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Much Ado About Nothing

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May 28, 2009

The media feeding frenzy over President Obama’s nomination of Judge Sonia Sotomayor to the United States Supreme Court provides us with yet another reason why so many newspapers and news magazines are going broke:  They beat stories to death.  There has been quite a bit of hype in the run-up to Obama’s announcement of his choice.  News outlets have been salivating in anticipation of a protracted, partisan brawl with visions of the Clarence Thomas confirmation hearings, dancing in their heads.  A visit to the RealClearPolitics website for May 27 provides the reader with an assaultive profusion of articles concerning the Sotomayor nomination.

There are a couple of simple dynamics at work here.  With his nomination of Judge Sotomayor, President Obama has set out a trap for partisan Republicans, hell-bent on opposing any nominee selected by the Democrat for the high court.  Once these “attack dogs” pounce on Sotomayor, they reinforce the public perception of the GOP as the Party of White Men.  They would not only alienate female voters but they would also antagonize Hispanic voters.  This is exactly why you won’t really see that much of a fight over her nomination.  On the other hand, a political “has been” such as Newt Gingrich, sees the Sotomayor nomination as the perfect opportunity to keep his fat face in front of the cameras, without any apparent regard as to whether his remarks could exacerbate the GOP’s image problem.  The “hard right” media outlets and other authoritarian activist groups have instinctively responded by filling in the blanks on their pre-written scripts to include Sotomayor’s name as well as the necessary touch-ups to relate their  remarks to this particular target.  One smear fits all.

In case you haven’t figured it out yet  . . .  It’s all a waste of your time.  You need only read one story about the Sotomayor nomination and it was written by Mike Allen of Politico.  Relying on confidential Republican sources, Mr. Allen reports that “the GOP plans no scorched-earth opposition to her confirmation”.  At this point, I should advise you that the hissing sound you are hearing is all the air coming out of the tires for those pundits, hoping to expand this story into an epic drama and an eventual book deal.  It’s not happening.  As Mike Allen reported:

“The sentiment is overwhelming that the Senate should do due diligence but should not make a mountain out of a molehill,” said a top Senate Republican aide.  “If there’s no ‘there’ there, we shouldn’t try to create one.”

The news media shouldn’t try to create one, either  . . .   but they will anyway.  What else are they going to discuss?  You’re already sick of the American Idol stories.  So what they’re left with is the economy.  They hate that subject because the public and their own reporters are too dumb to understand it.  Besides … it’s boring and it involves math!  Never mind the fact that you’re going broke.  Just smoke your “green shoots” and believe in a “hope rally” for the stock market.

It’s always refreshing when someone such as Mike Allen undermines the mainstream media hype machine by sticking to the simple truth of a story.  In this case the simple truth is that the story itself is quite simple.

Sign This Petition

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May 25, 2009

For some reason, the Boston College School of Law invited Federal Reserve Chairman, B.S. Bernanke, to deliver the commencement address to the class of 2009 on May 22.  While reading the text of that oration, I found the candor of this remark at the beginning of his speech, to be quite refreshing:

Along those lines, last spring I was nearby in Cambridge, speaking at Harvard University’s Class Day.  The speaker at the main event, the Harvard graduation the next day, was J. K. Rowling, author of the Harry Potter books.  Before my remarks, the student who introduced me took note of the fact that the senior class had chosen as their speakers Ben Bernanke and J. K. Rowling, or, as he put it, “two of the great masters of children’s fantasy fiction.”  I will say that I am perfectly happy to be associated, even in such a tenuous way, with Ms. Rowling, who has done more for children’s literacy than any government program I know of.

Meanwhile, that great master of children’s fantasy fiction (and money printing) is now faced with the possibility that someday, someone might actually start looking over his shoulder in attempt to get some vague idea of just what the hell is going on over at the Federal Reserve.

The Federal Reserve’s resistance to transparency has been a favorite topic of many commentators.  For example, once Ben Bernanke took over the Fed Chairmanship from Alan Greenspan in 2006, Ralph Nader expressed his high hopes that Bernanke might adopt Nader’s suggested “seven policies of openness”.  Dream on, Ralph!

Speaking of children’s fantasy fiction, one expert on that subject is Congressman Alan Grayson.  As the Representative of Florida’s Eighth Congressional District, his territory includes Disney World.  Thus, it should come as no surprise that back in January of 2009, as a new member of the House Financial Services Committee, he immediately set about cross-examining Federal Reserve Vice-Chairman Donald Kohn about what had been done with the 1.2 trillion dollars in bank bailout money squandered by the Fed after September 1, 2008.  Glenn Greenwald of Salon.com provided a five-minute video clip of that testimony along with an audio recording of his 20-minute interview with Congressman Grayson, focusing on the complete lack of transparency at the Federal Reserve.

