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More Ugly Truth about Deepwater Horizon

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Too many of the news reports concerning the second anniversary of the Deepwater Horizon oil rig blowout are suspiciously similar to the BP commercials featuring testimonials about how the company’s wonderful clean-up job has brought life along the Gulf Coast “back to normal”.  Unfortunately, the ugly truth about life along the Gulf of Corexit has not been thrust before the American public with the same aggressiveness as BP’s public relations propaganda.

Since the catastrophe occurred back in April of 2010, one steady source of unvarnished reports on the matter has been Washington’s Blog.  On April 18 of this year, Washington’s Blog posted this great piece which links to a number of reports documenting the extent of ongoing damage to the Gulf ecosystem.

We are constantly bombarded with propaganda emphasizing how offshore oil rigs create jobs.  What we don’t hear are reports concerning the number of people from the fishing industry who lost their jobs (and their health) as a result of the Deepwater Horizon incident.  Consider this AFP report from last year:

Local chemist Wilma Subra has been helping test people’s blood for volatile solvents, and said levels of benzene among cleanup workers, divers, fishermen and crabbers are as high as 36 times that of the general population.

“As the event progresses we are seeing more and more people who are desperately ill,” she said.

“Clearly it is showing that this is ongoing exposure,” Subra said, noting that pathways include contact with the skin, eating contaminated seafood or breathing polluted air.

“We have been asking the federal agencies to please provide medical care from physicians who are trained in toxic exposure.”

She said she has received no response.

The most devastating exposé on the Deepwater Horizon disaster came from Greg Palast, who wrote a two-part report for EcoWatch.  A British investigative television program – Dispatches – sent Palast into Baku, Azerbaijan, with a cameraman to investigate a whistleblower’s report that in September of 2008, a BP off-shore rig in the Caspian Sea suffered a nearly identical blow-out to the Deepwater Horizon incident.  BP concealed the true cause and extent of the Caspian Sea event from the U.S. regulators and Congress.  From Part One:

The witness, whose story is backed up by rig workers who were evacuated from BP’s Caspian platform, said that had BP revealed the full story as required by industry practice, the eleven Gulf of Mexico workers “could have had a chance” of survival.  But BP’s insistence on using methods proven faulty sealed their fate.

One cause of the blow-outs was the same in both cases:  the use of a money-saving technique – plugging holes with “quick-dry” cement.

By hiding the disastrous failure of its penny-pinching cement process in 2008, BP was able to continue to use the dangerous methods in the Gulf of Mexico – causing the worst oil spill in U.S. history.  April 20 marks the second anniversary of the Gulf oil disaster.

There were several failures in common to the two incidents identified by the eyewitness.  He is an industry insider whose identity and expertise we have confirmed.  His name and that of other witnesses we contacted must be withheld for their safety.

The failures revolve around the use of “quick-dry” cement, the uselessness of blow-out preventers, “mayhem” in evacuation procedures and an atmosphere of fear which prevents workers from blowing the whistle on safety problems.

In Part Two of the report, Greg Palast revealed that one of the classified cables leaked by Private Bradley Manning through WikiLeaks.org to The Guardian was a briefing from the U.S. Embassy in Azerbaijan to the State Department in Washington.  The cable summarized information obtained from Bill Schrader, President of BP-Azerbaijan, about the cause and extent of the 2008 blowout.  The collusion of the State Department in this cover-up became an important aspect of Palast’s report:

From other sources, we discovered the cement which failed had been mixed with nitrogen as a way to speed up drying, a risky process that was repeated on the Deepwater Horizon.

Robert F. Kennedy Jr., president of Waterkeeper Alliance and senior attorney for Natural Resources Defense Council, calls the concealment of this information, “criminal.  We have laws that make it illegal to hide this.”

The cables also reveal that BP’s oil-company partners knew about the blow-out but they too concealed the information from Congress, regulators and the Securities Exchange Commission.  BP’s major U.S. partners in the Caspian Sea drilling operation were Chevron and Exxon.

*   *   *

Kennedy’s particular concern goes to the connivance of the State Department, then headed by Secretary of State Condoleezza Rice, in the cover-up and deception.  Chevron, noted Kennedy, named an oil tanker after Rice who had served on the oil company’s board of directors.  “BP felt comfortable – and Chevron and Exxon – in informing the Bush State Department, which was run by Condoleezza Rice,” he said, “and they felt comfortable that that wasn’t going to come out.”

The U.S. Securities Exchange Commission requires companies to report “material” events.  BP filed a “20-F” report in 2009 stating, “a subsurface gas release occurred below the Central Azeri platform,” suggesting a naturally occurring crack in the seafloor, not a blow-out.  This contradicted the statements of three eyewitnesses and the secret statement of BP’s Azerbaijan President in then WikiLeaks cable.

“The three big actors, Chevron, Exxon and BP all concealed this from the American public,” concludes Kennedy.  “This is a criminal activity.”

At this point, anyone who believes that Condoleezza Rice could be chosen as Mitt Romney’s running mate is headed for a big disappointment.

With the passing of time, the Deepwater Horizon story isn’t getting any better.  It just keeps getting worse.


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Nasty Cover-Up Gets Exposed

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Ever since the Deepwater Horizon oil rig disaster occurred on that horrible, twentieth day of April 2010, I have been criticizing the cover-up concerning the true extent of this tragedy.  Sitting here in my tinfoil hat, I felt frustrated that the mainstream media had been facilitating the obfuscation by British Petroleum and the Obama administration in their joint efforts to conceal an ongoing environmental disaster in the Gulf of Corexit.  On July 22 of that year, I wrote a piece entitled, “BP Buys Silence of Expert Witnesses”.  On August 26 of 2010, I expressed my cynicism in a piece entitled “Keeping Americans Dumb”:

As time drags on, it is becoming more apparent that both BP and the federal government are deliberately trying to conceal the extent of the damage caused by the Deepwater Horizon blowout.

I got some good news this week when I learned that the mainstream media are finally beginning to acknowledge the extent of this cover-up.  While reading an essay by Gerri Miller for Forbes, I learned about a new documentary concerning the untold story of the Deepwater Horizon Disaster:  The Big Fix.

Once my enthusiasm was sparked, I began reading all I could find about this new documentary, which was co-produced by Peter Fonda.  The Guardian (at its Environment Blog) provided this useful analysis of the movie:

The Big Fix, by Josh and Rebecca Tickell, re-opens some of the most persistent questions about last year’s oil spill.  How BP was able to exert so much control over the crisis as it unfolded?  What were the long-term health consequences of using a toxic chemical, Corexit, to break up the oil and drive it underwater?

Rebecca Tickell herself had a serious reaction to the chemical after being out on the open water – and as it turned out so did the doctor she consulted in an Alabama beach town.  She still has health problems.

