Tuesday, March 24, 2009

Bend Over and Say, "Uncle Sam"

Bend Over and Say, "Uncle Sam"

By Mike Whitney

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Timothy Geithner refuses to take underwater banks into receivership and resolve them, but has no problem transforming the FDIC into a hedge fund. Go figure? Here's what everyone needs to know: The US government (you) will provide up to 94 percent of the financing (low interest, of course) for dodgy mortgage-backed assets that no one in their right mind would ever buy so that wealthy and politically-connected banksters can scrub up to $1 trillion of red ink from their balance sheets. Ugh!

The so-called "private partners" in this confidence scam, will get non recourse loans, which means that if the plan backfires and they lose their skimpy 6 percent investment they can call it quits and leave the taxpayer holding the bag. ($1 trillion in potential losses!) Here's how Paul Krugman sums it up:

"The Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. This isn't really about letting markets work. It's just an indirect, disguised way to subsidize purchases of bad assets."

"Markets"? Who said anything about markets? This is corporate welfare, pure and simple.

Also, the partnerships will be conducted through off-balance sheets operations, (Enron-type structured investment vehicles or SIVs), so the parent company (our new business partners) can avoid liability when they dump all types of ineligible, unmarketable, toxic garbage into the program, which they will since the average banker has moral scruples of Hannibal Lector.

The opportunities for fraud in Geithner's "public-private" Banker's Bonanza are truly breathtaking. All the bank has to do is shovel its mountainous pile of B-grade dog-dung into its newly-minted SIV and then hide behind its government-issue "no risk" loan and claim ignorance when the FDIC tries to get its money back.

"I'm so sorry. How did that 2006 vintage subprime CDO made up of liar's loans from unemployed Pizza Hut workers get mixed up in there? My bad."

In Geithner's defense, we should point out the challenges he's facing. It's not easy pulling the wool over people's eyes, especially when they've been repeatedly fleeced. The Treasury Secretary's main job is "to keep the big banks in private hands" and to remove over a trillion dollars of toxic mortgage-backed assets that are worth only a fraction of their original value. According to economist Dean Baker, these junk assets are worth roughly 30 cents on the dollar, although the banks have them listed on their books at 60 cents on the dollar. If the banks are unable get full price, then many of them will be forced into bankruptcy. Geithner's job is to make sure that doesn't happen, which is why he has created the "partnership" smokescreen to conceal the fact that the government is intentionally overpaying for significantly-downgraded sludge. Here's how economist James Galbraith puts it:

"The bad assets are bad because they are worth less than the banks say they are. House prices have dropped by nearly 30% nationwide. That has created something in the neighborhood of $5+ trillion of losses in residential real estate alone (off a peak market value of housing about $20+ trillion). The banks don't want to take their share of those losses because doing so will wipe them out. So they, and Geithner, are doing everything they can to pawn the losses off on the taxpayer."

Galbraith (indirectly) explains why Geithner has avoided "price discovery" at all cost. Think about it for a minute: We are now 19 months into the biggest economic catastrophe since the Great Depression and STILL the public has no fixed idea of what these rotten assets are really worth. Why? The business media, the government and big finance have engineered the biggest cover up in memory in order to protect the interests of privately-owned financial institutions. Is that how a free market is supposed to work?

The question that should be on everyone's mind is this: Why would Geithner create a program that rewards bankers and hedge funds at the expense of the public? Or to be more specific: What manner of man would conjure up a transaction where taxpayers put up 94 percent of the investment but only stand to get 50 percent of the profits?

Who is Geithner working for anyway?

There's no way around the fact that Geithner is a financial industry representative planted in the White House to do Wall Street's bidding. Institutional bias precludes him from doing his job and operating in the public interest. Thus, the first step in any financial rescue plan must be to remove Geithner, Summers and all the other parasitic Rubin-clones that have infected the present administration and bring in a whole new team. That will prepare the ground for nationalizing the banks and providing debt-relief to the people who need it most, the victims of Wall Street's Ponzi-credit bubble.

Welcome to Pipelineistan

Welcome to Pipelineistan

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At one point last week, the price of a barrel of crude oil -- which had risen as high as $147 last July and, with the global economic meltdown, hit a low of $32 in 2009 -- rebounded above $51. Prices at the local gas pump are expected to rise as well in the coming weeks. However, given a worldwide falloff in oil use, these price jumps may not hold for long. Still, cheap or not, oil and natural gas (as well as coal) are what drives global civilization, and that's clearly not going to change any time soon.

That, in turn, means the major powers are going to be no less eager to secure key energy reserves and control the flow of energy in bust times as they were in boom times, which is where Pepe Escobar comes in. In a long, typically vigorous essay just published in book form, "Obama Does Globalistan," he refers to his earlier book Globalistan as a "warped geopolitical travel book." That makes him a wonderfully "warped geopolitical traveler." In fact, he regularly circumnavigates the globe from Central Asia and the Middle East to Latin America, even sometimes landing in Washington, writing pyrotechnically for an online publication on which I have long been completely hooked, Asia Times.

Knowing his proclivity for following energy flows the way normal tourists might follow the sun, I asked him if he might offer TomDispatch readers periodic "postcards" from the energy heartlands of the planet and what he calls the Tower of Babel of "nations, mercenary peoples, terrorists, dictatorships, tribes, nomad mafias, and religious outfits" that are in conflict upon them. This is the first of his postcards. More will follow. Tom

Liquid War

Postcard from Pipelineistan
By Pepe Escobar

What happens on the immense battlefield for the control of Eurasia will provide the ultimate plot line in the tumultuous rush towards a new, polycentric world order, also known as the New Great Game.

Our good ol' friend the nonsensical "Global War on Terror," which the Pentagon has slyly rebranded "the Long War," sports a far more important, if half-hidden, twin -- a global energy war. I like to think of it as the Liquid War, because its bloodstream is the pipelines that crisscross the potential imperial battlefields of the planet. Put another way, if its crucial embattled frontier these days is the Caspian Basin, the whole of Eurasia is its chessboard. Think of it, geographically, as Pipelineistan.

All geopolitical junkies need a fix. Since the second half of the 1990s, I've been hooked on pipelines. I've crossed the Caspian in an Azeri cargo ship just to follow the $4 billion Baku-Tblisi-Ceyhan pipeline, better known in this chess game by its acronym, BTC, through the Caucasus. (Oh, by the way, the map of Pipelineistan is chicken-scratched with acronyms, so get used to them!)

I've also trekked various of the overlapping modern Silk Roads, or perhaps Silk Pipelines, of possible future energy flows from Shanghai to Istanbul, annotating my own DIY routes for LNG (liquefied natural gas). I used to avidly follow the adventures of that once-but-not-future Sun-King of Central Asia, the now deceased Turkmenbashi or "leader of the Turkmen," Saparmurat Niyazov, head of the immensely gas-rich Republic of Turkmenistan, as if he were a Conradian hero.

