Hot Town, Riots in the City

In my last article, I talked about liberalism and its growing failure as a political system, in large part because of its failure to "deliver the goods." Clearly, though, there are different kinds of goods; and the liberal state's inability to provide one kind is increasingly threatening it on its most basic level.

Since the media's good at hiding stories like this, it may have escaped your attention, but as usually happens this time of year, parts of Europe are in crisis--again. It started almost two weeks ago, in the suburbs of Stockholm, Sweden, where dozens of cars were burned for several nights in a row, repeated attacks on police have taken place, and so on. General riotous behavior, replete with the apparently-required "car barbecues" (or "carbecues," if you will). Who are the culprits? Well, it took several days, but eventually the media began reporting that this was the work of young Muslims, heavily concentrated in the neighborhood.

A Swedish youth organization tried to diffuse responsibility by pointing out that these suburbs have the highest rate of youth unemployment in the country, and that "We need to understand the underlying motives for the riots, and understand why they are taking place." Which, apparently, is why people in what has been described as traditional Muslim garb have been burning cars and assaulting Jews and their synagogues: Because they're unemployed and no one "understands" them. Got it.

Not that there's a deliberate connection between one and the other, but there has been a similar outbreak of violence in Britain. Not long after the Stockholm riots started, a U.K. soldier was horribly hacked to death by two men with machetes. His crime? Wearing a "Help for Heroes" T-Shirt--which, as everyone knows, is an obvious sign of Western imperialism and dominance and such. The radicalized youths who committed the atrocity proudly announced that they did it in the name of their Islamic brethren. In the days since, there seems to have been at least one copycat crime proceeding from this, in France, both involving young Muslim men.

But don't worry. After several days of slowness and dithering, the responsible authorities at all these flashpoints have kicked into action and are cracking down on these lawbreakers.....Ha! Hahaha!! Oh, I'm just kidding. They're actually going after the people protesting the violence.

In the past few days, police have made numerous arrests of members of the English Defence League, described as a "far-right" organization calling for tighter immigration controls, the expulsion of radical imams from Britain, and the general protection of Western cultural values. Apparently a few of their members seem to have attributed these crimes to Muslims as a group; therefore it's a hate crime, and there has been pressure from government, the media, and much of "enlightened society" to not only arrest those responsible but eliminate private funding for the group altogether. Meanwhile, back in Scandinavia, a number of citizens who took up arms to defend their property from the rioters found themselves denounced as "vigilantes" and "hooligans" and actively prevented by police from trying to break up packs of vandals. This, on the heels of the Stockholm Police Chief admitting official policy was to do "as little as possible" to interfere with the rioters. Again, the excuse is that some are nationalists or neo-Nazis, though there doesn't seem to be any hard evidence that this is the case.

Look, I'm not here to defend this individual or that organization. As we've repeatedly discussed, there's racial animosity on all sides in Europe, and at least a few of these protestors have been caught using racist language. A more pressing question is, why should anyone be surprised that this is taking place? I use the examples of Islamic violence because they're so recent, but the fact is, in a country like Britain, where a woman can be arrested for trying to ward off the guys robbing her with a toy gun (apparently the prospect of getting shot was damaging to their sense of well-being or something), how can one maintain with a straight face that the state is there to protect its citizenry? Because in cases like these, it seems that government policy is to enforce multiculturalism, sooth hurt feelings, and enhance all-around "tolerance," even at the cost of law-abiding citizens' safety.

I guess for some people, this is a worthy goal. But it does raise the question of what right such a state has to expect its people's loyalty and obedience. I'm not one of those people who think the government exists solely because of a social contract with its citizens or whatever, but it definitely derives its legitimacy from an expectation that it will protect the people over which it has power. Any ideology which seriously undermines that expectation is bound to break that relationship. And this may be the ultimate failure of liberalism today--its goals have, in certain cases, led it into direct opposition with the most basic needs of the public. The longer "tolerance" and "acceptance" continue to be the top priority of England, Sweden, and other countries, the greater this tendency towards violence and division will be.

[+] Read More...

[-] Collapse Post...

America's Newest Racists: Union Members

Or at least, I'm sure that's what Chris Matthews and company will say if they ever report on this. (Actually, unions do have a long history of bad race relations, but that's another story.) In the interests of making us feel better at the end of a grueling week, here's another case of liberals turning on each other.

So when ObamaCare was passed three years ago, unions were among its loudest cheerleaders. And why wouldn't they? It was supposed to be the legislation that would ensure health care for all, make it affordable, lead America into a new Golden Era, blah blah blah. Besides, there's party loyalty to consider. So they backed TOTUS all the way.