Josh Tickell, who grew up in Louisiana, said the Obama administration’s decision to allow the use of Corexit, which is banned in Britain, was the biggest surprise in the making of the film.

“The most shocking thing to me was the disregard with which the people of the Gulf region were dealt,” Tickell said.

“Specifically I think that there was sort of a turn-a-blind-eye attitude towards the spraying of dispersants to clean up the spill. I don’t think anyone wanted to look too deeply at the consequences.”

Gerri Miller’s article for Forbes provided more insight on what the film revealed about the injuries sustained by people in the local shrimping communities:

Dean Blanchard, whose shrimp processing company was once the largest in the U.S., has seen his supply dwindle to “less than 1 percent of the shrimp we produced before.  We get shrimp with oil in the gills and shrimp with no eyes.  The fish are dead and there are no dolphins swimming around my house.”  He knows five people who worked on cleanup crews who have died, and he suffers from sinus and throat problems.  Former shrimper Margaret Curole‘s healthy 31-year-old son worked two months on the cleanup and became so sick from dispersant exposure that he lost 52 pounds and is now unable to walk without a cane. “Most of the seafood is dead or toxic.  I wouldn’t feed it to my cat,” said her husband Kevin Curole, a fifth-generation shrimper who, like Blanchard, had friends who died from Corexit exposure.  “I used to be a surfer but I won’t go in the water anymore,” he said.  “The last time I did my eyes and lips were burning.”

EcoWatch warned us that the movie can be emotionally upsetting:

When you watch how the the Gulf residents captured in The Big Fix have been affected by Corexit and the spill, beware, it is both heart wrenching and frightening.  When you see Gulf residents driven to tears by this environmental tragedy, you want to cry with them. Rebecca, herself, was seriously sickened by Corexit during their filming in the Gulf.

When you listen to eco-activist, Jean-Michel Cousteau, son of champion of the seas Jacques-Yves Cousteau, state so emotionally in the film, “We’re being lied to,” you realize the truth about the Gulf oil spill is being covered up.

The most informative essay about The Big Fix was written by Jerry Cope for The Huffington Post.  The “official trailer” for the film can be seen here.

Ernest Hardy of LA Weekly emphasized how the film hammered away at the mainstream media complicity in the cover-up:

Josh Tickell, a Louisiana native, had two questions he wanted answered when he set out to make his documentary:  What were we not told by the media in the days and weeks immediately following the April 2010 British Petroleum oil spill in the Gulf of Mexico, and what haven’t we been told since the story faded from the news cycle?  If The Big Fix had simply tackled those questions, the story uncovered would be maddening:  BP’s repeated flaunting of safety codes; their blatant disregard for the lives of individuals and communities devastated by the spill; collusion among the U.S. government (from local to the White House), the media, and BP to hide the damage and avoid holding anyone accountable.  The film’s scope is staggering, including its detailed outlining of BP’s origins and fingerprints across decades of unrest in Iran.  By doing smart, covert reporting that shames our news media, by interviewing uncensored journalists, by speaking with locals whose health has been destroyed, and by interviewing scientists who haven’t been bought by BP (many have, as the film illustrates), Fix stretches into a mandatory-viewing critique of widespread government corruption, with one of the film’s talking heads remarking, “I don’t have any long-term hope for us [as a country] unless we find a way to control campaign financing.”  And yes, the Koch brothers are major players in the fuckery.

The theme of regulatory capture played a role in Anthony Kaufman’s critique of The Big Fix for The Wall Street Journal’s “online magazine” – Speakeasy:

Tickell says that U.S. politicians, both in the Democratic and Republican parties, are too closely tied to the oil and gas industries to regulate them effectively.  “Even if these people come in with good intentions, and what to do good for their community, in order to achieve that level of leadership, they have to seek money from oil and gas,” he says.

While the film promises to take a crack at BP, Tickell says the company is more held up as a “universal example, in the way that resource extraction companies have a certain set of operating paradigms which have lead us to a situation where we have Gulf oil spills and tar sands.”

I felt that my conspiracy theory concerning this tragedy was validated after reading a review of the movie in AZGreen Magazine:

The Big Fix makes clear that the Deepwater Horizon disaster is far from over.  Filmmakers Josh and Rebecca Tickell (makers of groundbreaking films Fuel and Freedom) courageously shine the spotlight on serious aspects of the BP oil spill that were never addressed by mainstream media.  Central to the story is the corporate deception that guided both media coverage and political action on the environmental damage (and ongoing human health consequences) caused by long-term exposure to Corexit, the highly toxic dispersant that was spewed into the Gulf of Mexico by millions of gallons.   The Big Fix drills deeply beyond media reports to demystify the massive corporate cover-up surrounding the Gulf oil spill, and BP’s egregious disregard for human and environmental health.  The film exposes collusion of oil producers, chemical manufacturers, politicians and their campaign funders that resulted in excessive use of Corexit to mask the significance of the oil, and thereby reduce the penalties paid by BP.

Reading all of this makes me wonder what happened to the people, who were discussed in my July 2010 posting, “NOAA Uses Human Canaries to Test Gulf Fish”.

The movie received a standing ovation at the Cannes Film Festival, as it did in its initial screenings in the United States.  Once audiences have a deeper look at the venal nature of the Obama Administration, it will be interesting to watch for any impact on the President’s approval ratings.


 

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Suspicious Trail Of Death

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As I pointed out on June 16, I often enjoy a good conspiracy theory.  That’s just one of the reasons why I wrote a posting back on January 28, 2010 entitled, “The Conspiracy Against Conspiracy Theories”.

The Internet provides us with innumerable sources of conspiracy theories on a vast array of subjects.  A good number of people disregard all of them, as a result of a belief that any conspiracy theory is of dubious veracity.  Others look for revealing signs of a fictitious narrative.  One such indicator becomes obvious when a conspiracy story twists and turns until it eventually finds its way to the Protocols of the Elders of Zion.  Purveyors of those stories are responsible for the anti-Semitic stigma, which the term “conspiracy theory” frequently evokes.

The latest conspiracy theory to catch my attention arises from the Deepwater Horizon oil rig disaster.  On July 22, 2010 – three months after that tragic event – I wrote a piece concerning how BP had begun a campaign of signing-up as many potential expert witnesses as could be found, not only to testify on BP’s behalf in administrative and judicial proceedings – but, more importantly – to buy their silence.  Litigation attorneys often refer to this tactic as, “buying experts off the street”.  As you can see, I have been predisposed to assume that there are likely to be more than a few conspiracies and cover-ups resulting from the Deepwater Horizon blowout.  I concluded that essay with this remark about a gentleman named Matthew Simmons:

On July 21, Bloomberg News televised an interview with Matthew Simmons, founder of the Ocean Energy Institute.  Among the subjects included in the conversation was the topic of BP’s confidentiality agreements.  If what Mr. Simmons said is correct, BP’s legal defense efforts will become futile once the public realizes “we have now killed the Gulf of Mexico”.  At least on that one point, the cretins at BP are probably not the only individuals who are hoping that Mr. Simmons is wrong.