In Almaty, the former capital of Kazakhstan (before it was moved to Astana, in the middle of the middle of nowhere) the locals were puzzled when I expressed an overwhelming urge to drive to that country's oil boomtown Aktau. ("Why? There's nothing there.") Entering the Space Odyssey-style map room at the Russian energy giant Gazprom's headquarters in Moscow -- which digitally details every single pipeline in Eurasia -- or the National Iranian Oil Company (NIOC)'s corporate HQ in Tehran, with its neat rows of female experts in full chador, was my equivalent of entering Aladdin's cave. And never reading the words "Afghanistan" and "oil" in the same sentence is still a source of endless amusement for me.

Last year, oil cost a king's ransom. This year, it's relatively cheap. But don't be fooled. Price isn't the point here. Like it or not, energy is still what everyone who's anyone wants to get their hands on. So consider this dispatch just the first installment in a long, long tale of some of the moves that have been, or will be, made in the maddeningly complex New Great Game, which goes on unceasingly, no matter what else muscles into the headlines this week.

Forget the mainstream media's obsession with al-Qaeda, Osama "dead or alive" bin Laden, the Taliban -- neo, light or classic -- or that "war on terror," whatever name it goes by. These are diversions compared to the high-stakes, hardcore geopolitical game that follows what flows along the pipelines of the planet.

Who said Pipelineistan couldn't be fun?

Calling Dr. Zbig

In his 1997 magnum opus The Grand Chessboard, Zbigniew Brzezinski -- realpolitik practitioner extraordinaire and former national security advisor to Jimmy Carter, the president who launched the U.S. on its modern energy wars -- laid out in some detail just how to hang on to American "global primacy." Later, his master plan would be duly copied by that lethal bunch of Dr. No's congregated at Bill Kristol's Project for a New American Century (PNAC, in case you'd forgotten the acronym since its website and its followers went down).

For Dr. Zbig, who, like me, gets his fix from Eurasia -- from, that is, thinking big -- it all boils down to fostering the emergence of just the right set of "strategically compatible partners" for Washington in places where energy flows are strongest. This, as he so politely put it back then, should be done to shape "a more cooperative trans-Eurasian security system."

By now, Dr. Zbig -- among whose fans is evidently President Barack Obama -- must have noticed that the Eurasian train which was to deliver the energy goods has been slightly derailed. The Asian part of Eurasia, it seems, begs to differ.

Global financial crisis or not, oil and natural gas are the long-term keys to an inexorable transfer of economic power from the West to Asia. Those who control Pipelineistan -- and despite all the dreaming and planning that's gone on there, it's unlikely to be Washington -- will have the upper hand in whatever's to come, and there's not a terrorist in the world, or even a long war, that can change that.

Energy expert Michael Klare has been instrumental in identifying the key vectors in the wild, ongoing global scramble for power over Pipelineistan. These range from the increasing scarcity (and difficulty of reaching) primary energy supplies to "the painfully slow development of energy alternatives." Though you may not have noticed, the first skirmishes in Pipelineistan's Liquid War are already on, and even in the worst of economic times, the risk mounts constantly, given the relentless competition between the West and Asia, be it in the Middle East, in the Caspian theater, or in African oil-rich states like Angola, Nigeria and Sudan.

In these early skirmishes of the twenty-first century, China reacted swiftly indeed. Even before the attacks of 9/11, its leaders were formulating a response to what they saw as the reptilian encroachment of the West on the oil and gas lands of Central Asia, especially in the Caspian Sea region. To be specific, in June 2001, its leaders joined with Russia's to form the Shanghai Cooperation Organization. It's known as the SCO and that's an acronym you should memorize. It's going to be around for a while.

Back then, the SCO's junior members were, tellingly enough, the Stans, the energy-rich former SSRs of the Soviet Union -- Kyrgyzstan, Uzbekistan, Kazakhstan, and Tajikistan -- which the Clinton administration and then the new Bush administration, run by those former energy men, had been eyeing covetously. The organization was to be a multi-layered economic and military regional cooperation society that, as both the Chinese and the Russians saw it, would function as a kind of security blanket around the upper rim of Afghanistan.

Iran is, of course, a crucial energy node of West Asia and that country's leaders, too, would prove no slouches when it came to the New Great Game. It needs at least $200 billion in foreign investment to truly modernize its fabulous oil and gas reserves -- and thus sell much more to the West than U.S.-imposed sanctions now allow. No wonder Iran soon became a target in Washington. No wonder an air assault on that country remains the ultimate wet dream of assorted Likudniks as well as Dick ("Angler") Cheney and his neocon chamberlains and comrades-in-arms. As seen by the elite from Tehran and Delhi to Beijing and Moscow, such a U.S. attack, now likely off the radar screen until at least 2012, would be a war not only against Russia and China, but against the whole project of Asian integration that the SCO is coming to represent.

Global BRIC-a-brac

Meanwhile, as the Obama administration tries to sort out its Iranian, Afghan, and Central Asian policies, Beijing continues to dream of a secure, fast-flowing, energy version of the old Silk Road, extending from the Caspian Basin (the energy-rich Stans plus Iran and Russia) to Xinjiang Province, its Far West.

The SCO has expanded its aims and scope since 2001. Today, Iran, India, and Pakistan enjoy "observer status" in an organization that increasingly aims to control and protect not just regional energy supplies, but Pipelineistan in every direction. This is, of course, the role the Washington ruling elite would like NATO to play across Eurasia. Given that Russia and China expect the SCO to play a similar role across Asia, clashes of various sorts are inevitable.

Ask any relevant expert at the Chinese Academy of Social Sciences in Beijing and he will tell you that the SCO should be understood as a historically unique alliance of five non-Western civilizations -- Russian, Chinese, Muslim, Hindu, and Buddhist -- and, because of that, capable of evolving into the basis for a collective security system in Eurasia. That's a thought sure to discomfort classic inside-the-Beltway global strategists like Dr. Zbig and President George H. W. Bush's national security advisor Brent Scowcroft.

According to the view from Beijing, the rising world order of the twenty-first century will be significantly determined by a quadrangle of BRIC countries -- for those of you by now collecting Great Game acronyms, that stands for Brazil, Russia, India, and China -- plus the future Islamic triangle of Iran, Saudi Arabia, and Turkey. Add in a unified South America, no longer in thrall to Washington, and you have a global SCO-plus. On the drawing boards, at least, it's a high octane dream.

The key to any of this is a continuing Sino-Russian entente cordiale.

Already in 1999, watching NATO and the United States aggressively expand into the distant Balkans, Beijing identified this new game for what it was: a developing energy war. And at stake were the oil and natural gas reserves of what Americans would soon be calling the "arc of instability," a vast span of lands extending from North Africa to the Chinese border. No less important would be the routes pipelines would take in bringing the energy buried in those lands to the West. Where they would be built, the countries they would cross, would determine much in the world to come. And this was where the empire of U.S. military bases (think, for instance, Camp Bondsteel in Kosovo) met Pipelineistan (represented, way back in 1999, by the AMBO pipeline).