Better yet was Congressman Grayson’s questioning of Federal Reserve Board Inspector General Elizabeth Coleman on May 7.  In one of the classic “WTF Moments” of all time, Ms. Coleman admitted that she had no clue about the “off balance sheet transactions” by the Federal Reserve, reported by Bloomberg News as amounting to over nine trillion dollars in the previous eight months.  If you haven’t seen this yet, you can watch it here.  After reviewing this video clip, Yves Smith of Naked Capitalism was of the opinion that Coleman was not stonewalling, but instead was “clearly completely clueless”.  Ms. Smith pointed out how opacity at the Federal Reserve may be by design, with the apparent motive being obfuscation:

But there is a possibly more important issue at stake.  The interview is with the Inspector General of the Federal Reserve Board of Governors.  The programs are actually at the Federal Reserve Bank of New York.  For reasons I cannot fathom, the Board of Governors is subject to Freedom of Information Act requests, while the Fed of New York has been able to rebuff them.

So I take Coleman’s inability to answer key questions to be a feature, not a bug.  The Fed of New York probably can answer Congressional questions, is taking care to limit what it conveys to the Board so as to keep the information from Congress and the public.  Note in the questioning the emphasis on “high level reviews”.

In order to shine a bright light on the Federal Reserve, Republican Congressman Ron Paul of Texas has introduced the Federal Reserve Transparency Act, (H.R. 1207) which would give the Government Accountability Office the authority to audit the Federal Reserve and its member components, and require a report to Congress by the end of 2010.  On May 21, Congressman Alan Grayson wrote to his Democratic colleagues in the House, asking them to co-sponsor the bill.  Among the many interesting points made in his letter were the following:

Furthermore, the Federal Reserve has refused multiple inquiries from both the House and the Senate to disclose who is receiving trillions of dollars from the central banking system.  The Federal Reserve has redacted the central terms of the no-bid contracts it has issued to Wall Street firms like Blackrock and PIMCO, without disclosure required of the Treasury, and is participating in new and exotic programs like the trillion-dollar TALF to leverage the Treasury’s balance sheet.  With discussions of allocating even more power to the Federal Reserve as the “systemic risk regulator” of the credit markets, more oversight over the central bank’s operations is clearly necessary.

The net effect of recent actions has been to isolate financial policy-making entirely from democratic input, and allow the Treasury Department to leverage the Federal Reserve’s balance sheet to spend money it cannot get appropriated from Congress.  The public does not know where trillions of its dollars are going, and so has no meaningful control over the currency or this unappropriated “budget”.  The extraordinary size of these lending facilities combined, the extreme secrecy, and the private influence is a dangerous seizure of Congress’s constitutional prerogative to appropriate public monies and control the currency.

You can do your part for this cause by signing the on-line petition.  Let Congress know that we will no longer tolerate “children’s fantasy fiction” from the Federal Reserve.  Demand an audit of the Federal Reserve as well as a report to the public of what that audit reveals.

A Consensus On Conspiracy

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May 21, 2009

I guess I can throw away my tinfoil hat.  I’m not so paranoid, after all.

Back on December 18, after discussing the bank bailout boondoggle, I made this observation about what had been taking place in the equities markets during that time:

Do you care to hazard a guess as to what the next Wall Street scandal might be?  I have a pet theory concerning the almost-daily spate of “late-day rallies” in the equities markets.  I’ve discussed it with some knowledgeable investors.  I suspect that some of the bailout money squandered by Treasury Secretary Paulson has found its way into the hands of some miscreants who are using this money to manipulate the stock markets.  I have a hunch that their plan is to run up stock prices at the end of the day, before those numbers have a chance to settle back down to the level where the market would normally have them.  The inflated “closing price” for the day is then perceived as the market value of the stock.  This plan would be an effort to con investors into believing that the market has pulled out of its slump.  Eventually the victims would find themselves hosed once again at the next “market correction”.  I don’t believe that SEC Chairman Christopher Cox would likely uncover such a scam, given his track record.

Some people agreed with me, although others considered such a “conspiracy” too far-flung to be workable.