Well, it's no secret to any of us that ObamaCare hasn't been delivering the flying unicorns it promised us. And the unions have slowly been figuring that out too. Even though many of the leaders spend their time ripping off the rank-and-file members, they still have to pay attention to those underlings' grievances. And what do a lot of union members see happening? Health insurance premiums continuing to go up, myriad other costs following suit--this is putting the squeeze on unions' own health plans, leading many to consider whether it wouldn't just be easier to go directly onto the government's plan. Which is not good--like any other organized group, the first law of a labor union is self-preservation, and one of their chief attractions has been their health insurance. If that's no longer a draw, then what?

So for the past few months or so, a lot of folks from Big Labor have been getting on the White House's case to adjust some of the requirements to make the legislation more palatable for unions. These haven't really gotten anywhere, and the frustration has risen to the point where one of them, at least, has decided to bolt. The United Union of Roofers, Waterproofers and Allied Workers (I honestly didn't know waterproofing was its own profession) issued a press release this week announcing that, their prior support for Obama and friends notwithstanding, their concerns about the consequences of the health-care bill were completely ignored, their health insurance has now been endangered, etc., they are therefore "calling for repeal or complete reform of the Affordable Care Act to protect...our members and their families," plus puppies and kittens and so on.

Now, this is the only union which has as an organization abandoned ObamaCare (so far). But there are plenty of rumblings below the surface in others, too. Many local chapters have likewise demanded repeal, including those in the United Federation of Teachers, the Social Service Employees Union, the Teamsters, and even the SEIU (!). And it's not just the unions. Even Montana's Democratic Senator Max Baucus, who was crucial in writing this monstrosity in the first place, has begun voicing criticisms, complaining about delays in setting up the necessary programs and warning that it has the potential to become a "train wreck." Er, thanks for that news flash, Senator.

It would appear that the groundwork is in place for a large-scale defection from support of ObamaCare. Now, don't hold out any hope of Obama giving up and repealing or drastically reforming the legislation. We've already talked about how this may be practically the entirety of his legacy; that's even more true now, with the recent failure of the gun control legislation and immigration reform anything but a certainty. He's going to hang all his hopes on this one, that's for sure. But it does provide a little bit of Schadenfreude, at least, to see Obama's coalition falling apart, even if it won't have any concrete results in the near future.

Racial identity groups, class identity groups, gender identity groups--they're all at odds with each other, and then they all attack the government when they don't get what they want. If we didn't get caught in the political consequences so often, it would just be a barrel of laughs.

[+] Read More...

[-] Collapse Post...

Democrats Use Supercommittee As Cash Machine

Surprise surprise, the Democrats are unethical and corrupt. . . just like we figured. Not only was it obscene that Harry “the turd” Reid appointed the Honorless Pat Murray to the new Supercommittee, but Nancy Pelosi’s selection, Xavier Becerra immediately set about trying to profit from being selected to the Supercommittee. Wow, Democrats are shameless.



The Supercommittee, as you may recall, will be charged with finding $1.5 trillion in spending cuts. This could include actual cuts or the elimination of special-interest-obtained tax deductions. That means thousands of lobbyists will want to get their paws on these Congresscritters and Senators to buy them off so their plundered spoils will continue to come pouring forth from the Treasury.



Apparently, the Democrats are happy to sell themselves to these lobbyists.



Indeed, when the committee names were first announced, Harry Reid’s selection of Washington State Senator Patty Murray seemed the most cynical. She is the head of the Democratic Senatorial Campaign Committee. That means she is charged with raising money to help Democratic Senators get re-elected in 2012. Giving her a post that will cause lobbyists to fight each other to the death for a place in line to buy her off is so incredibly cynical you wouldn’t think a modern American politician would actually try to get away with doing such a thing -- indeed, this harkens back to the days of the scandals of the 1880s, when politicians were openly bought and sold. But you would be wrong. Reid did it. Nice work Harry, you sh~t. . . oh, and #$%& you Nevada.



But Murray has been a paragon of virtue compared to Pelosi appointee Xavier Becerra (which means “corrupt bastard” in Spanish). Literally within two hours of being appointed, Becerra sent out an invitation to Wall Street lobbyists inviting them to a $1,500 per-ticket event. On the invite, he highlighted his membership on the Supercommittee:

“[Becerra is] not only vice chairman of the Democratic Caucus, but who also has just been named to the new deficit reduction committee. This will be Mr. Becerra’s first event since being named to the commission and may be one of the first for any of the twelve members of the group. This event could give all attendees a glimpse into what will most assuredly be the primary topic of discussion between now and the end of the year.”