AMBO, short for Albanian Macedonian Bulgarian Oil Corporation, an entity registered in the U.S., is building a $1.1 billion pipeline, aka "the Trans-Balkan," slated to be finished by 2011. It will bring Caspian oil to the West without taking it through either Russia or Iran. As a pipeline, AMBO fit well into a geopolitical strategy of creating a U.S.-controlled energy-security grid that was first developed by President Bill Clinton's Energy Secretary Bill Richardson and later by Vice President Dick Cheney.

Behind the idea of that "grid" lay a go-for-broke militarization of an energy corridor that would stretch from the Caspian Sea in Central Asia through a series of now independent former SSRs of the Soviet Union to Turkey, and from there into the Balkans (thence on to Europe). It was meant to sabotage the larger energy plans of both Russia and Iran. AMBO itself would bring oil from the Caspian basin to a terminal in the former SSR of Georgia in the Caucasus, and then transport it by tanker through the Black Sea to the Bulgarian port of Burgas, where another pipeline would connect to Macedonia and then to the Albanian port of Vlora.

As for Camp Bondsteel, it was the "enduring" military base that Washington gained from the wars for the remains of Yugoslavia. It would be the largest overseas base the U.S. had built since the Vietnam War. Halliburton's subsidiary Kellogg Brown & Root (KBR) would, with the Army Corps of Engineers, put it up on 400 hectares of farmland near the Macedonian border in southern Kosovo. Think of it as a user-friendly, five-star version of Guantanamo with perks for those stationed there that included Thai massage and loads of junk food. Bondsteel is the Balkan equivalent of a giant immobile aircraft carrier, capable of exercising surveillance not only over the Balkans but also over Turkey and the Black Sea region (considered in the neocon-speak of the Bush years "the new interface" between the "Euro-Atlantic community" and the "Greater Middle East").

How could Russia, China, and Iran not interpret the war in Kosovo, then the invasion of Afghanistan (where Washington had previously tried to pair with the Taliban and encourage the building of another of those avoid-Iran, avoid-Russia pipelines), followed by the invasion of Iraq (that country of vast oil reserves), and finally the recent clash in Georgia (that crucial energy transportation junction) as straightforward wars for Pipelineistan? Though seldom imagined this way in our mainstream media, the Russian and Chinese leaderships saw a stark "continuity" of policy stretching from Bill Clinton's humanitarian imperialism to Bush's Global War on Terror. Blowback, as then Russian President Vladimir Putin himself warned publicly, was inevitable -- but that's another magic-carpet story, another cave to enter another time.

Rainy Night in Georgia

If you want to understand Washington's version of Pipelineistan, you have to start with Mafia-ridden Georgia. Though its army was crushed in its recent war with Russia, Georgia remains crucial to Washington's energy policy in what, by now, has become a genuine arc of instability -- in part because of a continuing obsession with cutting Iran out of the energy flow.

It was around the Baku-Tblisi-Ceyhan (BTC) pipeline, as I pointed out in my book Globalistan in 2007, that American policy congealed. Zbig Brzezinski himself flew into Baku in 1995 as an "energy consultant," less than four years after Azerbaijan became independent, and sold the idea to the Azerbaijani elite. The BTC was to run from the Sangachal Terminal, half-an-hour south of Baku, across neighboring Georgia to the Marine Terminal in the Turkish port of Ceyhan on the Mediterranean. Now operational, that 1,767-kilometer-long, 44-meter-wide steel serpent straddles no less than six war zones, ongoing or potential: Nagorno-Karabakh (an Armenian enclave in Azerbaijan), Chechnya and Dagestan (both embattled regions of Russia), South Ossetia and Abkhazia (on which the 2008 Russia-Georgia war pivoted), and Turkish Kurdistan.

From a purely economic point of view, the BTC made no sense. A "BTK" pipeline, running from Baku through Tehran to Iran's Kharg Island, could have been built for, relatively speaking, next to nothing -- and it would have had the added advantage of bypassing both mafia-corroded Georgia and wobbly Kurdish-populated Eastern Anatolia. That would have been the really cheap way to bring Caspian oil and gas to Europe.

The New Great Game ensured that that was not to be, and much followed from that decision. Even though Moscow never planned to occupy Georgia long-term in its 2008 war, or take over the BTC pipeline that now runs through its territory, Alfa Bank oil and gas analyst Konstantin Batunin pointed out the obvious: by briefly cutting off the BTC oil flow, Russian troops made it all too clear to global investors that Georgia wasn't a reliable energy transit country. In other words, the Russians made a mockery of Zbig's world.

For its part, Azerbaijan was, until recently, the real success story in the U.S. version of Pipelineistan. Advised by Zbig, Bill Clinton literally "stole" Baku from Russia's "near abroad" by promoting the BTC and the wealth that would flow from it. Now, however, with the message of the Russia-Georgia War sinking in, Baku is again allowing itself to be seduced by Russia. To top it off, Azerbaijan President Ilham Aliyev can't stand Georgia's brash President Mikhail Saakashvili. That's hardly surprising. After all, Saakashvili's rash military moves caused Azerbaijan to lose at least $500 million when the BTC was shut down during the war.

Russia's energy seduction blitzkrieg is focused like a laser on Central Asia as well. (We'll talk about it more in the next Pipelineistan installment.) It revolves around offering to buy Kazakh, Uzbek, and Turkmen gas at European prices instead of previous, much lower Russian prices. The Russians, in fact, have offered the same deal to the Azeris: so now, Baku is negotiating a deal involving more capacity for the Baku-Novorossiysk pipeline, which makes its way to the Russian borders of the Black Sea, while considering pumping less oil for the BTC.

President Obama needs to understand the dire implications of this. Less Azeri oil on the BTC -- its full capacity is 1 million barrels a day, mostly shipped to Europe -- means the pipeline may go broke, which is exactly what Russia wants.

In Central Asia, some of the biggest stakes revolve around the monster Kashagan oil field in "snow leopard" Kazakhstan, the absolute jewel in the Caspian crown with reserves of as many as 9 billion barrels. As usual in Pipelineistan, it all comes down to which routes will deliver Kashagan's oil to the world after production starts in 2013. This spells, of course, Liquid War. Wily Kazakh President Nursultan Nazarbayev would like to use the Russian-controlled Caspian Pipeline Consortium (CPC) to pump Kashagan crude to the Black Sea.

In this case, the Kazakhs hold all the cards. How oil will flow from Kashagan will decide whether the BTC -- once hyped by Washington as the ultimate Western escape route from dependence on Persian Gulf oil -- lives or dies.

Welcome, then, to Pipelineistan! Whether we like it or not, in good times and bad, it's a reasonable bet that we're all going to be Pipeline tourists. So, go with the flow. Learn the crucial acronyms, keep an eye out for what happens to all those U.S. bases across the oil heartlands of the planet, watch where the pipelines are being built, and do your best to keep tabs on the next set of monster Chinese energy deals and fabulous coups by Russia's Gazprom.