Thanks to Tyler Durden at Zero Hedge, my earlier suspicions of market manipulation were confirmed.  On Tuesday, May 19, Mr. Durden posted a video clip from an interview with (among others) Dan Schaeffer, president of Schaeffer Asset Management, previously broadcast on the Fox Business Channel on May 14.  While discussing the latest “bear market rally”, Dan Schaeffer made this observation:

“Something strange happened during the last 7 or 8 weeks. Doreen, you probably can concur on this — there was a power underneath the market that kept holding it up and trading the futures.  I watch the futures every day and every tick, and a tremendous amount of volume came in at several points during the last few weeks, when the market was just about ready to break and shot right up again.  Usually toward the end of the day — it happened a week ago Friday, at 7 minutes to 4 o’clock, almost 100,000 S&P futures contracts were traded, and then in the last 5 minutes, up to 4 o’clock, another 100,000 contracts were traded, and lifted the Dow from being down 18 to up over 44 or 50 points in 7 minutes.  That is 10 to 20 billion dollars to be able to move the market in such a way. Who has that kind of money to move this market?

“On top of that, the market has rallied up during the stress test uncertainty and moved the bank stocks up, and the bank stocks issues secondary — they issue stock — they raised capital into this rally.  It was a perfect text book setup of controlling the markets — now that the stock has been issued …”

Mr. Schaeffer was then interrupted by panel member, Richard Suttmeier of ValuEngine.com.

My fellow foilhats likely had no trouble recognizing this market manipulation as the handiwork of the Plunge Protection Team (also known as the PPT).  Many commentators have considered the PPT as nothing more than a myth, with some believing that this “myth” stems from the actual existence of something called The President’s Working Group on Financial Markets.  For a good read on the history of the PPT, I recommend the article by Ambrose Evans-Pritchard of the Telegraph.  Bear in mind that Evans-Pritchard’s article was written in October of 2006, two years before the global economic meltdown:

Hank Paulson, the market-wise Treasury Secretary who built a $700m fortune at Goldman Sachs, is re-activating the ‘plunge protection team’ (PPT), a shadowy body with powers to support stock index, currency, and credit futures in a crash.

Otherwise known as the working group on financial markets, it was created by Ronald Reagan to prevent a repeat of the Wall Street meltdown in October 1987.

Mr Paulson says the group had been allowed to languish over the boom years.  Henceforth, it will have a command centre at the US Treasury that will track global markets and serve as an operations base in the next crisis.

*    *    *

The PPT was once the stuff of dark legends, its existence long denied.  But ex-White House strategist George Stephanopoulos admits openly that it was used to support the markets in the Russia/LTCM crisis under Bill Clinton, and almost certainly again after the 9/11 terrorist attacks.

“They have an informal agreement among major banks to come in and start to buy stock if there appears to be a problem,” he said.

“In 1998, there was the Long Term Capital crisis, a global currency crisis.  At the guidance of the Fed, all of the banks got together and propped up the currency markets. And they have plans in place to consider that if the stock markets start to fall,” he said.

The only question is whether it uses taxpayer money to bail out investors directly, or merely co-ordinates action by Wall Street banks as in 1929.  The level of moral hazard is subtly different.

John Crudele of the New York Post frequently discusses the PPT, although he is presently of the opinion that it either no longer exists or has gone underground.  He has recently considered the possibility that the PPT may have “outsourced” its mission to Goldman Sachs:

Let’s remember something.

First, Goldman Sachs accepted $10 billion in government money under the Troubled Asset Relief Program (TARP), so it is gambling with taxpayer money.

But the bigger thing to remember is this:  The firm may be living up to its nickname – Government Sachs – and might be doing the government’s bidding.

The stock market rally these past seven weeks has certainly made it easier for the Obama administration to do its job.  That, plus a little fancy accounting during the first quarter, has calmed peoples’ nerves quite a bit.

Rallies on Wall Street, of course, are good things – unless it turns out that some people know the government is rigging the stock market and you don’t.

That brings me to something called The President’s Working Group on Financial Markets, which is commonly referred to as the Plunge Protection Team.

As I wrote in last Thursday’s column, the Team has disappeared.

Try finding The President’s Working Group at the US Treasury and you won’t.

The guys and girls that Treasury Secretary Hank Paulson relied on so heavily last year when he was forcing Bank of America to buy Merrill Lynch and when he was waterboarding other firms into coming to Wall Street’s rescue has gone underground.

Anybody who has read this column for long enough knows what I think, that the President’s Working Group Plunge Protectors have, in the past, tinkered with the financial markets.

We’ll let interrogators in some future Congressional investigation decide whether or not they did so legally.

But right now, I smell a whiff of Goldman in this market. Breath in deeply, it’s intoxicating – and troubling.