In other words, this is your first chance to give me money because I will be deciding the fate of your spoils. This is just shameless. Kenya isn’t this corrupt. Nigeria isn't this corrupt. Chicago isn't this corrupt.



Should we be surprised by this? Hardly. Pelosi is infamous for corruptly giving special treatment to her donors, see e.g. Kaiser Permanente. She is also infamous for trying to pass bills that benefit companies in which she has an ownership stake, like various natural gas bills that would directly help Clean Energy Fuels Corp (CLNE). And of course, she’s not alone in this. Indeed, using their legislative power to corruptly help their donors or enrich themselves is part of being a Democrat. The Congress Black Caucus, for example, has been particular good at illegally giving federal money to their friends and family, see e.g. Sanford Bishop and Eddie Bernice Johnson (scholarships to relatives), Charlie Rangel (tax breaks to donors) and Maxine Waters (money to relatives’ banks), and most Democrats are quite accomplished tools of big business. Chris Dodd was an infamous whore for Countrywide Financial. Obama too has been good at this (GE corruption, giving the treasury to Goldman Sachs, money for GM unions) as was Clinton and just about anyone with a "D" after their names. In fact, they should dump their Donkey mascot and replace it with a backscratcher or a cash machine.



So if you’re a Democrat, it’s time to face reality: your party is the corrupt tool of big business. You stupidly think your party stands for the little guy, but it really only stands on the little guy. You are supporting a party that steals from the poor to give to rich friends. You suck.



[+] Read More...

[-] Collapse Post...

Republicans Learning To Play Hardball!

For decades, the Democrats attacked Republican-supporting institutions. They spied on churches and sent the IRS to investigate their tax exempt statuses. They tried to ban corporate giving and attacked the Chamber of Commerce because they favored Republicans. They attacked wealthy Republican donors and groups like the Mormon Church and the Boy Scouts which they saw as being on the “wrong side.” And the Republicans never fought back. Now that’s changing, and it’s about time.

Unlike their ancestors, the new Republicans seem to be getting it. In the budget battle, they’ve specifically targeted federal funding for left wing bastions like NPR and Planned Parenthood. Arizona, Texas and Indiana started cleaning up the illegal immigration mess, much to the chagrin of the race lobby. Wisconsin and Ohio Republicans are going after unions, which is particularly significant because unions have become the backbone of the Democratic Party. Democrats draw money directly from taxpayers through the unions, and union bosses provide Democrats with “workers” for political campaigns. All of this will be a huge blow to the Democratic Party, as it will end their taxpayer subsidy.

Now three House Republicans are targeting another Democratic stronghold -- AARP. AARP is ostensibly a non-partisan interest group that represents old people. Indeed, they need to be non-partisan to maintain their tax exempt non-profit status. But everyone knows they aren’t non-partisan. Consider this:

● AARP opposed tax cuts under Reagan and Bush.
● AARP worked to defeat the nomination of Clarence Thomas.
● AARP helped Clinton defeat the balanced budget amendment.
● AARP supports gun control and lobbied to strengthen the Brady Bill.
● AARP supports entitlements for illegal aliens.
● AARP partnered with race-hate group La Raza to promote amnesty and drivers licenses for illegals, and to end enforcement of immigration laws.
● AARP calls homosexuality a civil right and opposes the Defense of Marriage Act.
● AARP pushed heavily for Obamacare even though it would cut $500 billion from Medicare, THE program upon which all of its members rely.
● While AARP does not contribute to candidates, AARP executives give overwhelmingly to Democrats.

AARP has 1,800 employees in Washington and they lobby. John Boehner notes that “AARP is one of the most liberal organizations in Washington, D.C.” And for their efforts, AARP gets around $83 million a year in direct payments from the federal government, not to mention their non-profit status saving them from hundreds of millions in taxes.

Now Republican Reps. Wally Herger (Ca.), Charles Boustany (La.) and Dave Reichert (Wash.) are challenging AARP’s tax exempt status and demanding the IRS investigate. They point out that while AARP claims to speak for seniors, it actually “operates in direct opposition to their senior membership.” Specifically, in lobbying for Obamacare, AARP supported a bill that would drain $500 billion out of Medicare, which would hurt seniors severely. Why would AARP do this? Because AARP stands to make an additional $1 billion over ten years as a result of Obamacare because AARP gets paid to refer seniors to insurance that fills in the gaps in Medicare. . . which will now have $500 billion in new gaps.