Within a few short weeks of that posting, Matthew Simmons was found dead in his hot tub, having suffered an apparent heart attack.  I immediately became suspicious   . . .

More recently, I came across this posting at a conspiracy-oriented website called The Intel Hub.  That item was based on the investigation conducted by a group called the Real Costal Warriors, who have been concerned about the fact that since the Deepwater Horizon event occurred, nine experts, critics and whistleblowers have died under mysterious circumstances.  The Intel Hub informed us that the suspicious death toll has now included a tenth individual:

George Thomas Wainwright, a BP ROV pilot was supposedly killed in a freak shark attack in Australia.

The avid outdoorsman and Texas A&M graduate was a marine systems engineer involved with capping the Macondo well after last year’s BP oil spill in the Gulf of Mexico.

Wainwright – whose body was recovered by the college friends he was boating with – is the third man killed by a great white in the state in two months.

The aforementioned Matthew Simmons was included in Real Costal Warriors’ list of nine individuals who are either “dead, missing or jailed”.  One of the unfortunate nine – Anthony Nicholas Tremonte – is still alive, although he was jailed after “child porn” was allegedly found on his computer.  A similar “child porn” bust was made against another member of this list – Dr. Thomas B. Manton – who was murdered in prison.  Here is the list as it appears on the Intel Hub website:

April 2, 2011 – Tucker Mendoza, gulf truth activist, still recovering, along with his niece.  Shot four times through his front door, niece hit twice.  Anyone with information regarding this shooting incident should call St. John the Baptist Parish Detectives at 985-359-8769 or Crimestoppers at 504-822-1111.

February 17, 2011 – LSU scientist Gregory Stone, 54 – Died of Unknown Illness.  Stone was an oft-quoted expert concerning the damage the leaked oil might cause to the coast.

January 26, 2011 – Anthony Nicholas Tremonte, age 31 – Mississippi Department of Marine Resources officer, from Ocean Springs arrested on child porn charge.

January 19, 2011 – Dr. Thomas B. Manton, former President and CEO of the International Oil Spill Control Corporation – imprisonment and subsequent murder while jailed.

December 31, 2010 – John P. Wheeler III, a former Pentagon official and presidential aide and a defense consultant and expert on chemical and biological weapons – was beaten to death in an assault, body was discovered in a Wilmington landfill.

November 23, 2010 – James Patrick Black, an incident commander for BP’s Gulf of Mexico oil spill response team, died Tuesday night near Destin, Florida in a small plane crash.

November 15, 2010 – Chitra Chaunhan, age 33, worked in the USF Center for Biological Defense and Global Health Infectious Disease Research – Found dead in an apparent suicide by cyanide at a Temple Terrace hotel.  She leaves behind a husband and a young child.

November, 2010 – MIA Status – Dr. Geoffrey Gardner of Lakeland, FL – Swan expert who “ran into legal trouble over an expired prescription license has closed his practice” — Was investigating unexplained bird deaths near Sarasota abruptly and immediately closed his practice, and apparently his investigation into the deaths of swans in Sarasota, suspected to have been impacted by the BP Oil Disaster.  No one has heard or spoken with him since. Watch this news report covering his investigation before his disappearance:

http://www.youtube.com/watch?v=sqbx2TnbYlc&

October 6, 2010 – Roger Grooters, age 66, was hit by a truck as he passed through Panama City, Florida.  Mr. Grooters had been knocked down and killed close to the end of a 3,200-mile trans-America charity ride to raise awareness about the Gulf Coast oil disaster. He began his cross-country bike ride in Oceanside, California, on September 10th.  Grooters’s family and friends will cycle the final stretch of the journey from the Pacific to the Atlantic in his honour, raising cash to support Gulf Coast families.

August 9, 2010 – Senator Ted Stevens of Alaska, 86, the longest-serving Republican senator in history, was among nine people on board when the 1957 DeHavilland DHC-3 Otter, crashed into a brush- and rock-covered mountainside Monday afternoon about 17 miles north of the southwest Alaska fishing town of Dillingham, federal officials said.  Stevens was the recipient of a whistleblower’s communication relative to the BP Oil Disaster blow-out preventer, and a conspiracy of secrecy to hide the facts from the public.

“You and your fellow Committee members may wish to require BP to explain what action was ultimately instituted to cease the practice of falsifying BOP tests at BP Prudhoe drilling rigs.  It was a cost saving but dangerous practice, again endangering the BP workforce, until I exposed it to Senator Ted Stevens, the EPA, and the Alaska Oil and Gas Conservation Commission.”  The cause of the crash is still an OPEN investigation by the NTSB (http://www.ntsb.gov/ntsb/GenPDF.asp?id=ANC10MA068&rpt=p)

August 13, 2010 – Matthew Simmons, age 67 – Simmons’ body was found Sunday night in his hot tub, investigators said.  An autopsy by the state medical examiner’s office concluded Monday that he died from accidental drowning with heart disease as a contributing factor – “It was painful as can be” to be only insider willing to speak out against the “officials” during the BP Oil Disaster in the Gulf of Mexico.

April 6, 2010 – Scientist Joseph Morrissey, age 46 – cell biologist and college professor, a near-native Floridian who chose to return to South Florida after studying at elite universities – was fatally shot during what police say was a home invasion robbery.

Obviously, the possibility exists that none of these incidents resulted from the involvement of these individuals in the Deepwater Horizon controversy.  In fact, there is no real connection described, which could remotely connect the death of John P. Wheeler III to Deepwater Horizon.  As for the death of George Thomas Wainwright, are we to believe that a Great White shark was trained to attack a particular individual on command?  There is an implicit suggestion that a shark attack was not the true cause of death, without any facts asserted which could bring that cause of death into question.  The number of victims is apparently being exaggerated here because, as that number increases, it seems less likely that we are looking at random coincidences.

The environmental disaster in the Gulf of Corexit presents enough suspicious circumstances and cover-ups whether or not any of these ten tragedies may have been causally connected to some aspect of the event.  Nevertheless, it’s an intriguing conspiracy theory and I’m going to keep it on my radar until it is satisfactorily debunked.


 

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Transparency Gives Way To Cover-Ups

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It hasn’t been limited to the Obama administration and it’s really catching on.  Transparency just isn’t working out anymore.  Things run much more smoothly after a good, old-fashioned cover-up.  This attitude is becoming more popular all over the world.