Could Goldman Sachs be involved in a conspiracy to manipulate the stock markets?  Paul Farrell of MarketWatch has been writing about the “Goldman Conspiracy” for over a month.  You can read about it here and here.  In his May 4 article, he set out the plot line for a suggested, thirteen-episode television series called:  The Goldman Conspiracy.  I am particularly looking forward to the fourth episode in the proposed series:

Episode 4. ‘Goldman Conspiracy’ is manipulating stock market

“Something smells fishy in the market. And the aroma seems to be coming from Goldman Sachs,” says John Crudele in the New York Post.  Stocks prices soaring.  “So, who’s moving the market?”  Not the little guy.  “Professional traders, with Goldman Sachs leading the way.”   NYSE numbers show “Goldman did twice the number of so-called big program trades during the week of April 13,” over a billion shares, creating “a historic rally despite the fact that the economy continues to be in serious trouble.”   Then he tells us why: Because the “Goldman Conspiracy” is using TARP and Fed money, churning the markets.  They are “gambling with taxpayer money.”

It’s nice to know that other commentators share my suspicions … and better yet:   Some day I could be watching a television series, based on what I once considered my own, sensational conjecture.

GPCs And GMCs

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May 18, 2009

The latest disappointment from the Obama – Goldman Sachs administration concerns the case of Daniel Choi.  Here was a West Point graduate, serving in the Army as an Arabic translator, who appeared on MSNBC’s Rachel Maddow Show.  With Barack Obama in the White House, Choi must have felt that the time was right to take a stand against the “don’t ask – don’t tell” policy concerning gays in the military by announcing to the world that he is gay.  Wrong!  Within a few weeks, Choi received a letter informing him that he had earned a dishonorable discharge for publicly disclosing his homosexuality, in violation of the “don’t ask – don’t tell” policy.  Not long afterward, the Obama administration announced that it would not intervene in such cases.

On Friday evening, this subject became a topic for discussion on the HBO program, Real Time with Bill Maher.  Maher reminded us of Obama’s campaign promise to do away with the “don’t ask – don’t tell” policy — particularly since so many of its targets happened to have served as Arabic translators.  We just don’t have enough personnel with that skill.  I agree with Maher’s belief that the rationale for adhering to the “don’t ask – don’t tell” policy arises from the fact that sexual harassment is a huge problem in the military.  Things haven’t changed all that much since the days of the “Tailhook” scandal.  In fact, they may now be much worse.  The military brass probably fears that if the “don’t ask – don’t tell” policy were rescinded, they could find themselves with an enormous increase in sexual harassment claims.  For example, an “out” Sgt. Butch Topington might feel emboldened about harassing the new recruits.

This subject was fresh in my mind as I watched Sean Penn’s fantastic, Oscar-winning performance in the film, Milk.  I was particularly impressed by Penn’s delivery of those important comments, spoken by gay activist Harvey Milk, into his tape recorder, after realizing that his eventual assassination would be more than likely:

I ask for the movement to continue because it’s not about personal gain.  It’s not about ego and it’s not about power.  It’s about the “Us”es out there — Not just the gays, but the blacks and the Asians and the seniors and the disabled — the “Us”es.

Without hope, the “Us”es give up.  And I know you can’t live on hope alone, but without hope life is not worth living.  So you … and you … and you — You gotta’ give ‘em hope!  You gotta’ give ‘em hope!

Candidate Obama spoke eloquently about “the audacity of hope”.  Nevertheless, President Obama seems to increasingly demonstrate “the audacity of nope”.

I believe there is still hope for those individuals in the same situation as Daniel Choi.  Now that they are out of the service, they should start working for “the big bucks” as contractors.  They could call themselves Gay Private Contractors (GPCs) or Gay Military Contractors (GMCs).  They should start their own business to compete with Blackwater (now known as Xe).  They might want to call it:  Gaywater.  Gaywater could promote its translation and interrogation service with a slogan such as:  “When we ask — they tell.”  Although the President has stated that he wants to “reconsider” the role of military contractors, where else is he going to find Arabic translators?  These individuals had security clearances up to the point of their discharge, so it should be a relatively quick, easy process to obtain civilian security clearances for them.  (However, the GMCs should be advised not to take personally, the fact that a civilian security clearance is called a “Q” clearance.)  Although there would likely be some sort of hurdle involved in getting such security clearances for “dishonorably discharged” personnel, the simple fact is that the only “dishonorable” acts committed by these individuals were instances of telling the truth about themselves.

