Thursday, May 20, 2010

The Bad Guys Get Away

I am an artist...It's self-evident that what that word implies is looking for something all the time without ever finding it in full. It is the opposite of saying, "I know all about it. I've already found it." As far as I'm concerned, the word means, "I am looking. I am hunting for it. I am deeply involved."

---Vincent Van Gogh

I scarcely remember counting upon any Happiness---I look not for it if it be not in the present hour---nothing startles me beyond the Moment. The setting sun will always set me to rights---or if a Sparrow come before my Window I take part in its existence and pick about the Gravel.

---John Keats

Hast thou named all the birds without a gun? Loved the woodrose, and left it on its stalk?

---Ralph Waldo Emerson

I guess our political system is based on Britain's history, with both of us taking our model from Rome's experiment in Greek democracy. But toward the end, before the so-called barbarians just walked into town and took over, Rome's system had fallen apart. The senate bickered and accomplished nothing. The executive could speak but had to get into the emperor's pocket for funding. The military was intervening everywhere. The courts sentenced questioners to crucifixion. And the emperors were mad with greed and lust.

My teaching career was spent largely celebrating our republic's ways of doing things politically. And just yesterday, I urged a friend to write her federal congressperson for help with a local post office. I guess I'm still a believer. But those primary results and all the conversation I hear---if anybody even bothers to talk about it---demonstrate America has lost faith dramatically in Washington, DC.

Two articles this morning explain to me how and why this has happened. The first is by Glenn Greenwald, previously a constitutional law and civil rights litigator in New York. He is the author of the book "How Would a Patriot Act?," a critique of the Bush administration's use of executive power, released in May 2006. His second book, "A Tragic Legacy", examines the Bush legacy. In one dynamic paragraph he sums up our disillusion~~~

"It makes perfect sense that the country loathes the political establishment. Just look at its rancid fruits over the past decade: a devastating war justified by weapons that did not exist; a financial crisis that our Nation's Genuises failed to detect and which its elites caused with lawless and piggish greed; elections that seem increasingly irrelevant in terms of how the Government functions; grotesquely lavish rewards for the worst culprits juxtaposed with miserable unemployment and serious risks of having basic entitlements (Social Security) cut for ordinary Americans; and a Congress that continues to be owned, right out in the open, by the very interests that have caused so much damage. The political establishment is rotten to its core, and the only thing that's surprising is that the citizenry's contempt isn't even more intense than it is. But precisely because that dynamic so clearly transcends Left/Right or Democratic/GOP dichotomies, little effort is expended to understand or explain it."

I recommend the article as well because he points out the United States free press repeats and repeats "anti-incumbency," but doesn't explain WHY. Is this the time the truth came out? Is that what we want?

On Tuesday reporter Amy Goodman published an article at TruthDig that describes step by step how the "leak" in the Gulf happened. If you didn't happen to see "60 Minutes" last week, have you heard of anyone else covering this?

"The gulf oil eruption (for that is what it is, not a 'spill' and not merely a 'leak,' but the unleashing of a hugely powerful jet of oil and gas under enormous pressure, a mile beneath the ocean surface) is likely to become the worst environmental disaster in United States history.

"Mike Williams, the chief electronics technician of the Transocean oil rig, detailed on '60 Minutes' the negligence of both Transocean and BP in the lead-up to the blowout. Williams said a mistake was made during a pressure test, which damaged a critical safety gasket, or annular. Later, a crew member reported finding chunks of the rubber gasket in the effluent that surfaces during the drilling process. This annular is part of the blowout preventer, which is the device on the ocean floor, atop the well, that is supposed to serve as the fail-safe, to prevent exactly the type of catastrophe that is unfolding now. There also was a known electrical failure on the blowout preventer.

"Williams also detailed an argument aboard the Deepwater Horizon rig between the Transocean manager and the BP manager. Transocean had been hired to drill the hole and to plug it until BP returned to begin oil extraction. The argument involved how best to plug the hole.

"Transocean, Williams recounted, wanted to leave a heavy mudlike substance in the well shaft, to help the concrete plugs (installed by Halliburton) stay in place. BP wanted the substance removed, ostensibly to expedite the later extraction. 'BP won,' Robert Bea, a University of California-Berkeley engineering professor, told '60 Minutes,' and the concrete plugs failed. The damaged blowout preventer failed as well, and the disaster soon followed."

Can anything be done? Will anything be done? Or, as one guy remarked, does BP actually stand for Beyond Prosecution? Is it too late?