Moreover, AARP-sponsored insurance policies are not cheaper for seniors than policies seniors could get alone on the open market, and several AARP executives are paid seven-figure salaries. . . none of which is consistent with AARP being a non-profit. Indeed, a quick look at AARP’s funding is rather illuminating as to AARP's true nature. AARP gets most of its money from selling insurance and advertising. In 2008, AARP was paid $652 million in royalties from insurance companies for referrals. It also received $120 million for advertisements inserted in its publications. By comparison, it collected only $249 million in membership dues. Of this, Boustany said:

“During this investigation it became very clear that despite its privileged tax-exempt status, in many cases, AARP represents a for-profit entity, in fact, an insurance company.”

Of course the Democrats are screaming bloody murder as they always do whenever their allies get attacked. Democrat Sander Levin (Mich.) called this a “witch hunt.” Boo hoo hoo.

First of all, the Republicans are right that AARP is not a non-profit. It is clearly a very large for-profit insurance referral company -- so large it belongs in the Fortune 500. Secondly, its lobbying is clearly partisan. Thus, it cannot be a non-profit. Third, I don’t care if it is a witch hunt. The Democrats have tried to stifle anyone who disagrees with them for decades by passing laws against them and sending the IRS after them. It’s time the Republicans started playing the same game. As long as only Democrats are willing to use this weapon, they will continue to use it with impunity. Only by doing to their friends and allies what they have done to everyone else will the Democrats ever be stopped from playing these destructive games. And if that damages a couple of Democrat-fellow-traveler institutions in the process, then all the better.

Their next target should be the ABA and the AMA.

[+] Read More...

[-] Collapse Post...

Jamie Gorelick?! Is Obama Kidding?

The latest rumor has Obama looking at appointing Jamie Gorelick to be the next director of the FBI. Good grief. This pick should bother everyone. Gorelick’s career has been an unending series of conflicts of interest, abuses of power, and questionable decisions. Let’s look at the highlights of Gorelick’s reign of error.

1. Gorelick's Wall of Silence

Between 1994 and 1997, Gorelick was Clinton’s Deputy Attorney General, the number two position at the Justice Department. In 1995, Gorelick wrote a memo outlining what would become known as “Gorelick’s Wall.” This memo interpreted court decisions on the Foreign Intelligence Surveillance Act of 1978 and recommended a set of restrictions on the ability of criminal investigative organizations, like the FBI, to share information with intelligence agencies, like the CIA. Gorelick’s Wall prevented intelligence agencies from accessing the computer of Zacarias Moussaoui, a computer which could well have led to the discovery of 9/11 before it happened.

But wait, says Gorelick in an editorial, the 9/11 Commission found that this wall already existed under Reagan and Bush I, and it never found this wall to be that big of a deal. What Gorelick fails to mention, however, is that she was on the 9/11 Commission AND that she never disclosed her 1995 memo to her fellow Commissioners.

This is not only an incredible conflict of interest that never should have been allowed, but it shows exactly why such conflicts must be avoided. By accepting the position on the 9/11 Commission, Gorelick essentially placed herself in the position of investigating herself. The fact she ignored such an obvious conflict of interest speaks poorly of her judgment. Moreover, her failure to disclosed this key memo to the Commission makes any conclusion they reached on this issue meaningless.

Further, Gorelick tries to defend herself by blaming Reagan and Bush for creating the policy, even though she is the one who provided the new interpretation. Then she tries to blame Janet Reno by claiming that her memo was less restrictive than what Reno ultimately put out (an argument which contradicts her attempts to blame Reagan or Bush). Also, she attacks her critics as “partisans” and blames “public rancor” for the allegations against her, which is an evasive tactic.

This incident is an ethical disgrace, and it calls into question whether she can put the interests of the FBI and the nation above her own self-interest.

2. Gorelick Champions Governments’ Right To Know

Also while serving as Clinton’s Deputy Attorney General, Gorelick tried to give the government control over the internet. Arguing that the internet was “transmitting child pornography into our homes,” that terrorists could use the internet to communicate, and that the internet could allow hackers to “shut down the banking system,” Gorelick fought for a ban on the domestic use of strong encryption and tried to force companies to put their encryption codes into escrow so the government could get at them. This is evidence of a mind that cares little for civil liberties and Constitutional rights.

(FYI, internet expert Gorelick didn’t even know her own e-mail address at the time.)

3. Fannie Mae Pay Day

Moving on from the Justice Department, Gorelick took a job as the Vice Chairman of Fannie Mae between 1997 and 2003. Guess what Fannie Mae started doing while Gorelick was there? Yep: bundling subprime loans into securities. . . the same securities that blew up the world economy in 2008. In March of 2002, Gorelick defended this practice in an interviewed with Business Week: “We believe we are managed safely. . . . Fannie Mae is among the handful of top-quality institutions.” She was paid $26,466,834 during her time at Fannie Mae. We would pay $338 billion to bail them out (and take on $5 trillion in loan guarantees).