Spinning Away From The Truth

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May 14, 2009

Wednesday was a rough day on Wall Street.  The Dow Jones Industrial Average dropped 184 points (just over two percent) to 8284; the Standard and Poor’s 500 index gave up over 24 points (2.69 percent) closing at 883.92 and the NASDAQ 100 index gave up 51.73 points (3.01 percent).  One didn’t have to look very far to find the reason.  At The Daily Beast website on Wednesday evening, item number 2 on the Cheat Sheet was a link to an article from The Wall Street Journal by Peter McKay, entitled:  “Signs of Consumer Strain Hit Stocks”.  The morning’s bad news was described by Mr. McKay in these terms:

The Commerce Department reported that retail sales fell 0.4% in April from the prior month, a steeper decline than the 0.1% gain economists expected.  Sales in March were revised down, falling 1.3% instead of 1.2% as previously reported.

The Wall Street Journal also ran an article on this subject by Justin Lahart:  “Retail Sales Stall on Consumer Caution”.  Mr. Lahart’s piece underscored the message reverberating through the evening’s financial reporting:

Indeed, retail sales rose in January and February after sliding for six straight months.  But those hopes were undermined by the 1.3% drop in retail sales in March as well as April’s decline.

The data suggest that a recovery won’t come until the second half of the year, and that when it does arrive it will be sluggish, said Michael Darda, an economist at MKM Partners in Stamford, Conn.

As I scanned through a number of websites to peruse the evening’s news stories, I was quite shocked to see the following headline on the Huffington Post blog, with screaming, bright red, upper-case, oversized font:  “BLOOMBERG NEWS:  CONSUMERS FEELING ‘INSPIRED’ TO SPEND MORE”.  Huh?   Just below the headline were three large photos.  The photo on the left featured a lineup of luxurious yachts, reminiscent of what can be found along Indian Creek during the Miami Beach Boat Show.  The middle picture showed that guy from Lifestyles of the Rich and Famous, raising a silver goblet in a toast to the photographer.  The photo on the right depicted a headless woman, adorned in enough jewelry to turn Ruth Madoff green with envy.  Had someone hacked into the HuffPo website and put this up as a gag?  (Later in the evening, I checked back at the site.  Although there was a new main headline relating to a different story, the link to the “inspired consumers” story was still there, although down the page.)

Clicking on the “inspired consumers” headline brought me to a story from Bloomberg News, entitled:  “‘Good Bad’ Economy Inspires Consumers As Slump Eases”.  “Good bad economy”?  I had trouble figuring out what that meant because I lost my George Orwell Decoder Ring.  Looking at this slice from the story told me enough about what they were trying to say:

Investor Exuberance

A Bloomberg survey of users on six continents showed that confidence in the global economy rose to the highest level in 19 months.

Antarctica and what five other continents?

The Huffington Post‘s BizarroWorld headline struck me as an attempt to imbue readers with a perception of Happy Days in Obamaland.  That headline and its incorporated story reminded me of a point recently made by one of my favorite bloggers, Jr. Deputy Accountant:

You know, there are times when I wonder just how difficult it is to keep the PR machine running at full speed and keep the market propped up artificially and massage Goldman’s nuts all at once.  Somehow, the powers-that-be are pulling it off, and I imagine that a large part of the dirty work, at least when it comes to PR, is taken care of by our moronic friends in mainstream media who feed up gems like this:  Citi using most of TARP capital to make loans.

(As an aside:  the reference to “Goldman” is Goldman Sachs, the second largest contributor to President Obama’s election campaign.)

Instead of relying on “the PR machine” to feed me propaganda about the economy, I rely on some of the sources included on this website’s blogroll.  Most of the writers for those sites are credentialed professionals, regarded as experts in their field (as opposed to the dilettantes, who cheerlead for Wall Street in the mainstream media).  One of these experts is Yves Smith of Naked Capitalism.  If you want to keep up with what’s really happening in the financial world, I suggest that you read her blog.

The truth of what the economy has in store for us is not pretty.  If you are ready to have a look at it, read Jeremy Grantham’s most recent report.  His bottom line is that late this year or early next year there will be a stock market rally, bringing the Standard and Poor’s 500 index near the 1100 range.  After that, get ready for seven really lean years:

A large rally here is far more likely to prove a last hurrah — a codicil on the great bullishness we have had since the early 90s or, even in some respects, since the early 80s.  The rally, if it occurs, will set us up for a long, drawn-out disappointment not only in the economy, but also in the stock markets of the developed world.