President Obama’s transition from transparency to opacity became obvious last summer, in his discussion about the catastrophe in the Gulf of Corexit.  Here’s how I discussed this situation on August 26, 2010:

Consider what our President said on August 4th:

“A report out today by our scientists shows that the vast majority of the spilled oil has been dispersed or removed from the water,” Obama said.

Beth Daley of the Boston Globe gave us another example of what our government told us about all that oil:

Earlier this month, Jane Lubchenco, National Oceanic and Atmospheric Administration chief, declared that “at least 50 percent of the oil that was released is now completely gone from the system, and most of the remainder is degrading rapidly or is being removed from the beaches.”

On August 20, we learned about the falsity of the government’s claims that the oil had magically disappeared.  The Washington Post put it this way:

Academic scientists are challenging the Obama administration’s assertion that most of BP’s oil in the Gulf of Mexico is either gone or rapidly disappearing — with one group Thursday announcing the discovery of a 22-mile “plume” of oil that shows little sign of vanishing.

After the Fukushima earthquake and nuclear power plant disaster in March, I immediately became suspicious about the lack of transparency concerning that crisis:

A good deal of the frustration experienced by those attempting to ascertain the status of the potential nuclear hazards at Fukushima, was obviously due to the control over information flow exercised by the Japanese government.  I began to suspect that President Obama might have dispatched a team of Truth Suppressors from the Gulf of Corexit to assist the Japanese government with spin control.

More recently, Vivian Norris reported on what she has learned about the extent of radioactive contamination resulting from the Fukushima events in the Huffington Post.  In the middle of the piece, she took a step back and shared a reaction that many of us were experiencing:

Why is this not on the front page of every single newspaper in the world?  Why are official agencies not measuring from many places around the world and reporting on what is going on in terms of contamination every single day since this disaster happened?  Radioactivity has been being released now for almost two full months!  Even small amounts when released continuously, and in fact especially continuous exposure to small amounts of radioactivity, can cause all kinds of increases in cancers.

In the United States, the EPA has apparently become so concerned that the plume of radioactivity may have contaminated fish, which are being caught off the Pacific coast and served-up at our fine restaurants – that the agency has decided to cut back on radiation monitoring.  That’s right.  Thorough radiation testing of water and fish causes too much transparency – and that’s bad for business.  Susanne Rust of California Watch discussed the reaction this news elicited from a group called Public Employees for Environmental Responsibility (Public Employees – uh-oh!):

The EPA and the Food and Drug Administration increased their radiation monitoring efforts after a massive earthquake and tsunami off the coast of Japan set off the world’s worst nuclear disaster since Chernobyl.

But on May 3, the EPA announced [PDF] in a press release that it was falling back to a business-as-usual schedule of radiation monitoring, citing “consistently decreasing radiation levels.”

*   *   *

“With the Japanese nuclear situation still out of control and expected to continue that way for months and with elevated radioactivity continuing to show up in the U.S., it is inexplicable that EPA would shut down its Fukushima radiation monitoring effort,” said Jeff Ruch, executive director of the watchdog group, in a statement.

*   *   *

According to Public Employees for Environmental Responsibility, the EPA has proposed raising their guideline radiation limits, or Protection Action Guides.  These values are used to guide decision makers about when a clean up is needed after a nuclear incident.

According to Ruch, the new clean up standards are “thousands of times more lax than anything the EPA has ever before accepted.”

Documents obtained by the watchdog group [PDF] via the Freedom of Information Act indicate the EPA made a decision to approve the revised guidelines months ago, but has yet to make a formal announcement.

Meanwhile, aversion to transparency is now being discussed in Geneva.  John Heilprin is reporting for the Associated Press that the Global Fund to Fight AIDS, Tuberculosis and Malaria is considering a reversal of its policy of transparency regarding how it spends the billions of dollars contributed to it.  Mr. Heilprin’s report discusses the hostile reaction to this suggestion – which resulted from revelations (by the organization’s internal transparency program) that the fund lost millions of dollars as a result of fraud and mismanagement.  The proposed solution:  to hell with transparency!  Be sure to read Heilprin’s entire report.  It presents a fine example of the latest trend in coping with the “transparency problem”.


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Obama Fatigue

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Since President Obama first assumed office, it hasn’t been too difficult to find harsh criticism of the new administration.  One need only tune in to the Fox News, where an awkward Presidential sneeze could be interpreted as a “secret message” to Bill Ayers or George Soros.  Nevertheless, with the passing of time, voices from across the political spectrum have joined a chorus of frustration with the Obama agenda.

On February 26, 2009 – only one month into the Obama Presidency – I voiced my suspicion about the new administration’s unwillingness to address the problem of systemic risk, inherent in allowing a privileged few banks to enjoy their “too big to fail” status:

Will Turbo Tim’s “stress tests” simply turn out to be a stamp of approval, helping insolvent banks avoid any responsible degree of reorganization, allowing them to continue their “welfare queen” existence, thus requiring continuous infusions of cash at the expense of the taxpayers?  Will the Obama administration’s “failure of nerve” –  by avoiding bank nationalization — send us into a ten-year, “Japan-style” recession?  It’s beginning to look that way.

By September of 2009, I became convinced that Mr. Obama was suffering from a degree of hubris, which could seal his fate as a single-term President:

Back on July 15, 2008 and throughout the Presidential campaign, Barack Obama promised the voters that if he were elected, there would be “no more trickle-down economics”.  Nevertheless, his administration’s continuing bailouts of the banking sector have become the worst examples of trickle-down economics in American history – not just because of their massive size and scope, but because they will probably fail to achieve their intended result.

Although the TARP bank bailout program was initiated during the final months of the Bush Presidency, the Obama administration’s stewardship of that program recently drew sharp criticism from Neil Barofsky, the retiring Special Inspector General for TARP (SIGTARP).  Beyond that, in his March 29 op-ed piece for The New York Times, Mr. Barofsky criticized the Obama administration’s failure to make good on its promises of “financial reform”:

Finally, the country was assured that regulatory reform would address the threat to our financial system posed by large banks that have become effectively guaranteed by the government no matter how reckless their behavior.  This promise also appears likely to go unfulfilled.  The biggest banks are 20 percent larger than they were before the crisis and control a larger part of our economy than ever.  They reasonably assume that the government will rescue them again, if necessary.

*   *   *

Worse, Treasury apparently has chosen to ignore rather than support real efforts at reform, such as those advocated by Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, to simplify or shrink the most complex financial institutions.

*   *   *

In the final analysis, it has been Treasury’s broken promises that have turned TARP – which was instrumental in saving the financial system at a relatively modest cost to taxpayers – into a program commonly viewed as little more than a giveaway to Wall Street executives.