Moreover, during this period, a $9 billion accounting scandal arose at Fannie Mae. According to the Director of the Office of Federal Housing Enterprise Oversight, false signatures were used by Fannie Mae to shift expenses into the future and wrongly increase profits. During 1998, these false profits triggered $27.1 million in bonuses to a handful of Fannie Mae executives, including Gorelick, who received $779,625 of that.

This scandal eventually resulted in $9 billion in profits being removed from Fannie Mae’s books. And while there is no direct proof of Gorelick’s involvement, let me point out that direct proof was not considered necessary in scandals like Enron or under Sarbanes-Oxley, where executives are considered responsible for the actions that occur under their watch. Further, her senior position and the unwillingness/inability of Fannie Mae to investigate who faked these signatures or who was aware of what, call into question her role, especially as she apparently made no attempt to expose this issue.

4. Railroading White Kids At Duke

Following her departure from Fannie Mae, Gorelick returned to a big DC law firm. In 2006, she joined the defense team that represented Duke University in the 2006 Duke University lacrosse case. This was the incident where Duke railroaded 47 Duke University students on flimsy and contradictory rape allegations by a stripper with a history of mental problems, who actually identified people who were not present as the rapists, who then confessed to a friend that she was lying to get money from the “white boys,” and who later tried to set fire to her live-in boyfriend. Despite this, Gorelick’s client suspended the entire lacrosse team, took no action to stop threats made against the players, their families and the team’s coach, and sent out e-mails stoking racial tensions.

5. International Peace Through Superior Firepower

Gorelick now serves on the board of directors of United Technologies Corporation, a defense contractor with $5 billion in defense contracts, while also serving on the board of directors of the John D. and Catherine T. MacArthur Foundation and the Carnegie Endowment for International Peace, organizations dedicated to (leftist) international peace. Do you see any conflict there?

6. Student Loan Lobbyist

Finally, Gorelick is currently a lobbyist for the lending industry fighting student loan reform. Remember the whole “no lobbyist” thing from Obama? No? Well, neither does Obama apparently. Oh, and she represents BP.

Gorelick has shown a lack of judgment when it comes to conflicts of interest, a penchant for passing blame to others, questionable business ethics, and an utter indifference to the rights of individuals. This is not someone who should be running the FBI.

[+] Read More...

[-] Collapse Post...

GE: Crony Capitalism Made Easy

It’s good to be the king. It’s equally good to be a friend of the king (“FOK”), as GE can attest. Indeed, you may recall GE CEO Jeffrey Immelt, was recently appointed to lead Obama’s President's Council on Jobs and Competitiveness. You may also recall that Immelt spent the last two years trying to foist cap and trade rules on the rest of us so we would be forced to buy his company’s products. Well, it gets better.

It was reported the other day that GE received a waiver from the EPA’s new greenhouse gas emissions rules for a power plant GE is building in California. Yes, the same greenhouse gas rules GE has been lobbying Congress to force upon the rest of us. That’s how you do it when you’re a FOKer.

Of course, GE wants to distance itself from the bad press this generates, so GE issued a press release, in which it claims that it did not request a waiver, nor was it given one. In fact, it says, it’s not even building the project! GE has only offered to provide turbines to the project but its offer hasn't even been accepted yet. So there, nothing to see here. Moreover, the project manager, not GE, requested the waiver.

So who is right? Well, let me say that I have no doubt that everything GE says in its press release is absolutely, technically true. But there’s a problem with GE’s claim. I spent years involved in government contracts, including construction contracts just like this one. And what GE says here is misleading.

When a company submits a bid on such a project, it already has its subcontractors lined up. Indeed, these bids are essentially the work of teams of contractors, whose efforts are coordinated by a single general contractor, who assembles and submits the final bid. Each contractor participating in the team will submit their own bid to the general contractor, usually on the condition that the bid is binding on both parties but only if the team is chosen to handle the contract. What this does is it allows the general contractor to know their costs and what capabilities they can offer, but doesn't require anyone to agree to anything unless they end up winning the overall contract, at which point everything automatically falls into place.

This is how it's always done. Indeed, it’s inconceivable that anyone would submit a bid to build a power station without having an agreement in place for GE (or some competitor) to supply the turbines at a certain price. Thus, while I don't doubt for a moment that GE is being legally correct when it claims that its offer has not been accepted, I have little doubt this is also highly misleading. The technical acceptance is a formality.

What’s more, it's also inconceivable that a project manager would request such a waiver without the full knowledge, support and participation of GE. Indeed, they would have needed GE to identify the issue for them and to guide them through the process. Thus, while it is probably technically correct that the general contractor made the request rather than GE, the general contractor would only make the request at GE’s direction.