Saturday, May 08, 2010

Wild Day On Wall Street

Journalist Matt Taibbi on Colbert Nation

If you were to put aside what you know because of what other people told you, how much of what you know do you truly know for yourself? If you look for the origin of your thoughts, of your life, of your universe, can you find it? Can you find where this moment comes from or where it goes home to?

---John Tarrant

Learn the changes and then forget them.

---Charlie Parker

I have learned to have very modest goals for society and myself, things like clean air, green grass, children with bright eyes, not being pushed around, useful work that suits one's abilities, plain tasty food...

---Paul Goodman

The rest of the headline, that I'm using for a title, went like this in yesterday's Washington Post: Wild day on Wall Street leaves electronic exchanges under scrutiny
By David Cho and Jia Lynn Yang. Then the report starts out, "Stock markets went haywire on Thursday. Shares were already falling over fears of fiscal problems in Europe when something, perhaps a structural flaw in U.S. markets, dragged prices into a historic and breathtaking plunge. In the span of minutes, the Dow Jones industrial average plummeted nearly 1,000 points from its previous close -- a record -- and whipsawed back up, creating one of the wildest trading days ever." The lead story in the New York Times this morning says nobody can figure out yet what happened.

Attempts were made a couple of times to teach me about economics during my schooling. Once was in high school I think, maybe for social studies. We had to choose a stock or 2 and follow them in the newspaper for a week or something. I guess we hoped it went up, but if that's supposed to be exciting it didn't get to me. Then in college there was a required Introduction to Economics, by which was meant US capitalism. I don't remember a single word of the course, but I don't think "hedge fund" or "derivative" was covered.

Nobody ever taught me about socialism, except maybe my great uncle by example. He was mayor of Jamestown, New York, my hometown, for about a zillion years, and was declared Mayor Emeritus because back in the 1930s he thought it was a good idea to have municipal light plants and things like that. He believed citizens should have direct input into how much utilities cost and how things are run. I suppose he was a socialist of some kind. You know how we Swedes are.

I get along with business majors and the like. They seem to have a good sense of humor. But I can't stand any of them once they become executives. They seem to get mean and ugly somewhere along the way. And I don't understand the stock market or much about how capitalism works...and it doesn't interest me. When Reagan was elected I thought probably it was the time to make a lot of money. My wife and I talked it over and we decided we didn't want to get on board...and we didn't. It was sort of a vow, not of poverty exactly, but of middle class contentment.

Well, it turns out contentment being middle class is more and more like being poor. How did that happen? And now we hear about necessary "financial reform." I find nowdays I can't leave my doctor or my insurance company or my union or political representatives to take care of things for me. I have to do the legwork and let them know I'm watching what they do. Life in America didn't used to be like that. My parents trusted those people and it worked out pretty well...until they voted for Reagan anyway.

So, if like most Americans, I don't know anything about financial reform, what am I supposed to do? What happened anyway? What place does Goldman Sachs have in my middle class life? I saw a bumper sticker or something the other days that said, "If America is going down the drain, Goldman Sachs has figured out a way to be that drain." The other day those pirates from Somalia said they're a subsidiary of Goldman Sachs. I suppose that's a joke, but there's a cutting edge to it. How does a guy who doesn't know the language find out what needs to be reformed and why?

Matt Taibbi's been writing about this stuff in Rolling Stone for over a year now. In some ways he's writing the same story over and over again in hope that eventually we're going to understand what he's talking about. Matt was a wonderful political correspondent during the presidential election. He was on the campaign trails of both candidates and wrote candidly about the problems and the hopes. But does he know economics?

A year ago April he wrote a long and involved piece called The Big Takeover. The article was about the bailout...but Taibbi's view of it is that "Wall Street insiders are using the bailout to stage a revolution." And he isn't kidding. What was wrong with Wall Street before the bailout got even wronger afterwards and now. I'm having trouble this morning finding the original article at Rolling Stone, but Common Dreams has maintained it (alas, without Victor Juhasz' brilliant illustrations) and I'll give you a few excerpts to convince you to read the whole thing~~~

"The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history - some $61.7 billion. In the final three months of last year (2008), the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses)...

"The problem was, none of this was based on reality. 'The banks knew they were selling crap,' says a London-based trader from one of the bailed-out companies. To get AAA ratings, the CDOs (Collateralized-Debt Obligation) relied not on their actual underlying assets but on crazy mathematical formulas that the banks cooked up to make the investments look safer than they really were. 'They had some back room somewhere where a bunch of Indian guys who'd been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years,' says one young trader who sold CDOs for a major investment bank. 'It was nuts...'