It wasn’t meant to be that.  Indeed, Treasury’s mismanagement of TARP and its disregard for TARP’s Main Street goals – whether born of incompetence, timidity in the face of a crisis or a mindset too closely aligned with the banks it was supposed to rein in – may have so damaged the credibility of the government as a whole that future policy makers may be politically unable to take the necessary steps to save the system the next time a crisis arises.  This avoidable political reality might just be TARP’s most lasting, and unfortunate, legacy.

Another unlikely critic of President Obama is the retired law school professor who blogs using the pseudonym, “George Washington”.  A recent posting at Washington’s Blog draws from a number of sources to ponder the question of whether President Obama (despite his Nobel Peace Prize) has become more brutal than President Bush.  The essay concludes with a review of Obama’s overall performance in The White House:

Whether or not Obama is worse than Bush, he’s just as bad.

While we had Bush’s “heck of a job” response to Katrina, we had Obama’s equally inept response and false assurances in connection with the Gulf oil spill, and Obama’s false assurances in connection with the Japanese nuclear crisis.

And Bush and Obama’s response to the financial crisis are virtually identical:  bail out the giant banks, let Wall Street do whatever it wants, and forget the little guy.

The American voters asked for change.  Instead, we got a different branch of the exact same Wall Street/military-industrial complex/Big Energy (BP, GE)/Big Pharma party.

Another commentator who has become increasingly critical of President Obama is Robert Reich, Secretary of Labor in the Clinton Administration.  Mr. Obama’s failure to push back against the corporatist politicians, who serve as “reverse Robin Hoods” enriching CEOs at the expense of American workers, resulted in this rebuke from Professor Reich:

President Obama and Democratic leaders should be standing up for the wages and benefits of ordinary Americans, standing up for unions, and decrying the lie that wage and benefit concessions are necessary to create jobs.  The President should be traveling to the Midwest – taking aim at Republican governors in the heartland who are hell bent on destroying the purchasing power of American workers.  But he’s doing nothing of the sort.

As attention begins to focus on the question of who will be the Republican nominee for the 2012 Presidential election campaign, Obama Fatigue is causing many people to appraise the President’s chances of defeat.  The excitement of bringing the promised “change” of 2008 has morphed into cynicism.  Many of the voters who elected Obama in 2008 might be too disgusted to bother with voting in 2012.  As a result, the idea of a Democratic or Independent challenger to Obama is receiving more consideration.  Rolling Stone’s Matt Taibbi recently provided this response to a letter inquiring about the possibility that Elizabeth Warren could make a run for the White House in 2012:

A few months ago I heard a vague rumor from someone who theoretically would know that such a thing was being contemplated, but I don’t know anything beyond that.  I wish she would run.  I’m not sure if it would ultimately be a good thing or a bad thing for Barack Obama – she could fatally wound his general-election chances by exposing his ties to Wall Street – but I think she’s exactly what this country needs. She’s totally literate on the finance issues and is completely on the side of human beings, as opposed to banks and oil companies and the like.  One thing I will say:  if she did run, she would have a lot more support from the press than she probably imagines, as there are a lot of reporters out there who are reaching the terminal-disappointment level with Obama ready to hop on the bandwagon of someone like Warren.

If Elizabeth Warren ultimately decides to make a run for The White House, Mr. Obama should do the right thing:  Stop selling the sky to people and step aside.


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Debunking Oil Industry Propaganda

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The political crisis in Egypt is being used by tools of the oil industry to – once again – put the scare into people about our dependence on “foreign oil”.  Stephen Moore was on Fox News talking-up the old “drill baby, drill” sentiment on February 2, lamenting our lack of “energy independence”.  I just wish Moore would restrict himself to a diet of Gulf shrimp.  I doubt whether it would change his mind, although it might make him more fun to watch on television as the hydrocarbons gradually work their karmic magic.

The myth of “foreign oil” is one of my pet peeves for several reasons – not the least of which is the fact that the one foreign oil company, which has done the most harm to the United States is British Petroleum, rather than some enterprise from the Middle East.

Much as been written to dispel the myths of “foreign oil” and “energy independence”, although the spokestools of the oil industry do all they can to pretend as though such information does not exist.  Take for example, the essay written by David Saied for the Ludwig von Mises Institute entitled “America’s Economic Myths”, wherein he debunked the myth of “dependence on foreign oil”:

This myth basically suggests that the problem with oil prices is due to America’s “dependence” on foreign oil.  One of the worst economic myths, it plays on economic nationalism and on xenophobic feelings that are sometimes pervasive in the United States.

The high price of oil has nothing to do with its origin; the price of oil is determined in international markets.  Even if the United States were to produce 100% of the oil it consumes, the price would be the same if the worldwide supply and demand of oil were to remain the same.  Oil is a commodity, so the price of a barrel produced in the United States is basically the same as the price of a barrel of oil produced in any other country, but the costs of labor, land, and regulatory compliance are usually higher in the United States than in third-world countries.  Lowering these costs would help increase supply.  Increasing supply, whether in the United States or elsewhere, will push prices lower.

Importing a product does not mean you “depend” on it.  This is like saying that when we “import” food from our local supermarket we “depend” on that supermarket.  The opposite is usually true; exporters depend on us, since we are the customers.  Also, importing a product usually means buying at lower prices, whereas producing in the United States often means consuming at higher prices.  This point is proven when we see the cheap imports we can purchase from China and the higher prices of many of these same products manufactured in the United States.  The amazing thing is that the protectionists claim, on the one hand, that America should be “protected” from cheap imports, but when it comes to oil, they say we should be “protected” from “expensive imported” oil.

Most, if not all, of the higher price of oil can be explained by the expansion of the money supply or the debasement of the dollar.  The foreign producers are not at fault; our national central bank is the culprit.

As a fan of the Real Clear Markets section of the Real Clear Politics website, I was pleased to see this recent commentary by John Tamny, wherein he had a good laugh at T-Bone Pickings for accidentally revealing the absurdity of the “energy independence” meme:

As this column has shown more than once, the price of a barrel of crude tends to revert to 1/15th of an ounce of gold, and as of Tuesday, oil’s price increase merely brought it in line with its historical cost.

*   *   *

Oil is oil is oil, and it’s a commodity whose price is discovered in deep world markets.

Canada is seemingly “energy independent”, but assuming ongoing Middle East uncertainty, its citizens will – like us – buy gasoline the price of which is based on the cost per barrel set in global markets.  Much as we might like to naively fantasize about walling ourselves off from international market realities, we’ll never be immune to the activities around the world that impact oil’s price.  Canada and its citizens won’t be either.

*   *   *

So while we can expect lots of breathy commentary about the need for energy independence in the coming weeks, particularly if Middle East unrest spreads, cooler heads will hopefully prevail.  The false God of independence will not wall us off from supply-driven increases, and more important, the waste of  human and financial capital necessary to achieve the silly notion would be far more economically crippling than any presumed supply shock could ever hope to be.