Why would GE try to mislead the public on this? Because this is crony capitalism. GE spent $32,050,000 lobbying in 2010 and now it’s calling in those markers to get its politicians to put harmful anti-competitive regulations in place, and then to get exemptions from those regulations for itself. Keep this in mind, along with the 25,000 jobs GE shipped overseas during the last two years the next time you see a GE ad telling you about all of the good things they are doing for America and the world. And even more importantly, keep this in mind the next time some politician (Republican or Democrat) tries to tell you why we should be doing something GE wants. . . because they're FOKers.

[+] Read More...

[-] Collapse Post...

Deepwater Horizon: Government Failure

The explosion of the Deepwater Horizon presents us with a true teachable moment. But the lesson isn’t that offshore drilling is bad or dangerous or wrong, or that oil companies are evil. No. The oil companies do bare the brunt of the blame and should be made to pay for all of the damage they have caused. But the real lesson here is that it’s time to reform our government because it keeps failing to do the few tasks it should be doing.

Under federal law, the Minerals Management Service is charged with inspecting offshore drilling rigs to make sure that they comply with all federal safety regulations. The MMS is supposed to inspect each rig at least once per month. We are now learning that they haven’t been doing that.

The exact number of times MMS inspected the Deepwater Horizon is not clear because MMS has been giving different numbers. They originally claimed to do 26 inspection in the last 64 months. But then they mysteriously raised this number to 48 out of 64, no explanation given. In either event, MMS failed to conduct between 25% and 59% of the required inspections.

This follows a citation in July 2002, when the Deepwater Horizon was shut down because the company had failed to conduct a pressure test of the blowout preventer -- a device that is supposed to stop the kind of gusher they can’t seem to stop right now. And in September 2002, the rig was cited again for problems with the blowout preventer.

Moreover, several years ago, MMS weakened its testing requirements on the very cutoff valves that should have prevented the current disaster. Indeed, they weakened these testing requirements so much that there is virtually no oversight of these key safety features. As a result, there have been repeated failures of these cutoff valves on other rigs in recent years -- at a time when inspections have been falling. This time, it went seriously wrong, costing eleven lives and billions of dollars in damage.

So why was this rig allowed to operate? Did BP trick MMS? No. Believe it or not, it turns out that the Deepwater Horizon was allowed to operate without providing safety documentation showing that these valves were functioning. Apparently, many of these rigs are. And Team Obama has ruled out stopping the process of granting such waivers, despite all the sound and fury coming out of the White House about this incident.

The problems here are obvious. First, the government is wasting so much money doing things it shouldn’t be doing that it has lost focus on the things it should be doing. Moreover, the government is too rife with conflicts of interest. For example, last year, MMS awarded the Deepwater Horizon an award for its safety history. Aside from the obvious of “you gave an award to people who kept being cited for violations?”, is the bigger question of why is MMS giving awards in the first place? Their job is to inspect. They are to shut down those who fail and pass those who do. Their job is not to pass out awards or to play footsie with these companies.

And lest you think this is a minor point, a report by the Interior Department's Inspector General now reveals that the relationship between the agency employees and the oil companies was so close that it bordered on bribery. Apparently, agency personnel accepted sporting-event tickets, meals, and other gifts from the oil companies they were supposedly monitoring. The report also finds that agency personnel, rather than doing inspections, were using government computers to view pornography.

Further, why is the agency doing inspections with the one hand, but collecting billions of dollars in royalties with the other? How can it make sense to give the inspection role to an agency whose primary incentive is to maximize output? Where is their incentive to do honest inspections?

The time has come to remake the government. It is time to strip out the conflicts of interest, it is time to hold everyone in the agency chain of command accountable for their failures, it is time to divorce government from its incestuous relationship with industry, it is time to focus these agencies on doing the job they should be doing and doing away with all of the distractions.

It is a scandal that the government allowed defective gear to be put into place without a substantive inspection. And it is a bigger scandal that Team Obama is not planning to fix this situation.

[+] Read More...

[-] Collapse Post...

United States of America™, Property of Goldman Sachs

In 1873, Mark Twain co-authored a book called The Gilded Age: A Tale of Today, and thereby gave a name to era between Reconstruction and the Progressive Era. Were Twain alive today, he would likely name our present era “The Second Gilded Age.” And nothing illustrates this more than the many-tentacled creature known as Goldman Sachs.

The Gilded Age

Events today read like a repeat of the Gilded Age.

The Gilded Age is generally considered to have begun under the Grant administration. It was an era noted for massive corruption, dramatic social and economic upheaval, and a shocking incestuousness between big business and government. These two became so intertwined that the public came to see government action as nothing more than favoritism, bribery, kickbacks, inefficiency, waste, and corruption. Smart people.