Unfortunately, it’s already too late for President Obama to accept the following rationale from Mr. Grantham’s essay:

We should particularly not allow ourselves to be intimidated by the financial mafia into believing that all of the failing financial companies — or very nearly all — had to be defended at all costs.  To take the equivalent dough that was spent on propping up, say, Goldman or related entities like AIG (that were necessary to Goldman’s well being), as well as the many other incompetent banks and spending it instead on really useful, high return infrastructure and energy conservation and oil and coal replacement projects would seem like a real bargain for society.  Yes, we would certainly have had a very painful temporary economic hit from financial and other bankruptcies if we had decided to let them go, but given the proven resilience of economies, it would still have seemed a better long-term bet.

After reading Jeremy Grantham’s recent quarterly letter, ask yourself this:  Do you feel “inspired” to spend more?

A Question Of Timing

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May 11, 2009

Josh Kraushaar has reported for Politico that on Tuesday, May 12, Florida Governor Charlie Crist will announce his intention to run as the Republican candidate for the Senate seat being vacated by Mel Martinez.  Kraushaar explained that Crist would become the Republican Party’s “most high-profile recruit of the 2010 election cycle”.  He went on to point out:

Crist’s decision puts Republicans in strong position to hold onto the seat held by retiring Sen. Mel Martinez (R-Fla.).  Crist holds high approval ratings among both Republicans and Democrats, according to statewide polling, and has forged a moderate governing style that has won him widespread support.

His decision to run came as little surprise to political observers, with the governor and his allies hinting of his interest in running for Congress over the last several months.

The timing of Crist’s announcement is rather interesting, in light of the fact that he is prominently featured in Kirby Dick’s new documentary film, Outrage, which opened on Friday.  Andrew O’Hehir interviewed Kirby Dick for Salon.com.  This is what the filmmaker had to say about his new movie:

My film is not about outing closeted politicians.  It’s about reporting on the hypocrisy of closeted politicians who vote anti-gay.  That’s the bright line that I draw.  In many cases, these politicians would normally vote pro-gay.  But because of the rumors swirling around them, they run in the opposite direction.  Their votes not merely harm millions of gays and lesbians across the country, but they’re also voting against their own beliefs, solely to protect the closet.  That’s contorting the American political process.

Rumors about Governor Crist’s lifestyle have circulated here in Florida for many years.  Many of my conservative Republican friends have always believed those rumors, although the issue never stopped them from voting for Crist.  Once he became identified as a potential running mate for John McCain in the 2008 election, Governor Crist got married.  The timing of that event made many people suspicious.  With Crist’s imminent announcement of his intention to run for the Senate, the question of timing has come up again.  Will he distract attention away from the questions raised by the film, Outrage . . .   or will the timing of his announcement enhance the magnitude of those concerns?

Bob Norman is the writer for the Broward and Palm Beach County edition of the New Times who was interviewed by Kirby Dick for the movie.  The filmmaker retraced some of the reporting done by Norman about Charlie Crist back in 2006.  Norman’s reports were based on information provided by two campaign staffers for the infamous Katherine Harris:  Jason Wetherington and Bruce Jordan.  In his recent New Times article about the film, Mr. Norman was careful to point out that the claims concerning Governor Crist’s preferences remain open to question:

I’ll never shy away from that reporting.  There is no question that both Wetherington and Jordan boasted of having affairs with Crist and there is no question that both men had met the man.  One woman, Dee Dee Hall, even gave a sworn statement detailing Jordan’s claims about his relationship with Crist.

But the fact remains that it’s possible both men were lying.  It may not seem likely, but it’s possible.

*    *    *

As well-known outer Michelangelo Signorile put it, there is no “smoking dick” here.  But it’s compelling stuff that’s worth reporting.

Jason Bellini provided a video report on the release of Outrage for The Daily Beast, which included an interview with Kirby Dick.  Bellini also provided an analysis of the mainstream media’s reaction to the film’s focus on Governor Crist.  For the most part, the mainstream outlets wrote off the claims as unsubstantiated rumors.

Aaron Blake reported for The Hill, that Charlie Crist’s Senate campaign could threaten the Republican Party’s control in Florida because a “domino effect” would result if he were to vacate the Governor’s office.  The GOP managed to consolidate its power here in the 2008 election, despite the fact that Barack Obama won this state.  Blake provided this perspective from a Republican insider:

“It’s going to be a complete shakeup from top to bottom of the Florida political landscape,” said GOP fundraiser Ana Navarro. “The political season could be more active than our hurricane season.”

If allegations of hypocrisy and concealment of a secret gay lifestyle get serious attention in Charlie Crist’s 2010 Senate campaign, Ms. Navarro’s analogy might be very appropriate.