My own dream of “energy independence” involves owning an electric car, which I can recharge with a “solar power station” similar to what we see advertised on television – along with another “solar power station” to provide my home electricity.  “Energy independence” can only be achieved when American consumers are liberated from the tyranny of the oil companies and the power utilities.


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More Bad News From The Gulf

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The never-ending catastrophe caused by the Deepwater Horizon oil rig blowout receives minimal coverage by the mainstream media.  An onslaught of awful news continues to flow out from the Gulf of Corexit, although interested citizens seeking to access that information need to do a little “drilling” of their own find it.  As I noted just before November’s mid-term elections, the BP-sponsored, lamestream media seem more than happy with the claim of  “mission accomplished” voiced by Coast Guard Rear Admiral Paul Zukunft (the man in charge of the federal response to the disaster) and his top science adviser, Steve Lehmann.  Last July, I discussed the rather peculiar and questionable response to the crisis provided by the National Oceanic and Atmospheric Administration (NOAA).  I focused on NOAA’s bizarre program of using “human canaries” to perform smell and taste tests on Gulf fish to ascertain the presence of contaminants.  No kidding.

Since last summer, I have been keeping up with the Gulf of Corexit tragedy by checking in on Washington’s Blog, which has done a diligent job of keeping the spotlight on everything that has been going on with the cover-up investigation of the events that have transpired both before and after the blowout event.  This posting from October 23 provided some links to a number of genuinely scary stories concerning some awful physiological consequences experienced by those who have been immersed in that toxic environment.  More recently, Washington’s Blog discussed a proposal by Navy Secretary Ray Mabus to “force the good men and women in our armed services” to eat Gulf coast seafood.

While our government persists in contriving grizzly science fair projects involving human consumption of seafood from the Gulf of Corexit, the concerned people at the Florida Oil Spill Law website continue to provide a number of important revelations that will come as quite a surprise to those who have been preoccupied with Christina Aguilera’s divorce.  A visit to that site provides links to stories such as this report by Randy Kistner of the Natural Resources Defense Council:

It all started on a warm spring night last May in the fertile fishing grounds near Barataria Bay.  BP’s busted undersea well was in its early days of eruption, spewing more than two million gallons of Louisiana crude into the sea each day.  Todd and Darla were trawling at night near the Gulf in Four Bayou Pass, trying to capture as many shrimp as they could before the offshore oil finally made its way to the coast.  Unknown to Todd and Darla, that night would be the first time the massive oil and chemical dispersant mix began pouring into the Barataria Bay.

Darla remembers what it felt that night after she was doused with water that she believes was full of oil and dispersants.  It was like being covered in stinging jellyfish, she says, except there were no jellyfish to be found.

“My husband shook the nets and water went on me.  I didn’t have a menstrual period for four months.  I had rash, itching irritated skin, something similar to bronchitis which I’ve never had.  It lasted for three or four months.  Eye irritations, heart pains, heart palpitations, involuntary muscles jumping all over my body, and continuous headaches day and night … all I would get is a about a 15 minute to a 20 minute break  from pain relievers that are specifically designed to get rid of headaches, that’s the only break I would get.   And I had to eat those 24 hours a day, seven days a week for three to four months … And they want to tell me to eat the seafood?  Why don’t they eat the seafood.  I’ll go catch them and I’ll throw BP a big old boil … I’m not eating it.”

On November 29, Florida Oil Spill Law provided a link to this video report appearing at the Local 15 TV website:

“Still in shock”:  Alabama shrimpers find catch “coated in oil” at area open for fishing — Boat to be decontaminated

Meanwhile, those who rely on the mainstream media for information about the current situation in the Gulf can expect to find reports such as this passage from a December 9 piece appearing in The Miami Herald:

Claims have come from all types of South Florida businesses and residents.  They include commercial fishermen, marinas, restaurants, hotels, dive watering holes, real estate agents, waterfront property owners, lobster trap makers, municipalities and even Ripley’s Believe It or Not Museum in Key West.

Some find it hard to believe these claims.  After all, the spill occurred hundreds of miles away and not one drop of oil has reached South Florida’s waters, shorelines or beaches.

“It wasn’t the reality.  It was the perception that hurt us, and is still affecting us,” said Harold Wheeler, executive director of the Monroe County Tourist Development Council.  “Many people think we got the oil — and still have it.”

On the other hand, some find it hard to believe the information they are being fed by the mainstream media, NOAA and other government agencies.  Of course, there is never a shortage of people anxious to jump on the bandwagon to file bogus claims in the wake of a disaster.  Nevertheless, the concern held by many of us in South Florida is that if there are potentially harmful levels of contaminants presently in the waters off the Florida Keys – it could be a long time before we find out about them.



Bad Report Card Haunts Democrats At Mid-Terms

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It doesn’t take much time or effort to find out how or why the Democrats have alienated so many independent voters (and so much of their own base) during the 2010 election cycle.  You don’t need to look to the Fox News or Andrew Breitbart for an explanation.   Reading through the opinion pages of The New York Times should provide you with a good understanding of what the Democrats have been doing wrong.

One common theme voiced by many critics of the Obama administration has been its lack of interest in prosecuting those responsible for causing the financial crisis.  Don’t hold your breath waiting for Attorney General Eric Hold-harmless to initiate any criminal proceedings against such noteworthy individuals as Countrywide’s Angelo Mozilo or Dick Fuld of Lehman Brothers.  On October 23, Frank Rich of The New York Times mentioned both of those individuals while lamenting the administration’s failure to prosecute the “financial crimes that devastated the nation”:

The Obama administration seems not to have a prosecutorial gene.   It’s shy about calling a fraud a fraud when it occurs in high finance.
*   *   *
Since Obama has neither aggressively pursued the crash’s con men nor compellingly explained how they gamed the system, he sometimes looks as if he’s fronting for the industry even if he’s not.

The special treatment afforded to the perpetrators of the frauds that helped create the financial crisis wasn’t the only gift to Wall Street from the Democratically-controlled White House, Senate and Congress.  The financial “reform” bill was so badly compromised (by the Administration and Senate Democrats, themselves) as it worked its way through the legislative process, that it is now commonly regarded as nothing more than a hoax.  Frank Rich finds it ironic that the voters are about to return power to “those who greased the skids” to facilitate the financial catastrophe:

We can blame much of this turn of events on the deep pockets of oil billionaires like the Koch brothers and on the Supreme Court’s Citizens United decision, which freed corporations to try to buy any election they choose.  But the Obama White House is hardly innocent.  Its failure to hold the bust’s malefactors accountable has helped turn what should have been a clear-cut choice on Nov. 2 into a blurry contest between the party of big corporations and the party of business as usual.