And, while you're at it, consider this just the first postcard sent off from our tour of Pipelineistan. We'll be back (to slightly adapt a quote from the Terminator). Think of this as a door opening onto a future in which what flows where and to whom may turn out to be the most important question on the planet.

Obama’s auto task force: a collection of Wall Street investors and asset strippers

Obama’s auto task force: a collection of Wall Street investors and asset strippers

By Jerry White

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President Obama's auto task force has a March 31 deadline to approve updated restructuring plans by General Motors and Chrysler LLC under terms of the federal loan agreement. The task force—which has the power to revoke the loans and has not ruled out the use of the bankruptcy courts—is pressing for sharp reductions in the wages and benefits of autoworkers and a drastic downsizing of the auto industry.

The selection by the White House of the personnel to oversee the restructuring of the industry makes clear that its aim is not "saving" the auto companies, in the sense of preventing mass layoffs and protecting the jobs and living standards of autoworkers and the millions more connected to the industry.

On the contrary, the Obama administration has chosen representatives of America's financial elite, including former private equity investors and corporate asset strippers involved in previous restructurings, including in the airline and steel industry, where tens of thousands of workers were robbed of their jobs, wages and pensions.

As the World Socialist Web Site has noted, the near bankruptcy of Detroit is being exploited to destroy the gains of generations of autoworkers in order to make the auto industry a lucrative investment for the same Wall Street financiers who are responsible for the economic crisis. This attack will be used as a precedent for an offensive against the wages and conditions of the entire working class, in the US and internationally.

The task force is headed by Treasury Secretary Timothy Geithner—a key architect of the of the original Wall Street bailout under the Bush administration who, to the joy of Wall Street on Monday, laid out plans for another massive taxpayer-funded bailout of the banks.

Sitting along side Geithner will be National Economic Council Director Lawrence Summers. As treasury secretary under former President Clinton, Summers pushed for the deregulation of the finance industry and cuts in capital gains taxes. Both he and Geithner have repeatedly sought to limit restrictions on executive pay for financial institutions involved in the federal bailout, including at AIG.

A key adviser to the task force is billionaire investor and Democratic Party fundraiser Steven Rattner—a man with no experience in the auto industry. Rattner left a career as a New York Times business reporter to go to Wall Street in the early 1980s, where he rose through the ranks at Lehman Brothers and Morgan Stanley before landing the number two spot at investment firm Lazard Freres & Co., where he was an integral player in media mega-deals, such as the sale of Paramount Communications to Viacom.

In 2000, Rattner co-founded a private equity firm, Quadrangle Group LLC, which manages New York Mayor Michael Bloomberg's $13 billion-plus personal fortune and advises him on his media empire.

Rattner, a man who is insisting that GM and Chrysler workers accept brutal wage and benefit cuts, is immensely wealthy. According to Fortune, Rattner's "sprawling" Manhattan apartment building—also the residence of billionaire George Soros—"overlooks Central Park and the Metropolitan Museum of Art (where he is on the board). He has a horse-farm in North Salem, New York, in northern Westchester County, near his friend, New York City Mayor Mike Bloomberg, and is building a 15,575-square foot house on the water in Martha's Vineyard"—where he often pilots his private jet.

On his way up the financial ladder, the Washington Post reported, Rattner also became a central figure in Democratic politics and a leading fundraiser for Al Gore, John Kerry, Hillary Clinton and Barack Obama. His wife is former Democratic National Committee finance chairwoman Maureen White.

Perhaps the most significant figure on the task force is Ron Bloom—Geithner's senior adviser. Bloom's importance stems from his origins as a Wall Street investor and his experience in the restructuring of the US steel industry, which several commentators have suggested should be the model for automakers.

Bloom has been praised by the United Auto Workers union as well as such liberal publications as the Nation, as "labor's man" on the auto task force. Throughout his career, however, he has not defended the interests of ordinary workers. On the contrary, he worked for—and made a handsome fortune serving—the labor bureaucracy, protecting the income and privileges of top union officials during various restructurings that have left hundreds of thousands of workers without jobs and pensions.

After graduating from Harvard with an MBA in 1985, Bloom, like Rattner, worked for investment banker Lazard Freres under the tutelage of the firm's senior partner, Felix Rohatyn. The latter led the attack on city workers as chairman of Municipal Assistance Corp during the bankruptcy of New York City in the mid-1970s and advised Chrysler and the government during the 1980 bailout, which resulted in the destruction of thousands of jobs.

Bloom rose in prominence in the investment firm during a period when the unions dropped any resistance to the government-backed attacks by the employers and aligned themselves with the efforts to drive down the living standards of US workers to compete against economic competitors in Japan and Europe. It was during this time that manufacturing industries were systematically starved of investment, while vast profits were made through corporate takeovers and the crudest forms of financial speculation.

At Lazard, Bloom specialized in a scheme known as "workers' buyouts," or Employee Stock Ownership Plans (ESOP), in which the pension funds of workers were essentially raided in an effort to induce investors to take over failing companies. Bloom was involved in two failed ESOP attempts in 1989 involving the bitter Eastern Airlines strike and an effort by the Air Lines Pilots Association to buy United Airlines.

Soon after the United deal fell apart, Fortune reported, Bloom and another former partner at Lazard Freres, Gene Keilin, set up an "investment banking advisory boutique" that advised unions in such deals. In 1994, for a fee said to be $22 million, they helped the United pilots' union craft the successful buyout of United, in which the union got 55 percent of the company's stock in exchange for $4.9 billion in wage and benefit concessions. In the end, rank-and-file workers lost everything when their stocks were wiped out when the company declared bankruptcy.

In 1996, Bloom left his firm and became an adviser to the United Steelworkers union, one of his former clients. This position, the Pittsburgh Post-Gazette reported, "enabled Mr. Bloom, 53, to become one of the principal architects of the restructuring of the steel industry earlier this decade."

Citing the comments of Leo A. Keevican, a Pittsburgh attorney and investment banker who has known Bloom for more than 20 years, the Pittsburgh Post-Gazette said Bloom counseled the USWA to "focus on making steelmakers profitable rather than on the number of jobs." While his union roots make him sympathetic to the plight of workers and retirees, Keevican said, he's "a Harvard M.B.A., so he understands capital... Ron understands this will involve enormous pain for everybody."

Another Post-Gazette article noted, "The United Steelworkers has done much to stabilize the industry with ingenious actions that have both prodded and cooperated with management." Specifically, the newspaper noted, the USWA has "pushed for mergers among more than 80 steel companies big and small, the better to face the real competition—government-subsidized steel corporations overseas. That effort has included going to Wall Street to help finance the mergers. While this has meant sacrificing thousands of jobs, it has kept work from going overseas, saving slots for USW members and the wherewithal to provide benefits for retirees."

The union has also "agreed to relax work rules so that workers could be shifted more easily from one role to another" and "worked with management to deal with ‘legacy costs,' the increasing burden of pensions and health care for retirees."

