea, that.

Now, since the patent folly of it all is paramount in the people's mind, let's reverse that squalid incestuous buttfuck of a marriage. Let's take each toxic critter and hack out a good bank using the critter's deposits as sole liability and sole obligation. And let's couple those deposits with an equal portion of assets, to wit the soundest part of the bank's loan portfolio.

And then let's have Uncle Sap insure the deposits -- oops, that's already more or less done, eh?

Once that new good bank is up and running, Uncle Slambo, the hammer of rentiers -- well he oughta just flat out 100% nationalize it and all its kin.

Stack 'em in groups and let 'em compete with each other, like the GSEs Fanny and Freddie do, or almost do.

What about the bad banks? Ah. This part you're gonna really like.

Throw all the bondholders and stockholders and every one else left over with claims to wealth through theft, and stick 'em with the rest of the portfolio -- the nub ends of the sound loans and all the stinking pile of Wall Street piffle, and then shoot the whole misbegotten freak show back out onto the deep rolling seas and wide open ways of our planet's markets for privately held paper figments.

A recent communique from my guardian gremlin, Hunter T:

"Some of you life members of the hate-America-first league oughta sit up a moment and take notice. Your preferred exploiters over there around Eurodisney are calling for the wagery to eat from the cat box these days, too:

"...and I say for all their class consciousness and red ribbons, they'll eat at least as much kitty litter as we will.

"So fuck 'em, and fuck their better cheese too. When the local hegemons over there start passing out the pink slips and report-to-the-rear notices, watch what happens -- I bet them old world wage slaves won't get one finger's length ahead of us doughfaced yanks. Fuck it, I bet we show 'em tailpipe, baby.

"Okay, you multilingual, bisexual, French ass-kissin, Uncle-is-Frankenstein types -- let's see who sinks faster and further here. And let's see who fights back harder and stronger -- Swedes and Lombards or us good ole boys playin' fer Team Dixie."

Ahh, Hunter, my Virgil -- still the rabid loyalist hometeamer, eh?

So much for the rant of a dipso gun-lusting sports fan. As guide to a class struggle world view, what's he worth?

Call me in a year or three.

"In order to understand the law of nature in regard to intellectual property, it is necessary to understand the principles of that law in regard to property in general. We shall then see that the right of property in ideas, is at least as strong as-and in many cases identical with-the right of property in material things....

"As a matter of public policy, the expediency of allowing a man a perpetual property in his ideas... is as clear as is that of allowing him a perpetual property in material things."

It's on the subject of our universal right to the fruits of our own intellectual products, and I strongly recommend it to any of you who haven't read it.

Like most "left-libertarian" logic rides, it has its fun moments -- not quite like crossing a raging river on ice cakes, but turveyish and strangely-cornered.

Then again, in its bottom-line utter wrongheadedness, it's a caution to all of us hedgehogs -- ultimately a warning against the seductions of socially isolated freethinking, no matter how fearless, decent, and bold.

The poli-econ green-eyeshade pinkos strike back! Corporate boardrooms tremble:

"[F]rom 2000 to 2007, the income of the median working-age household fell by $2,000-an unprecedented decline. In that time, virtually all of the nation’s economic growth went to a small number of wealthy Americans. An important reason for the shift from broadly-shared prosperity to growing inequality is the erosion of workers’ ability to form unions and bargain collectively....

The problem is that the election process overseen by the National Labor Relations Board has become drawn out and acrimonious, with management campaigning fiercely to deter unionization, sometimes to the extent of violating the labor law....

To remedy this situation, the Congress is considering the Employee Free Choice Act....