"In its simplest form, a CDS (Credit-Default Swap) is just a bet on an outcome. Say Bank A writes a million-dollar mortgage to the Pope for a town house in the West Village. Bank A wants to hedge its mortgage risk in case the Pope can't make his monthly payments, so it buys CDS protection from Bank B, wherein it agrees to pay Bank B a premium of $1,000 a month for five years. In return, Bank B agrees to pay Bank A the full million-dollar value of the Pope's mortgage if he defaults. In theory, Bank A is covered if the Pope goes on a meth binge and loses his job...

"(Robert) Cassano (the head of a tiny, 400-person unit within the company called AIG Financial Products, or AIGFP) was selling so-called 'naked' CDS deals. In a 'naked' CDS, neither party actually holds the underlying loan. In other words, Bank B not only sells CDS protection to Bank A for its mortgage on the Pope - it turns around and sells protection to Bank C for the very same mortgage. This could go on ad nauseam: You could have Banks D through Z also betting on Bank A's mortgage. Unlike traditional insurance, Cassano was offering investors an opportunity to bet that someone else's house would burn down, or take out a term life policy on the guy with AIDS down the street. It was no different from gambling, the Wall Street version of a bunch of frat brothers betting on Jay Feely to make a field goal. Cassano was taking book for every bank that bet short on the housing market, but he didn't have the cash to pay off if the kick went wide.

"In a span of only seven years, Cassano sold some $500 billion worth of CDS protection, with at least $64 billion of that tied to the subprime mortgage market. AIG didn't have even a fraction of that amount of cash on hand to cover its bets, but neither did it expect it would ever need any reserves. So long as defaults on the underlying securities remained a highly unlikely proposition, AIG was essentially collecting huge and steadily climbing premiums by selling insurance for the disaster it thought would never come...

"Cassano's outrageous gamble wouldn't have been possible had he not had the good fortune to take over AIGFP just as Sen. Phil Gramm - a grinning, laissez-faire ideologue from Texas - had finished engineering the most dramatic deregulation of the financial industry since Emperor Hien Tsung invented paper money in 806 A.D. For years, Washington had kept a watchful eye on the nation's banks. Ever since the Great Depression, commercial banks - those that kept money on deposit for individuals and businesses - had not been allowed to double as investment banks, which raise money by issuing and selling securities. The Glass-Steagall Act, passed during the Depression, also prevented banks of any kind from getting into the insurance business.

"But in the late Nineties, a few years before Cassano took over AIGFP, all that changed. The Democrats, tired of getting slaughtered in the fundraising arena by Republicans, decided to throw off their old reliance on unions and interest groups and become more 'business-friendly.' Wall Street responded by flooding Washington with money, buying allies in both parties. In the 10-year period beginning in 1998, financial companies spent $1.7 billion on federal campaign contributions and another $3.4 billion on lobbyists. They quickly got what they paid for. In 1999, Gramm co-sponsored a bill that repealed key aspects of the Glass-Steagall Act, smoothing the way for the creation of financial megafirms like Citigroup. The move did away with the built-in protections afforded by smaller banks. In the old days, a local banker knew the people whose loans were on his balance sheet: He wasn't going to give a million-dollar mortgage to a homeless meth addict, since he would have to keep that loan on his books. But a giant merged bank might write that loan and then sell it off to some fool in China, and who cared?..

"The situation worsened in 2004, in an extraordinary move toward deregulation that never even got to a vote. At the time, the European Union was threatening to more strictly regulate the foreign operations of America's big investment banks if the U.S. didn't strengthen its own oversight. So the top five investment banks got together on April 28th of that year and - with the helpful assistance of then-Goldman Sachs chief and future Treasury Secretary Hank Paulson - made a pitch to George Bush's SEC chief at the time, William Donaldson, himself a former investment banker. The banks generously volunteered to submit to new rules restricting them from engaging in excessively risky activity. In exchange, they asked to be released from any lending restrictions. The discussion about the new rules lasted just 55 minutes, and there was not a single representative of a major media outlet there to record the fateful decision.

"Donaldson OK'd the proposal, and the new rules were enough to get the EU to drop its threat to regulate the five firms. The only catch was, neither Donaldson nor his successor, Christopher Cox, actually did any regulating of the banks. They named a commission of seven people to oversee the five companies, whose combined assets came to total more than $4 trillion. But in the last year and a half of Cox's tenure, the group had no director and did not complete a single inspection. Great deal for the banks, which originally complained about being regulated by both Europe and the SEC, and ended up being regulated by no one...

"There are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs - a company whose average employee still made more than $350,000 last year, even in the midst of a depression - was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That's the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers' credit card.

"The people who have spent their lives cloistered in this Wall Street community aren't much for sharing information with the great unwashed. Because all of this shit is complicated, because most of us mortals don't know what the hell LIBOR is or how a REIT works or how to use the word 'zero coupon bond' in a sentence without sounding stupid - well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them...