During this time steelmakers unloaded billions of dollars in pension obligations onto the government's Pension Benefit Guaranty Corporation—where they were sharply reduced—and cut off more than 200,000 workers from their supposedly guaranteed medical care.

The union-backed concessions opened the door for various asset strippers to buy up failing companies and reap vast fortunes. One such figure was Wilbur Ross, a New York financier who took over LTV, Bethlehem, Weirton and other old-line companies and consolidated them into the International Steel Group. After the slashing of tens of thousands of jobs, the 17 top companies reported an after-tax profit of $6.6 billion in 2004. Ross sold International Steel to the Indian entrepreneur Lakshmi Mittal for $4.5 billion in 2005, pocketing billions.

Ross, who has carried out similar raids in the auto parts and coal mining industry, was the owner of the Sago Mine where 12 West Virginia miners were killed in 2006 due to unsafe conditions. He praised Bloom for his work with the USWA, saying, "Unlike what a lot of people think about labor leaders, (Bloom) has an extremely good understanding of the economics of business," adding that Bloom and other union leaders helped convince workers of the need to change quickly to make the business work.

In remarks to a steel industry conference in 2004, Bloom said the best route for creating and sustaining viable companies was a partnership between labor and "providers of capital." We recognize, he said, "in a capitalist society, over time, if capital does not earn a return it will stop showing up."

It was during this time that Bloom helped negotiate the setting up of a Voluntary Employees' Beneficiary Association, or VEBA, to relieve Ross's companies of most of their obligations for retiree health care benefits. A similar deal then followed between the steelworkers union and Goodyear Tire & Rubber, in which a union-run VEBA fund was set up to take over retiree health care while Goodyear removed a $1.2 billion liability from its balance sheet.

In 2005, Bloom's old firm, Lazard Ltd., was hired by the United Auto Workers union to review GM's finances in order to reduce its health care payments. A UAW spokesman, Paul Krell, told Reuters at the time that Bloom was involved on an informal basis to help the union review GM's finances. Krell called him "an old friend of the UAW."

The Goodyear plan became the model for the retiree health fund negotiated by the UAW bureaucracy in 2007—another scheme in which workers have been stuck with virtually worthless stock and will now face a drastic reduction in health care benefits.

Bloom, Rattner, Geithner and Summers are now in charge of the restructuring of the US auto industry. This can only mean that the most brutal attacks on workers are being prepared; attacks that can only be opposed by mobilizing the strength of autoworkers, independently of the UAW, and in a political struggle against the Obama administration and the financial elite for which it speaks. Such a fight must be based on unifying autoworkers in the US, Canada and internationally to take the auto industry out of the hands of the corporate executives and speculators that have run it into the ground, and placing it under the democratic control of working people.

US prepares new escalation of Afghanistan intervention

US prepares new escalation of Afghanistan intervention

By Patrick Martin

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The chief official overseeing US policy in Afghanistan and Pakistan, Richard Holbrooke, arrived in Brussels Monday to brief NATO representatives on the Obama administration plans for the region, amid press reports that the US intends to push aside Afghan President Hamid Karzai and supplant him with an unelected "czar" to take charge of the vast new influx of military and economic aid for the US puppet regime.

The British newspaper the Guardian reported Sunday that the US planned to appoint an Afghan "prime minister" who would bypass Karzai and his corrupt government in Kabul. In addition, the formula for distribution of the aid will be changed to divert money from the capital to the provinces, to avoid the siphoning off of funds by Karzai's clique.

According to the Guardian report, "A revised role for Karzai has emerged from the White House review of Afghanistan and Pakistan ordered by Barack Obama when he became president. It is to be unveiled at a special conference on Afghanistan at The Hague on March 31."

Several names have been suggested for the central administrative post, including interior minister Mohammed Hanif Atmar, and the former finance minister, Ashraf Ghani. The American press has also recently published flattering accounts of Gul Agha Shirzai, governor of Jallalabad province, and Mohammed Halim Fidai, governor of Wardak province, promoting them as regional leaders who were more effective wielders of power than Karzai.

A high-ranking Pentagon official told the Los Angeles Times March 19 that Defense Secretary Robert Gates was strongly in favor of shifting the focus of US efforts from Kabul to the provinces, particularly in the south and east of the country where the war with insurgent forces is most intense. Press Secretary Geoff Morrell said, "Building a strong central government in Afghanistan is counter-cultural, counter-historical."

Holbrooke denied the report that the US would openly move against Karzai, in remarks to reporters upon his arrival in Brussels, claiming, "It doesn't reflect any views that I am aware of in the government I work for and it's certainly not a universal NATO plan or anything." A Karzai spokesman in Kabul also called the report "nonsense."

But there is no denying the growing US disdain for the man who has been for more than seven years the principal American puppet in Kabul. Karzai was installed as president in early 2002, then won a landslide victory in a US-run election two years later. His term officially expires in May, but he is currently favored to win reelection in the poll set for August 20.

President Barack Obama cancelled the regular secure videoconferences that Bush used to hold with Karzai, and did not even make a phone call to the Afghan president until four weeks after his inauguration. Obama ordered a major escalation of the US military presence in Afghanistan, adding 17,000 troops to the 38,000 already in place, with only the barest pretense of consultation with his opposite number in Kabul.

US press reports, citing unnamed American government officials, have connected two of Karzai's brothers to corruption in Afghanistan. Ahmed Wali Karzai, head of the provincial council in Kandahar, the country's second-largest city, has been linked to drug trafficking, while Mahmoud Karzai, a US citizen and restauranteur, has become one of the richest men in his native country, with interests in banking, real estate and the country's main cement plant.

Despite Holbrooke's denial, it is clear that the Obama administration regards Karzai as an obstacle to its policies in the region. Holbrooke himself called the $800 million spent on poppy eradication in Afghanistan—much of it diverted to government officials and drug traffickers, sometimes the same people—"the most wasteful and ineffective program I have seen in 40 years."

In his interview Sunday night with the CBS television program "60 Minutes," Obama made no reference to the Bush administration's claims to be promoting democracy and economic development in Afghanistan, one of the poorest countries in the world. Instead, asked what the US mission was in Afghanistan, Obama replied, "Making sure that Al Qaeda cannot attack the US homeland and US interests and our allies. That's our No. 1 priority."

Significantly, Obama made no reference to the Taliban, the main target of US military action in the country. There have been a series of reports suggesting back-channel talks with the Taliban or other insurgent groups are under way.

The Observer, the sister newspaper of the Guardian, reported Sunday on "a radical new

initiative to bring the Taliban into the Afghan political process," quoting the US ambassador to Afghanistan declaring that the Obama administration "would be prepared to discuss the establishment of a political party, or even election candidates representing the Taliban, as part of a political strategy that would sit alongside reinforced military efforts."

William Wood, the outgoing US ambassador, said other possibilities included changing the Afghan constitution as part of negotiations with Taliban forces, and possible prisoner releases. "Insurgencies, like all wars ... end when there is an agreement," he told the newspaper. While rejecting any Taliban-ruled enclave in the country, he added, "There is room for discussion on the formation of political parties ... for elections. That is very different from shooting your way into power."