The Gilded Age was the age of robber barons, like Andrew Carnegie, John Rockefeller, Cornelius Vanderbilt, and John Pierpont Morgan -- names that continue to mark our most powerful corporations today. It was the time of Tammany Hall and Boss Tweed, of corrupt local politics and election fraud, of Republican Mugwumps calling for an end to the spoils system in the civil service, of Bourbon Democrats calling for free market reforms, and of national parties ignoring all the cries for reform. And in 1889, this Age gave us the Billion Dollar Congress, an outrage that seems quaint compared to this year’s trillion dollar deficit.

The Gilded Age also gave us waves of immigrants to keep factory costs down, Chinese labor to build the nation’s railroads, and the birth of labor unions. The media too was changing, with the introduction of yellow press journalism, and the abandonment of factual news for sensationalism and sentimental stories. And the economy endured two depressions, the Panic of 1873, caused by the manipulation of the gold market by Jay Gould and James Fisk (“Black Friday”), and the Panic of 1893, a deep depression that ushered in the Progressive Era.

Sound familiar? Try substituting Goldman Sachs, ACORN, Tea Party, Mexicans, infrastructure, Madoff, Stafford, and reading this again.

By the 1890s, the Gilded Age was ending. Spurred on by reformers, the government imposed new regulations in response to corporate excesses, dangerous workplace and consumer conditions, exploitive labor practices, and anti-competitive behaviors. Many of those regulations remain with us today.

Goldman Sachs: The Corruption of the Revolving Door

It seems we are doomed to repeat the Gilded Age. And as history loves irony, the company at the center of this Second Gilded Age is a company formed at the tail end of the first Gilded Age: Goldman Sachs.

Goldman Sachs was founded as Marcus Goldman & Co. in 1869. It was renamed Goldman Sachs in 1882. The company made a name for itself in its pioneering use of commercial paper and it joined the New York Stock Exchange in 1896. Over the next 100+ years, it would grow to become one of the most influential companies in the world.

Now before I continue, let me be clear, I do not believe in conspiracies. There is no small group of illuminati that meet regularly to decide our fates and control the world. That said, I am not fool enough to believe that our government acts in the best interests of its citizens. It should be painfully clear to all of us that the government responds to those who have the most access to it. Thus, where we find access, and we find favored treatment for those with access, we must wonder whether the system is working or not. That is the point to this article.

Nor, is this article an attack on Goldman Sachs per se. Goldman is simply one of dozens of groups with too much influence. I have picked Goldman from the crowd only because they’ve made it very easy lately to see how they use their influence to help themselves at our expense.

How Much Influence Does Goldman Have?

How powerful is Goldman? Said one recent commenter: “It’s Goldman’s world, folks. We just live in it (at Goldman's discretion, of course).” Consider these facts. In October of last year, the New York Times reported that thirteen Goldman employees worked in senior positions with the George W. Bush administration. This included Treasury Secretary Hank Paulson, White House Chief of Staff Joshua Bolten, and the man who would oversee the TARP, Neel Kashkari. The Times called this “Government Sachs.”

The Clinton administration too was staffed with Goldman employees, including Treasure Secretary Robert Rubin. Obama, who received $918,000 from Goldman employees for his campaign, also has hired his share of Goldman alumni. Indeed, in a rather controversial move, Timothy Geithner hired former Goldman employee Mark Patterson to be the Treasury Department Chief of Staff, in direct violation of Obama’s “no lobbyists” policy.

But Goldman employees aren't just in the administration. Goldman employee Robert Zoellick is president of the World Bank. Mario Drahi is the governor of the Bank of Italy. Romano Prodi is the former Prime Minister of Italy. Mark Carney is the governor of the Bank of Canada. Michael Cohrs is the Head of Global Banking at Deutsche Bank. Malcolm Turnbull is the leader of Australia’s Liberal Party. Jim Cramer spends his days talking up Goldman Sachs on his show on CNBC, along with former Goldman alum Erin Burnett. Edward Lampert bought K-Mart in 2003. Ashwin Navin is President of BitTorrent. John Corzine, the former head of Goldman Sachs became a United States Senator and then governor of New Jersey. And there are many more.