David Weidner of MarketWatch recently discussed the idea of appointing a special prosecutor to bring the Wall Street culprits to justice.  After acknowledging the often-used pushback argument made by those opposed to such a prosecutorial effort — that those cases are impossibly difficult to advance through the legal system — Weidner made this observation:

These cases may be difficult, but they’re not impossible.  And given the creation of a lawless marketplace where one economy-destroying decision can be made on top of another for short-term personal gains, something has to be done.

But nothing’s happening.  Maybe it’s because of the money Wall Street lavishes on Congress.  Perhaps it’s the close ties between the industry and the administration.   It could be, as Nouriel Roubini said in the new documentary “Inside Job,” investigators are “afraid” of what they will find.

A special prosecutor, in a bid to make a name for himself or herself, might be immune to such pressure.   It’s our best hope for outing the scoundrels and creating an industry where greed finally takes a backseat to the law.

Back at The New York Times, Charles Blow brought our attention to the recent rant by Attorney General Eric Hold-harmless, who – despite his uselessness in the aftermath of the financial Ponzi-crisis – stands at the ready to prosecute marijuana smokers in the event that Proposition 19 becomes law in The Golden State.  One would think that the Obama administration might prefer that a large bloc of voters should remain stoned for as long as possible, so as to prevent those citizens from realizing what a lousy job their President is doing for them.  Worse yet, Charles Blow explained how the Democrats have been advancing the Clinton-era Byrne Formula Grant Program, as a vehicle for financing a war on pot smokers, over the objections of former President George W. Bush and conservative groups, who emphasized that the program “has proved to be an ineffective and inefficient use of resources.”  Nevertheless, the Democrats were able to direct two billion dollars from the financial stimulus program to the so-called Byrne Grants.  Remember: that’s two billion dollars from the American Recovery and Reinvestment Act of 2009 – which was supposed to put people back to work and save the economy – misappropriated to the effort of putting pot smokers in jail.  I guess that the Obama Justice Department has to look like it’s doing something.

Another issue that has not escaped the public’s radar – despite the efforts of the Obama administration – is the never-ending catastrophe in the Gulf of Corexit, caused by the Deepwater Horizon oil rig blowout.  Washington’s Blog recently featured an important posting, with links to several articles about this environmental disaster, which the administration wants you to forget about (at least until after the election).  The BP-sponsored, mainstream media seem more than happy with the claim of  “mission accomplished” voiced by Coast Guard Rear Admiral Paul Zukunft (the man in charge of the federal response) and his top science adviser, Steve Lehmann.   A review of any one of the articles linked at the Washington’s Blog posting will scare the hell out of you — just in time for Halloween (and Election Day).  Nevertheless the people who will get the worst haunting of Halloween 2010 will be the Democrats.  Unfortunately for us, most of them deserve it.


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Keeping Americans Dumb

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August 26, 2010

Much has been written lately about the fact that Americans are becoming increasingly dumb.  How has this happened?  Some commentators have expressed the opinion that young people spend too much time playing video games and not enough time reading.  Whatever the cause, the statistics are shocking.  Lloyd de Vries recently did a report for CBS News concerning a Roper Poll of people aged 18-24, conducted for National Geographic.  Despite the wall-to-wall coverage of Hurricane Katrina, one-third of those polled could not locate Louisiana on a map.  Only 50 percent could locate New York State on a map.  Sixty percent could not locate Iraq on a map of the Middle East.  A recent Gallup Poll revealed more of the same:

When Americans are asked to identify the country from which America gained its independence, 76% correctly name Great Britain.  A handful, 2%, think America’s freedom was won from France, 3% mention some other country (including Russia, China, and Mexico, among others named), while 19% are unsure.

*   *   *

Only 66% of those aged 18-29 know that America gained its independence from England, compared to 79% of those aged 30 and older.

My favorite result from that poll was the revelation that 18 percent of the respondents believe that the sun revolves around the earth.  Roll over, Copernicus!

After reading so much of the news coverage concerning the Deepwater Horizon catastrophe in the Gulf of Mexico (it’s west of Florida and south of the Alabama – Mississippi border) I’m beginning to suspect that the news and entertainment industries are responsible for dumbing-down Americans.  While we’re at it – we should be mindful of the role of the United States government in this effort.  Consider what our President said on August 4th:

“A report out today by our scientists shows that the vast majority of the spilled oil has been dispersed or removed from the water,” Obama said.

Beth Daley of the Boston Globe gave us another example of what our government told us about all that oil:

Earlier this month, Jane Lubchenco, National Oceanic and Atmospheric Administration chief, declared that “at least 50 percent of the oil that was released is now completely gone from the system, and most of the remainder is degrading rapidly or is being removed from the beaches.’’

On August 20, we learned about the falsity of the government’s claims that the oil had magically disappeared.  The Washington Post put it this way:

Academic scientists are challenging the Obama administration’s assertion that most of BP’s oil in the Gulf of Mexico is either gone or rapidly disappearing — with one group Thursday announcing the discovery of a 22-mile “plume” of oil that shows little sign of vanishing.

As time drags on, it is becoming more apparent that both BP and the federal government are deliberately trying to conceal the extent of the damage caused by the Deepwater Horizon blowout.  Lisa Hooper-Bui is a professor of entomology at Louisiana State University.  She recently wrote an op-ed piece for The New York Times, discussing the frustration experienced by scientists (including herself) who are attempting to measure the impact of this event on the environment.  As it turns out, unless you know “the secret handshake” – you might as well give up because you ain’t findin’ out nuttin’:

The problem is that researchers for BP and the government are being kept quiet, and their data is unavailable to the rest of the community.  When damages to the gulf are assessed in court or Congress, there might not be enough objective data to make a fair judgment.

*   *   *

Independent researchers like me and my team — we study the effect of things like oil and dispersants on insects — have had to rely on the meager discretionary funds provided by our university departments, particularly in the early weeks of the disaster.  And, as the weeks have rolled into months, we have found ourselves blocked from a widening list of sites, all of which are integral to completing our investigations.

America’s dumbed-down “sheeple” have been conditioned by the news media to disregard accounts of cover-ups, unless such accounts have been authorized by the corporate sponsors of those news outlets.  The expression “conspiracy theory” is invoked to serve as a stamp of falsehood on any factual account running contrary to a mainstream-approved narrative.  The usual tactics involve the use of such terms as “grassy knoll” or “Oliver Stone” as though the evidence disputing the “single bullet theory” of President Kennedy’s assassination has been conclusively discredited and that anyone who rejects the Warren Report is a fool.  (In fact, the most recent of the thousands of books on this subject —  Head Shot by physicist G. Paul Chambers, PhD — demonstrates that the physics behind the lone-gunman theory is not only wrong — but scientifically impossible.)