The Observer reported there were at least four attempts at exploratory negotiations with various factions of the anti-Kabul insurgents, including meetings with representatives of former prime minister Gulbuddin Hekmatyar and militia leader Jalaluddin Haqqani, who head two of the largest groups fighting the US and UN occupation forces, and with a group of former Taliban officials.

Whatever the immediate course of action in relation to Karzai himself, the Obama administration has clearly decided on a major escalation of the US intervention in Afghanistan and in the wider region, including the Afghanistan-Pakistan border. In addition to the 17,000 troops which have begun arriving in the country, there is an enormous increase in US military construction. According to one report, the Army Corps of Engineers is now the second largest employer in Afghanistan, after the national government, and commands as much as 60 percent of the country's construction industry, with plans to spend $4 billion this year and an even greater sum next year, largely to make the rural areas more accessible to US military forces.

The real target of the US escalation is the Pakistan border region, which Holbrooke singled out as the biggest concern of Washington policy-makers. He told the Christian Science Monitor, in an interview in Brussels, that the military and political situation in Afghanistan was actually not as bad as in the Pashtun-populated tribal regions on the Pakistan side of the mountainous border region, where Taliban strength has grown rapidly in the past year. "The heart of the problem for the West is in western Pakistan," he said.

Another top US adviser, Australian counterinsurgency expert David Kilcullen, told the Washington Post, in an interview published Sunday, that the greatest US fear was an outright collapse of the Pakistan government. "We're now reaching the point where within one to six months we could see the collapse of the Pakistani state, also because of the global financial crisis, which just exacerbates all these problems," he said. "The collapse of Pakistan, Al Qaeda acquiring nuclear weapons, an extremist takeover—that would dwarf everything we've seen in the war on terror today."

Kilcullen has been a key aide to General David Petraeus, the US commander in Iraq in 2007-2008 who now heads the US Central Command, with jurisdiction over the entire Middle East and Central Asia.

At the same time, CIA Director Leon Panetta was in India and Pakistan over the weekend for talks with top officials in each country.

Real estate investors: 'Tsunami' still ahead

Real estate investors: ‘Tsunami’ still ahead

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Unemployment will peak between 10 percent and 12 percent, according to professional real estate investors informally polled this week.

“The job market will be the last piece of this to recover,” said economist Sam Chandan, a panelist at the quarterly meeting of the Real Estate Investment Advisory Council. REIAC members were polled on questions including where unemployment will top out; 64 percent said it could go as high as 12 percent.

Their response came hours after the state Labor Department said joblessness in Georgia hit 9.3 percent in February. “Very few people are leaving their current work voluntarily,” adding to job hunters’ woes, Chandan said.

In another poll question, 39 percent of REIAC members said the economy will not turn around until the second half of 2010 or early 2011.

Egbert Perry, chairman and chief executive of the Integral Group, said about 70 percent of option adjustable rate mortgages have yet to reset, so “the tsunami is still coming.”

In December, Perry was named a director of mortgage buyer Fannie Mae, which is trying to ease loan modifications before they reset.

Commercial lags residential real estate, so defaults due to business downturns are ahead, panelists said.

Existing Home Sales Fall 4.6%

Existing Home Sales Fall 4.6%

By Barry Ritholtz

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Home prices dropped 15% from the same period one year ago; Despite the price drop, sales fell 4.6%. How anyone can try to spin this as a positive is beyond my mathematical comprehension.

Even the NAR reported that “overall sales activity remains relatively soft,” as existing-home sales increased in February (month over month).

This was another weak housing report. Do not be fooled by the monthly gains, as we have been saying for 4 years now, as they are meaningless (see chart at bottom):

-Single-family home sales rose 4.4% to a seasonally adjusted annual rate of 4.23 million in February. They fell 4.6% from the 4.95 million-unit level of February 2008;

-Distressed properties accounted for 45% of all sales;

-Home foreclosures were up 30% in February from a year earlier;

-The national median existing-home price for all housing types was $165,400 in February, down 15.5 percent from a year ago.

-The median existing single-family home price was $164,600 in February, down 15% from a year ago

-Total housing inventory at the end of February rose 5.2% to 3.80 million existing homes available for sale, a 9.7-month supply at the current sales pace.

-The absolute number of homes for sale rose to 3.8 million from 3.6 million

-The West continued to see the biggest drops in prices due to foreclosures.

While there was a healthy increase in sales from January, a look at the non-seasonal data might be instructive: As expected, the gins are primarily seasonal in nature, with January the worst sales month of the year, and February the start of modest seasonal improvements.


Existing Home Sales, Non-Seasonally Adjusted

chart via Calculated Risk

Existing-Home Sales Rise In February
NAR, March 23, 2009

America Is in Need of a Moral Bailout

America Is in Need of a Moral Bailout

By Chris Hedges

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In decaying societies, politics become theater. The elite, who have hollowed out the democratic system to serve the corporate state, rule through image and presentation. They express indignation at AIG bonuses and empathy with a working class they have spent the last few decades disenfranchising, and make promises to desperate families that they know will never be fulfilled. Once the spotlights go on they read their lines with appropriate emotion. Once the lights go off, they make sure Goldman Sachs and a host of other large corporations have the hundreds of billions of dollars in losses they incurred playing casino capitalism repaid with taxpayer money.

We live in an age of moral nihilism. We have trashed our universities, turning them into vocational factories that produce corporate drones and chase after defense-related grants and funding. The humanities, the discipline that forces us to stand back and ask the broad moral questions of meaning and purpose, that challenges the validity of structures, that trains us to be self-reflective and critical of all cultural assumptions, have withered. Our press, which should promote such intellectual and moral questioning, confuses bread and circus with news and refuses to give a voice to critics who challenge not this bonus payment or that bailout but the pernicious superstructure of the corporate state itself. We kneel before a cult of the self, elaborately constructed by the architects of our consumer society, which dismisses compassion, sacrifice for the less fortunate, and honesty. The methods used to attain what we want, we are told by reality television programs, business schools and self-help gurus, are irrelevant. Success, always defined in terms of money and power, is its own justification. The capacity for manipulation is what is most highly prized. And our moral collapse is as terrifying, and as dangerous, as our economic collapse.

Theodor Adorno in 1967 wrote an essay called “Education After Auschwitz.” He argued that the moral corruption that made the Holocaust possible remained “largely unchanged.” He wrote that “the mechanisms that render people capable of such deeds” must be made visible. Schools had to teach more than skills. They had to teach values. If they did not, another Auschwitz was always possible.

“All political instruction finally should be centered upon the idea that Auschwitz should never happen again,” he wrote. “This would be possible only when it devotes itself openly, without fear of offending any authorities, to this most important of problems. To do this, education must transform itself into sociology, that is, it must teach about the societal play of forces that operates beneath the surface of political forms.”