Some are in key positions that regulate Goldman itself. Goldman alumnus Stephen Friedman and current Goldman board member, became an economic advisor to President Bush and Chairman of the Foreign Intelligence Advisory Board, before leaving the administration to become Chairman of the New York Federal Reserve Bank’s Board of Directors. . . the agency that regulates Goldman Sachs and which has a significant role in setting interest rates, which affect Goldman directly. Even worse, Friedman received a waiver, allowing him to remain on Goldman’s board during his time on the New York Fed. However, when it was learned in May 2009 that he purchased 52,000 shares of Goldman Sachs in January, he resigned from the Fed “to avoid the appearance of a conflict of interest.” Wouldn’t want that.

William Dudley, a former Goldman economist, was appointed as president of the New York Fed to replace Tim Geithner, who was mentored by former Goldman CEO and Treasury Secretary Robert Rubin. Rubin has been an economic advisor to President Obama.

Goldman executive Gary Gensler became the head of the Commodity Futures Trading Commission, replacing Brooksely Born, who was criticized for failing to regulate the derivatives market. Gensler himself stated that Born, “should have done more to reign in exotic financial instruments that have battered global markets.” What went unmentioned, however, was that Born’s efforts to regulate derivatives were blocked by Goldman alum Robert Rubin, who recommended to Congress in 1999 that the Congress strip the CFTC of its regulatory authority over derivatives. More on Goldman’s role in the derivative issue in a moment.

Goldman's Influence Equals Power

So what has Goldman gotten from all this influence? Remember cap and trade? Goldman Sachs, which gave $4,452,585 to the Democratic Party, has been pushing cap and trade because Goldman dominates the new carbon-credit market. Matt Tabbi of Rolling Stone notes that this

“is a virtual repeat of the commodities-market casino that’s been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won’t even have to rig the game. It will be rigged in advance.”

In an interview in July 2009, former Assistant Secretary of Treasury Paul Craig Roberts was asked “Does the US Secretary of the Treasury work for the people or does he work for the banking system on Wall Street?” He replied: “He works for Goldman Sachs.”

Do you remember the bailout? The bailout was designed by former Goldman leader Hank Paulson. Here’s what you might not know:

• Paulson let Goldman competitor Lehman Brothers go bankrupt. The very next day, Paulson established the bailout program.

• Paulson put Goldman employee Neel Kashkari in charge of administering the bailout (TARP) funds.

• Paulson gave $300 billion in taxpayer money to Citigroup, which was run by ex-Goldman head Robert Rubin.

• Paulson gave $138 billion to help Bank of America buy, and thus bailout, Merrill Lynch, then run by former Goldman employee John Thain. According to recent testimony by Bank of American president Ken Lucas, Paulson threatened Lucas to go through with the deal and to pay off bonuses to Thain and others. Thain, by the way, was rumored to be John McCain’s choice for Treasury Secretary had he won the election.

• Goldman/Treasury employee Robert Steel was put in charge of Wachovia, which he turned around and sold to Wells Fargo after a few months, triggering $225 million in golden parachutes that went to a handful of Wachovia executives, including Steel.

Now consider the AIG shell game. As we noted above, Goldman alumnus Robert Rubin stood in the way of the CFTC regulating derivatives. A derivative is basically insurance against a bond defaulting. When the derivatives market took off, AIG became heavily involved. Goldman was the first group to realize that AIG had underestimated the risks in issuing these derivatives and it bought lustily from AIG.

When the market turned and it became clear that AIG had over extended itself and likely could not pay off these derivatives (in fact, the company appeared ready to fail), Paulson stepped in. He not only agreed to bail out AIG to the tune of $85 billion, but he put former Goldman employee Ed Liddy in charge of AIG. Liddy paid $13 billion of these moneys over to Goldman, paying off 100% of AIG’s debt to Goldman. No other institution received 100 cents on the dollar from AIG.

But this is nothing new for Goldman. According to Matt Tabbi, Goldman has been heavily involved in inflating every bubble and then profiting from the bailouts that follow the busting of those bubbles.

Nor is Goldman’s influence limited to the national level. Do you remember Goldman head John Corzine? He’s now the governor of New Jersey. Guess what company floats bonds for New Jersey? More interestingly, in November 2008, it was revealed that at the same time that Goldman was selling bonds for New Jersey, it was telling its wealthiest customers that they should short those bonds. This advice would make those bonds appear riskier than they actually were and would increase the interest rates the state needed to pay on future bonds (and Goldman profits).

At the same time, the Los Angeles Times accused Goldman of doing the same thing in California.

Conclusion

This is not an issue of Republicans or Democrats. Both sides are equally guilty. Nor is this an issue of Goldman Sachs being evil or running the world. Goldman is simply taking advantage of a system that lets people move between government and industry with amazing easy, that lets people profit from conflicts of interest, and that converts our government from a referee into a cash machine. It is time for serious ethics reform to prevent the types of arrangements that make the above possible.


[+] Read More...

[-] Collapse Post...