Uncritical reliance of the authority of the “mainstream” news media (and – for that matter – whatever can be found on the Internet) has also served to “dumb-down” Americans in a big way.  The horizons of our reality have been crimped to exclude “troublesome” information and our attention has been focused on American Idol drivel.  I was reminded of another example of the “conspiracy theory” stigma when I stumbled across this piece, appearing in the Financial Times, which was co-authored by President Clinton’s former Chief of Staff, John Podesta.  The article presented a great argument for allowing the Bush tax cuts to expire for the wealthiest two percent of households.  When I saw Podesta’s name, I was reminded of his position on another so-called, “cover-up conspiracy theory” —  the subject of UFOs and what the government really knows about them.  Here is a video clip of John Podesta making the case for disclosure of data compiled by the United States government on the subject.  In a speech before the National Press Club on November 14, 2007, Mr. Podesta said this:

“I think it’s time to open the books” (on government investigations of UFOs).    .  .  .  “We ought to do it because it’s right.  We ought to do it because the American people, quite frankly, CAN handle the truth and we ought to do it because it’s the law.”

Yes, the truth is out there  —  but if you limit your information intake to what you are fed by the mainstream media (or any other authoritarian source) – you might not find it.



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Financial Reform Bill Exposed As Hoax

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June 28, 2010

You don’t have to look too far to find damning criticism of the so-called financial “reform” bill.  Once the Kaufman-Brown amendment was subverted (thanks to the Obama administration), the efforts to solve the problem of financial institutions’ growth to a state of being “too big to fail” (TBTF) became a lost cause.  Dylan Ratigan, who had been fuming for a while about the financial reform charade, had this to say about the product that emerged from reconciliation on Friday morning:

It means that the same people who brought you these horrible changes — rising wealth discrepancy, massive unemployment and a crumbling infrastructure – have now further institutionalized the policies that will keep the causes of these problems firmly in place.

The best trashing of this bill came from Tyler Durden at Zero Hedge:

Congrats, middle class, once again you get raped by Wall Street, which is off to the races to yet again rapidly blow itself up courtesy of 30x leverage, unlimited discount window usage, trillions in excess reserves, quadrillions in unregulated derivatives, a TBTF framework that has been untouched and will need a rescue in under a year, non-existent accounting rules, a culture of unmitigated greed, and all of Congress and Senate on its payroll.  And, sorry, you can’t even vote some of the idiots that passed this garbage out:  after all there is a retiring lame duck in charge of it all.  We can only hope his annual Wall Street (i.e. taxpayer funded) annuity will satisfy his conscience for destroying any hope America could have of a credible financial system.

*   *   *

In other words, the greatest theatrical production of the past few months is now over, it has achieved nothing, it will prevent nothing, and ultimately the financial markets will blow up yet again, but not before the Teleprompter in Chief pummels the idiot public with address after address how he singlehandedly was bribed, pardon, achieved a historic event of being the only president to completely crumble under Wall Street’s pressure on every item that was supposed to reign in the greatest risktaking generation (with Other People’s Money) in history.

Robert Lenzner of Forbes focused his criticism of the bill on the fact that nothing was done to limit the absurd leverage used by the banks to borrow against their capital.  After all, at the January 13 hearing of the Financial Crisis Inquiry Commission, Lloyd Bankfiend of Goldman Sachs and JP Morgan’s Dimon Dog admitted that excessive leverage was a key problem in causing the financial crisis.  As I discussed in “Lev Is The Drug”:

Lloyd Blankfein repeatedly expressed pride in the fact that Goldman Sachs has always been leveraged to “only” a  23-to-1 ratio.  The Dimon Dog’s theme was something like:  “We did everything right  . . . except that we were overleveraged”.

At Forbes, Robert Lenzner discussed the ugly truth about how the limits on leverage were excised from this bill:

The capitulation on this matter of leverage is extraordinary evidence of Wall Street’s power to influence Congress through its lobbying dollars.  It is another example of the public servants serving the agents of finance capitalism.  After pumping in gobs of sovereign credit to replace the credit that had been wiped out and replace the supply of credit to the economic system, a weak reform bill will just be an invitation to drum up the leverage that caused the crisis in the first place.

Another victory for the lobbyists came in their sabotage of the prohibition on proprietary trading (when banks trade with their own money, for their own benefit).  The bill provides that federal financial regulators shall study the measure, then issue rules implementing it, based on the results of that study.  The rules might ultimately ban proprietary trading or they may allow for what Jim Jubak of MSN calls the “de minimus” (trading with minimal amounts) exemption to the ban.  Jubak considers the use of the de minimus exemption to the so-called ban as the likely outcome.  Many commentators failed to realize how the lobbyists worked their magic here, reporting that the prop trading ban (referred to as the “Volcker rule”) survived reconciliation intact.  Jim Jubak exposed the strategy employed by the lobbyists:

But lobbying Congress is only part of the game.  Congress writes the laws, but it leaves it up to regulators to write the rules.  In a mid-June review of the text of the financial-reform legislation, the Chamber of Commerce counted 399 rule-makings and 47 studies required by lawmakers.

Each one of these, like the proposed de minimus exemption of the Volcker rule, would be settled by regulators operating by and large out of the public eye and with minimal public input.  But the financial-industry lobbyists who once worked at the Federal Reserve, the Treasury, the Securities and Exchange Commission, the Commodities Futures Trading Commission or the Federal Deposit Insurance Corp. know how to put in a word with those writing the rules.  Need help understanding a complex issue?  A regulator has the name of a former colleague now working as a lobbyist in an e-mail address book.  Want to share an industry point of view with a rule-maker?  Odds are a lobbyist knows whom to call to get a few minutes of face time.

At the Naked Capitalism website, Yves Smith served up some more negative reactions to the bill, along with her own cutting commentary:

I want the word “reform” back.  Between health care “reform” and financial services “reform,” Obama, his operatives, and media cheerleaders are trying to depict both initiatives as being far more salutary and far-reaching than they are.  This abuse of language is yet another case of the Obama Administration using branding to cover up substantive shortcomings.  In the short run it might fool quite a few people, just as BP’s efforts to position itself as an environmentally responsible company did.

*   *   *

So what does the bill accomplish?  It inconveniences banks around the margin while failing to reduce the odds of a recurrence of a major financial crisis.

The only two measures I see as genuine accomplishments, the Audit the Fed provisions, and the creation of a consumer financial product bureau, do not address systemic risks.  And the consumer protection authority was substantially watered down.  Recall a crucial provision, that banks be required to offer plain vanilla variants of products, was axed early on.

So there you have it.  The bill that is supposed to save us from another financial crisis does nothing to accomplish that objective.  Once this 2,000-page farce is signed into law, watch for the reactions.  It will be interesting to sort out the clear-thinkers from the Kool-Aid drinkers.





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