Our elites are imploding. Their fraud and corruption are slowly being exposed as the disparity between their words and our reality becomes wider and more apparent. The rage that is bubbling up across the country will have to be countered by the elite with less subtle forms of control. But unless we grasp the “societal play of forces that operates beneath the surface of political forms” we will be cursed with a more ruthless form of corporate power, one that does away with artifice and the seduction of a consumer society and instead wields power through naked repression.

I had lunch a few days ago in Toronto with Henry Giroux, professor of English and cultural studies at McMaster University in Canada and who for many years was the Waterbury Chair Professor at Penn State. Giroux, who has been one of the most prescient and vocal critics of the corporate state and the systematic destruction of American education, was driven to the margins of academia because he kept asking the uncomfortable questions Adorno knew should be asked by university professors. He left the United States in 2004 for Canada.

“The emergence of what Eisenhower had called the military-industrial-academic complex had secured a grip on higher education that may have exceeded even what he had anticipated and most feared,” Giroux, who wrote “The University in Chains: Confronting the Military-Industrial-Academic Complex,” told me. “Universities, in general, especially following the events of 9/11, were under assault by Christian nationalists, reactionary neoconservatives and market fundamentalists for allegedly representing the weak link in the war on terrorism. Right-wing students were encouraged to spy on the classes of progressive professors, the corporate grip on the university was tightening as made clear not only in the emergence of business models of governance, but also in the money being pumped into research and programs that blatantly favored corporate interests. And at Penn State, where I was located at the time, the university had joined itself at the hip with corporate and military power. Put differently, corporate and Pentagon money was now funding research projects and increasingly knowledge was being militarized in the service of developing weapons of destruction, surveillance and death. Couple this assault with the fact that faculty were becoming irrelevant as an oppositional force. Many disappeared into discourses that threatened no one, some simply were too scared to raise critical issues in their classrooms for fear of being fired, and many simply no longer had the conviction to uphold the university as a democratic public sphere.”

Frank Donoghue, the author of “The Last Professors: The Corporate University and the Fate of the Humanities,” details how liberal arts education has been dismantled. Any form of learning that is not strictly vocational has at best been marginalized and in many schools has been abolished. Students are steered away from asking the broad, disturbing questions that challenge the assumptions of the power elite or an economic system that serves the corporate state. This has led many bright graduates into the arms of corporate entities they do not examine morally or ethically. They accept the assumptions of corporate culture because they have never been taught to think.

Only 8 percent of U.S. college graduates now receive degrees in the humanities, about 110,000 students. Between 1970 and 2001, bachelor’s degrees in English declined from 7.6 percent to 4 percent, as did degrees in foreign languages (2.4 percent to 1 percent), mathematics (3 percent to 1 percent), social science and history (18.4 percent to 10 percent). Bachelor’s degrees in business, which promise the accumulation of wealth, have skyrocketed. Business majors since 1970-1971 have risen from 13.6 percent of the graduation population to 21.7 percent. Business has now replaced education, which has fallen from 21 percent to 8.2 percent, as the most popular major.

The values that sustain an open society have been crushed. A university, as John Ralston Saul writes, now “actively seeks students who suffer from the appropriate imbalance and then sets out to exaggerate it. Imagination, creativity, moral balance, knowledge, common sense, a social view—all these things wither. Competitiveness, having an ever-ready answer, a talent for manipulating situations—all these things are encouraged to grow. As a result amorality also grows; as does extreme aggressivity when they are questioned by outsiders; as does a confusion between the nature of good versus having a ready answer to all questions. Above all, what is encouraged is the growth of an undisciplined form of self-interest, in which winning is what counts.”

This moral nihilism would have terrified Adorno. He knew that radical evil was possible only with the collaboration of a timid, cowed and confused population, a system of propaganda and a press that offered little more than spectacle and entertainment and an educational system that did not transmit transcendent values or nurture the capacity for individual conscience. He feared a culture that banished the anxieties and complexities of moral choice and embraced a childish hyper-masculinity, one championed by ruthless capitalists (think of the brutal backstabbing and deception cheered by TV shows like “Survivor”) and Hollywood action heroes like the governor of California.

“This educational ideal of hardness, in which many may believe without reflecting about it, is utterly wrong,” Adorno wrote. “The idea that virility consists in the maximum degree of endurance long ago became a screen-image for masochism that, as psychology has demonstrated, aligns itself all too easily with sadism.”

Sadism is as much a part of popular culture as it is of corporate culture. It dominates pornography, runs like an electric current through reality television and trash-talk programs and is at the core of the compliant, corporate collective. Corporatism is about crushing the capacity for moral choice. And it has its logical fruition in Abu Ghraib, the wars in Iraq and Afghanistan and our lack of compassion for the homeless, our poor, the mentally ill, the unemployed and the sick.

“The political and economic forces fuelling such crimes against humanity—whether they are unlawful wars, systemic torture, practiced indifference to chronic starvation and disease or genocidal acts—are always mediated by educational forces,” Giroux said. “Resistance to such acts cannot take place without a degree of knowledge and self-reflection. We have to name these acts and transform moral outrage into concrete attempts to prevent such human violations from taking place in the first place.”

The single most important quality needed to resist evil is moral autonomy. Moral autonomy, as Immanuel Kant wrote, is possible only through reflection, self-determination and the courage not to cooperate.

Moral autonomy is what the corporate state, with all its attacks on liberal institutions and “leftist” professors, has really set out to destroy. The corporate state holds up as our ideal what Adorno called “the manipulative character.” The manipulative character has superb organizational skills and the inability to have authentic human experiences. He or she is an emotional cripple and driven by an overvalued realism. The manipulative character is a systems manager. He or she exclusively trained to sustain the corporate structure, which is why our elites are wasting mind-blowing amounts of our money on corporations like Goldman Sachs and AIG. “He makes a cult of action, activity, of so-called efficiency as such which reappears in the advertising image of the active person,” Adorno wrote of this personality type. These manipulative characters, people like Lawrence Summers, Henry Paulson, Robert Rubin, Ben Bernanke, Timothy Geithner, AIG’s Edward Liddy and Goldman Sachs CEO Lloyd Blankfein, along with most of our ruling class, have used corporate money and power to determine the narrow parameters of the debate in our classrooms, on the airwaves and in the halls of Congress while they looted the country.

“It is especially difficult to fight against it,” warned Adorno, “because those manipulative people, who actually are incapable of true experience, for that very reason manifest an unresponsiveness that associates them with certain mentally ill or psychotic characters, namely schizoids.”

AIG Shows Why We Need the Employee Free Choice Act

AIG Shows Why We Need the Employee Free Choice Act

By Mike Elk

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At first, it might seem a bit odd that Bank of America and Citigroup [1] paid for a conference call to coordinate a campaign against the Employee Free Choice Act. Why would Bank of America and Citigroup be so interested in hosting efforts against a measure that would allow workers to more easily join unions, since unionization has traditionally had little appeal for financial service workers? As a union organizer, I've never heard of stockbrokers wanting to unionize.