Somebody Really Loves Goldman Sachs

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May 17, 2009

The recent article about Treasury Secretary “Turbo” Tim Geithner by Jo Becker and Gretchen Morgenson, appearing in the April 26 edition of The New York Times, seems to have helped fan the flames of the current outrage concerning the Federal Reserve Bank of New York.  Turbo Tim was president of the New York Fed during the five years prior to his appointment as Treasury Secretary.  Becker and Morgenson pointed out many of the ways in which “conflict of interest” seems to be one of the cornerstones of that institution:

The New York Fed is, by custom and design, clubby and opaque.  It is charged with curbing banks’ risky impulses, yet its president is selected by and reports to a board dominated by the chief executives of some of those same banks. Traditionally, the New York Fed president’s intelligence-gathering role has involved routine consultation with financiers, though Mr. Geithner’s recent predecessors generally did not meet with them unless senior aides were also present, according to the bank’s former general counsel.

By those standards, Mr. Geithner’s reliance on bankers, hedge fund managers and others to assess the market’s health — and provide guidance once it faltered — stood out.

The New York Fed is probably the most important of the nation’s twelve Federal Reserve Banks, since its jurisdiction includes the heart of America’s financial industry.  As the Times piece pointed out, this resulted in the same type of “revolving door” opportunities as those enjoyed by members of Congress who became lobbyists and vice versa:

A revolving door has long connected Wall Street and the New York Fed.  Mr. Geithner’s predecessors, E. Gerald Corrigan and William J. McDonough, wound up as investment-bank executives.  The current president,William C. Dudley, came from Goldman Sachs.

The New York Fed’s current chairman, Stephen Friedman, has become a subject of controversy these days, because of his position as director and shareholder of Goldman Sachs.   Goldman sought and received expedited approval to become a “bank holding company” last September, thus coming under the jurisdiction of the Federal Reserve and becoming eligible for the ten billion dollars in TARP bailout money it eventually received.  After Goldman became subject to the New York Fed’s oversight (with Friedman as the New York Fed chairman) the Fed made decisions that impacted Goldman’s financial state.  Although this controversy was discussed here and here by The Wall Street Journal, that publication’s new owner, Rupert Murdoch, now requires a $104 annual on-line subscription fee to read his publication over the Internet. Sorry Rupert:  Homey don’t play that.  Although Slate provided us with an interesting essay on the Friedman controversy by Eliot “Socks” Spitzer, the best read was the commentary by Robert Scheer, editor of Truthdig.  Here are some important points from Scheer’s article, “Cashing In on ‘Government Sachs’ “:

When N.Y. Fed Chairman Stephen Friedman bought stock in the company that he once headed, and where he still serves as a director, he was already in violation of Federal Reserve policy and was hoping for a waiver to permit him to hold his existing multi-million-dollar stock stash and to remain on the Goldman board.  The waiver was requested last October by Timothy Geithner, then the president of the N.Y. Fed and now Treasury secretary.  Yet,without having received that waiver, Friedman went ahead in December and purchased 37,300 additional shares.  With shares he added in January, after the waiver was granted, he ended up with 98,600 shares in Goldman Sachs, worth a total of $13,330,720 at the close of trading on Tuesday.

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As Jerry Jordan, former president of the Fed Bank in Cleveland, told the Journal in reference to Friedman’s obvious conflict of interest, “He should have resigned.”

Unfortunately, this was not the view during the reign of Geithner, who argued that Friedman needed to remain chairman of the N.Y. Fed board to find a suitable replacement for Geithner as he moved on to be secretary of the Treasury.  Friedman chose a fellow former Goldman Sachs exec for the job.

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Geithner is a protege of former Goldman Sachs chairman Rubin.  And it was therefore not surprising when he picked Mark Patterson, a registered lobbyist for Goldman Sachs, to be his chief of staff at the Treasury Department.  That appointment was made on the same day that Geithner announced new rules for limiting the influence of registered lobbyists.  Need more be said?