As economists, we believe this is a critically important step in rebuilding our economy and strengthening our democracy by enhancing the voice of working people in the workplace. "

• Kenneth Arrow, Stanford University
• Dean Baker, Center for Economic Policy and Research
• Jagdish Bhagwati, Columbia University
• Alan S. Blinder, Princeton University
• Brad DeLong, University of California/Berkeley
• Robert H. Frank, Cornell University
• Richard Freeman, Harvard University
• James K. Galbraith, University of Texas
• Robert J. Gordon, Northwestern University
• Dani Rodrik, Harvard University
• Jeffrey D. Sachs, Columbia University
• Robert M. Solow, Massachusetts Institute of Technology
• Lester C. Thurow, Massachusetts Institute of Technology

" The institutions that govern the labor market have also failed, producing the unusual and unhealthy situation in which hourly compensation for American workers has stagnated even as their productivity soared"

Personally, I hate usury, so I hate consumer loans, good times or bad. The vig is a plain gouge, not a silent partner's piece of the action.

In fact we oughta ban death on the installment plan -- like betting on sports contests, or reading grocery line tabloids, or playing the slots at Trump, or eating weedy salads.

Not gonna happen, though, is it? But at least Uncle don't need to subsidize this Shylockin'. (Okay, so I'd make an exception when it comes to house lot loans, but more on that another time.)

All the ballooning of consumer loans, credit cards, installment plans, stretch pays, rent-to-owns, payday loans -- all just a nasty dollar-sucking substitute for faster earned income growth for the bottom 80% of us weeblery.

We've had 30 years of stagnant wages, which has led to 30 years of borrowed pleasures, and that led to -- now.

But on the other hand, small business loans, like for low-tech startups -- loans to make me my own boss -- well, that's the two-horned long-tailed dream of every red-blooded pleb bounder in America.

So as a twenty-year, day-in and day-out proponent of more damn Nepmen everywhere -- I say we got ourselves a problem here worth Uncle's solving.

The private banksters aren't loaning to small biz of any sort anymore, no more in fact then they are to us pronate consumers. So let's call in -- who else -- uncle's Small Business Administration. Fire up a trillion-dollar loan fund for us little guys with small ideas -- about one-fifth the value of all our outstanding home loans, and far less than the Wall Street manta rays lost buildin' their latest set of paper towers.

I say let's start funding pipe dreams. Then we can truly claim that any nobody, or at least a whole passel of nobodies, can make themselves into -- well, if not somebody, at least their own nobody.

$2 trillion in 50K blocks made available for folks wanting to invent their own personal pedestrian road to higher prosperity -- hell, that'd create a startup frenzy bigger and more furious than anything in our history. Like a thousand Oklahoma land rushes all at once -- yahooooo babycakes!

Imagine the homely polyphony of it all -- in a word: Whitmanesque.

Cheap generous credit, ready for the taking. All you gotta do is draw up a plan on how you're fixin' to start the business of your daydreams, and Uncle Loosepockets will send ya the juice.

To hell with the old fart-by-fart way of trickle-down venturing -- all that Oliver Twist shit. Let Uncle be for all of us one big-ass angel bountiful. It'd be like a works project administration, but without the projects, and only the slightest of administrations, and hell, maybe with practically no work to it either -- just ingenuity, guile and gumption.

Pass 'em out like Pell grants, only they'd be loans -- all with a personal IOU. Hey -- we could call 'em Pell-Mell loans!

Oh wouldn't Pere Proudhon be delighted?

Here's a well-observed piece by Jeremy Scahill, on Alternet:

Some anti-war analysts find hope in President Barack Obama's address at Camp Lejuene in North Carolina on Friday, in which he appeared to spell out a clear date for withdrawal from Iraq.

"I intend to remove all U.S. troops from Iraq by the end of 2011," Obama said in a speech that quickly generated headlines announcing that an end to the occupation is on the horizon.... [But] Obama's plan, as his advisors have often said, is subject to "conditions on the ground," meaning it can be altered at any point between now and 2011. Underscoring this point, a spokesperson for New York Rep. John McHugh, the ranking Republican on the House Armed Services Committee, said on Friday that Obama "assured [McHugh] he will revisit the tempo of the withdrawal, or he will revisit the withdrawal plan if the situation on the ground dictates it. … The president assured him that there was a Plan B."

''From 1882 until 1922, the British promised the international community 66 times that they would leave Egypt, but they never did."