The real interest big banks have in opposing unions and the Employee Free Choice Act lies in the unions' role in preventing corporate greed.

Unions are a countervailing force against corporate greed in a market that has proven incapable of regulating itself. One example is the 2003 dismissal of New York Stock Exchange Chairman Dick Grasso [2]. CalPERS—the California Public Employees' Retirement System, the nation's largest pension fund with assets of over $200 billion dollars—raised red flags when it discovered that Grasso was going to receive a compensation package of nearly $140 million. The compensation package was designed for him by a board of representatives from NYSE-listed companies. Since Grasso was charged with regulating these companies, such a large compensation package represented a clear conflict of interest. Under the threat of pulling their investment out of NYSE-listed companies, CalPERS and other worker-run pension funds forced Grasso to step down as NYSE chairman. That was a major victory for workers and for market accountability.

Corporate greed has gone unchecked recently in part due to the decline of the labor movement. Is it a coincidence that union membership declined dramatically from 20 percent of the private sector workforce in 1980 to just over 7 percent in 2006 [3] while CEO pay has increased from 42 times what the average worker made in 1980 to 364 in 2006[4]? Unions demand an economy that works for all, not just those at the top, such as AIG executives. As William Greider, author of the Soul of Capitalism [5], told me, "Unions are an honest broker in the economy.”

Through pension and retirement funds, workers can fund companies that invest in communities and in green jobs, promote workers' rights and operate in a transparent manner; and penalize companies that don't. With over $6 trillion of workers' money [6] in retirement plans, pension funds, profit-sharing and stock plans and union reserve funds, the money of workers' plays a large role in fueling the global economy. Through putting workers' representatives on the board of these funds, unions can make sure that "worker investments are managed in workers' best financial interests." By investing in transparent, open and financially healthy companies, unions through stockholder activism can lead the way in ending the culture of reckless corporate short-term profit-seeking, which led to the rise of subprime mortgages and credit-derivative swaps.

Unions have long sought ways to make corporate profits sustainable in the long run in order to both retain and create jobs. It is ironic that the United Auto Workers (UAW) has been unfairly scapegoated as the cause of the demise of the auto industry since, as early as 1949, they have called for the Big Three to make small, more fuel-efficient cars. In 1949, in a pamphlet entitled "A Small Car Named Desire," [7] the UAW cautioned automakers against investing solely in big cars since some consumers would ultimately be interested in cheaper smaller, more fuel-efficient cars. In short, unions have also sought was is best for all— not just for workers, but creating the economic conditions that will allow their companies to thrive.

As President Obama stated [8], "We know that strong, vibrant, growing unions can exist side by side with strong, vibrant and growing businesses. This isn't a either/or proposition between the interests of workers and the interests of shareholders. That's the old argument. The new argument is that the American economy is not and has never been a zero-sum game. When workers are prospering, they buy products that make businesses prosper."

Indeed, passing the Wagner Act, which allowed unions to collectively bargain for higher wages, in 1935— during the middle of the Great Depression—was crucial to getting the economy going again.

The recent AIG scandal shows why we need an active force to protect us against the greed of Wall Street CEOs. Unions, representing the combined interests of everyday Americans, can be a valuable instrument in fighting for the interests of all, not just those at the top. By passing the Employee Free Choice Act, we would make it easier for workers to advocate for a union without facing the kind of employer intimidation that currently results in one of five workers who attempt to organize a union being fired [9] from their job. The Employee Free Choice Act would not just protect the right of workers to join a union, but would protect us all from the corporate greed of AIG, Bank of America, Citigroup and the rest of their partners in crime.

Bay City, Michigan: Fifteen-year-old dies after Taser shooting

Bay City, Michigan: Fifteen-year-old dies after Taser shooting

By Tom Eley

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On Sunday, a Bay City, Michigan teenager died soon after police used a taser "stun gun" on him.

Police were responding to a reported altercation between Brett Elder, 15, and another man early Sunday morning. Police claim that Elder then "attempted to fight the officers." According to a witness, however, Elder was already handcuffed when police fired the Taser.

Police took Elder to a local hospital where he was pronounced dead. He may be the youngest person to die in a Taser-related killing. Elder's family had planned to celebrate his 16th birthday on Tuesday.

A reader comment on a Bay City Times article concerning the incident reported to have intimate knowledge of what took place.

"Brett was handcuffed while being tased," the comment reads. "Brett was not fighting or swinging or throwing punches or kicks." After being tased, "he fell over and screamed as most people would do so they tased him again... The tasing caused Brett to vomit so now he is laying face down in his own vomit and his heart stops... The family that was there now started to yell at the cops he's not breathing, he's not breathing. This we have on audio recording." The police, the writer claims, would not allow a relative to administer CPR, nor did they undertake to do so themselves.

Family members say Brett Elder had recently lost his mother, and was going through drug and alcohol rehab. They say he was drunk, but that was no reason for him to die. "He was killed by the police," said Wendy Elder, the victim's sister-in-law, "the police are supposed to protect you, not hurt you."

The Taser gun, also called an "electrical control device," delivers a high voltage shock to the victim's body via wires connecting it to a pistol. The weapon overrides the body's nervous system, causing uncontrollable skeletal muscle spasms, disabling the victim. The electrical current is supposed to last for five seconds. The pain, victims say, is agonizing.

The boy's aunt, Cindy Hernden, described the boy's reaction to the Taser. "He was flopping around and looked like a fish out of water," she said. "That's the only way to explain it—his whole body was bent over."

The officer who fired the Taser has been placed on administrative leave for several days, according to Bay City Police Chief Michael Cecchini. The police will conduct an internal investigation of the incident, and the Michigan State Police will also investigate.

There have been no criminal charges filed against the police.

Elder was a student at Wenona High School. According to its web site, the school provides an "alternative education program for students who have been unsuccessful in traditional high and middle schools." The school's principal, quoted in the Bay City Times, called Elder "a pleasant enough young man."

Police and advocates of Taser use claim that it is a "soft" weapon that helps to avert police use of handguns. Indeed, police commonly use Tasers for situations in which guns should not be used, for example firing them into the backs of fleeing suspects, using them to shoot allegedly "uncooperative" suspects, and, most frequently, using them on those already arrested or otherwise under police control. This appears to have been the case with Elder.

There is a growing body of evidence to suggest that Tasers are lethal weapons. One web site that keeps a tally of Taser-related deaths reports that the weapon may be linked to at least 399 deaths in North America since 2001. A recent Canadian study has found that Tasers can cause lasting damage to the nervous system.

Amnesty International, along with a number of civil rights organizations, has called for a moratorium on the use of Tasers pending further scientific study of their effects.

The death of Brett Elder is the second story in recent months to bring national attention to Bay City, Michigan, (population 36,000). In January, a 93-year old man, Marvin Schur, froze to death after city officials placed a "limiter" on his energy consumption due to unpaid electricity bills. (See "Michigan man, 93, freezes to death after city cuts off electricity")