Yes, there are a couple more things:  Goldman Sachs was the second largest contributor to Barack Obama’s Presidential election campaign, with a total of $980,945 according to OpenSecrets.org.  President Obama nominated Gary Gensler of Goldman Sachs to become Chairman of the Commodity Futures Trading Commission.  As Ken Silverstein reported for Harpers, this nomination has stalled, since a “hold” was placed on the nomination by Vermont Senator Bernie Sanders.  Mr. Silverstein quoted from the statement released by the office of Senator Sanders concerning the rationale for the hold:

Mr. Gensler worked with Sen. Phil Gramm and Alan Greenspan to exempt credit default swaps from regulation, which led to the collapse of A.I.G. and has resulted in the largest taxpayer bailout in U.S.history.   He supported Gramm-Leach-Bliley, which allowed banks like Citigroup to become “too big to fail.”  He worked to deregulate electronic energy trading, which led to the downfall of Enron and the spike in energy prices.  At this moment in our history, we need an independent leader who will help create a new culture in the financial marketplace and move us away from the greed, recklessness and illegal behavior which has caused so much harm to our economy.

“Change you can believe in”, huh?

Joining The Supremes

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May 4, 2009

On April 30, Supreme Court Justice David Souter announced his intention to retire after the current court term recess in June.  Many were surprised by this announcement.  Since Justice John Paul Stevens is 89 and Justice Ruth Bader Ginsburg is 76, most Supreme Court watchers expected one of those two jurists to be the first to retire after the election of President Obama.  Those who know Justice Souter all concur that he hates living in Washington, D.C. where he is a reluctant member of the capitol’s “elite”.

Watching Friday’s news programs, I was amused by the mad scramble by those on the “hard right” to organize their opposition to the confirmation of Preisdent Obama’s nominee to the high court.  Obama has not yet even announced whom he intends to nominate, yet these reactionaries are already against that person.  So, the fun begins  . . .

Once the President makes the nomination, the Senate Judiciary Committee begins the confirmation hearings, wherein the candidate will become incessantly badgered about his or her views on abortion, gay weddings, gun control and whether the court should “intervene” by overturning patently unconstitutional laws enacted by a bought-off (Oops!  — I mean “lobbied”) Congress.  The Judiciary Committee then issues its report and the full Senate votes to either confirm or reject the nomination with 51 votes.

This process became a spectator sport back in 1987, when Ronald Reagan nominated the Amish-looking, Robert Bork.  The Democrats immediately launched a full-on battle against the nomination, considered by many as a bit over-the-top, since it involved scrutiny of Bork’s video rentals.  This particular judicial confirmation resulted in the use of the word “Bork” as a verb.  Since that time, getting “Borked” described any situation wherein a political appointee became the target of a partisan attack during the confirmation process.  Nevertheless, Bork’s view that the Constitution provides no guarantee of an individual’s right to privacy, justified much of the ire against him.  During the confirmation hearings, he criticized the decision in Roe v. Wade.  Dumb idea.  Since that time, Republican nominees to any Federal Court do all they can to avoid providing straight answers to questions dealing with a woman’s right to determine whether she will carry a fetus to term.

The most entertaining confirmation hearings came along when George H.W. Bush nominated Clarence Thomas to the Supreme Court in 1991.  By that time, Bush appointee David Souter had already begun to disappoint the “hard right”.  The administration wanted to be sure they had a hard-line conservative this time and in Thomas they found the prefect candidate to replace the court’s first African-American Justice, Thurgood Marshall, who retired.  The excitement began when the committee heard testimony from Anita Hill, who had worked for Thomas at the Equal Employment Opportunity Commission (EEOC).  Ms. Hill testified that while working at the EEOC, she was sexually harassed by Clarence Thomas on several occasions.  The most memorable portion of her testimony concerned a remark by Thomas that his favorite porn video was a feature entitled:  Long Dong Silver.  Although Hill’s testimony ultimately did not block the confirmation of Thomas, people began lining up at adult book stores to purchase copies of the overnight classic.  I always wondered whether a certain chain of seafood restaurants also might have benefited from that aspect of the proceedings.

At this point, many Republicans likely assume that President Obama will nominate an ultra-liberal judge to counter-balance the far-right members of the court:  Clarence Thomas and Antonin Scalia.  News outlets are already abuzz with speculation concerning the most likely nominee.  The betting is heavy that Obama will nominate a woman for this vacancy because a man (Samuel Alito) was appointed by George W. Bush to replace Sandra Day O’Connor, one of only two females on the court when Bush took office.  Some pundits expect Obama to nominate someone from a minority group to add a little more diversity to the court.  As a result, many of these people expect Judge Sonia Sotomayor from the Second Circuit Court of Appeals to get the nod.  My prediction is that the President will select Judge Diane Wood from the Seventh Circuit.  She shares Obama’s experience as an instructor at the University of Chicago Law School and she has a solid background.

Nevertheless, we can expect quite a bit of showboating once the confirmation process begins.  It might not be as much fun as the Clarence Thomas hearings  .  .  .  but who knows?

Let the games begin!