"The real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex. It might not bode well that Geithner, Obama's Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner - himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm - picked a former Goldman lobbyist named Mark Patterson to be his top aide.

"In fact, most of Geithner's early moves reek strongly of Paulsonism. He has continually talked about partnering with private investors to create a so-called 'bad bank' that would systemically relieve private lenders of bad assets - the kind of massive, opaque, quasi-private bureaucratic nightmare that Paulson specialized in. Geithner even refloated a Paulson proposal to use TALF, one of the Fed's new facilities, to essentially lend cheap money to hedge funds to invest in troubled banks while practically guaranteeing them enormous profits."

Even with Matt Taibbi's regular-guy style of writing, this is hard stuff to understand. But it's a start...and it's necessary. You don't want to be fooled again, do you?

Wednesday, May 05, 2010


When you finally collapse somewhere, this robot will read your vitals and call 911.

Life is too short to be in a hurry.

---Henry David Thoreau

No man should go through life without once experiencing healthy, even bored solitude in the wilderness, finding himself depending solely on himself and thereby learning his true and hidden strength.

---Jack Kerouac

The artist must summon all his energy, his sincerity, and the greatest modesty in order to shatter the old cliches that come to easily to hand while working, which can suffocate the little flower that doesn not come, ever, the way one expects.

---Henri Matisse

I understand Google's got a war on. Hacked and attacked from all sides, and probably especially from China whose American-made spy devices keep an eye on everyone wherever. Well, maybe Times Square was saved because of all those cameras watching everything, but still what if I want to hide away somewhere? Get lost. Find some solitude. A Google Earth satellite can find me, hone in on my whereabouts, and cybercast me taking a bath. Hello YouTube. Sign in with your Google account.

I know a Libertarian at work, who's always telling me the government wants to put a computer chip in our brains. I have a friend, currently being checked out, who believes the government already did that to him. Well get this: people are sick and tired of trying to use their cellphones in places where there's no antenna close enough to give them service. Now a computer chip has been invented that is a portable antenna, and you can have it installed your head so your cellphone will work anywhere. There's a market for it. The government won't have to force it on us at all.

Here's the deal, however you feel. I finally put in that stupid word verification thing for comments. I hate doing it. I am so for freedom to come, speak your mind, and go. Dutifully I've log in to jazzoLOG everyday to remove the robot spam and porn comments. I'm content to do that work because Blogger is free and I figure it's the price I pay. I also blog at a paysite and if it happens there, I complain and the webmaster takes care of it. I'd pay for that service here too.

But a few weeks ago, something got into my Gmail, accessed my contact list, and sent out a ridiculous message to everyone...from me. People replied and said they couldn't believe I really wanted them to do these things. One person actually did them. I complained, and got a robot message urging me to change my password. I did so. A week later another message went out. Then my whole account went down.

When that happens, you've really got trouble. You try to log in at any Google-run feature or site and a screen comes up telling you you're Temporarily Disabled. Links lead you from screen to screen, and finally a Contact Us option. YES! Perhaps a human is at the other end. No such luck. A robot form shows up, and last week there were questions like What was the date you registered for your blog? Oh yeah, it was such a treasured moment I wrote it right down in my diary. What are the email addresses of the people you most send messages to? I tried answering all these, and messages came each time to the alternative Yahoo addy I provided that my answers weren't good enough. The robot couldn't verify my existence.

I wondered why the questionnaire didn't ask me something like the titles of various articles at this blog...a blog readers couldn't access, so only I would remember such stuff. But no, it asked questions nobody would know the answer to. I gave up on it, and started searching Help Forum sites. I found tons of people complaining from the same boat. Blogs were detected by robots and suspected of spamming. Down they went, disappeared they were. Was I under such suspicion? No charges had been leveled at me. I couldn't figure it out.

Finally I found a Google page that offered human review of my situation. I jumped at the chance. Alas, I read, all I can do now is wait. There's a massive backlog. I'm imagining one guy in Pakistan having the job of looking us over. A week goes by. Meanwhile everyday the robot pornographer in Japan continues to comment at my blog that isn't there. How is this possible? I fill out more robot forms telling the robots about this. No reply. I continue trying to log in.

Finally just before midnight, the veil was lifted. I got the screen to change my password again, and when I did here I am. I don't know how stable this is. I don't know how long this will last. Maybe I'll change my password everyday. For the moment I'm out of my Google cellblock and walking free. It feels good. Fragrance of locust in bloom. It's spring. It's rained. Frogs and turtles in bliss. I'll appreciate the case the darkness descends again.