Sunday, October 31, 2010

GDP report heralds still higher US unemployment

GDP report heralds still higher US unemployment

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The Commerce Department on Friday estimated that the US economy grew at an anemic annual rate of 2.0 percent in the third quarter, a pace that all but ensures a further rise in unemployment.

The government claims that the recession ended in June of 2009, but the quarterly increases in the nation’s gross domestic product (GDP) this year have been far below those recorded following previous major recessions. US GDP rose 3.7 percent in the first quarter of 2010 and then slowed to 1.7 percent in the second.

A rate of 2 percent is insufficient to reduce joblessness, which is officially already at the stratospheric level of 9.6 percent. The Wall Street Journal reported Friday that Bank of America Merrill Lynch economists predict the jobless rate will surpass 10 percent and remain there for most of 2011.

A Bloomberg News survey of economists concluded that unemployment will remain above 9 percent through 2011, completing a three-year stretch of 9 percent-plus joblessness, the longest period since records began in 1948.

The Federal Reserve Bank of San Francisco recently issued the following grim prognosis for the US economy: “The economic recovery is proceeding at a very slow pace and has lost momentum since the spring. No sector of the private economy stands ready to drive a robust recovery.”

Friday’s figure could be revised downward when the Commerce Department issues a second estimate of third-quarter GDP growth on November 23. The department’s initial estimate for the second quarter, 2.4 percent, was subsequently downgraded.

While the third-quarter GDP figure was marginally higher than that for the second quarter, certain economic components indicate a further weakening of the economy. Business spending on equipment slowed dramatically, rising by only 12 percent—half the pace recorded in the second quarter.

Reflecting the relentless assault by business on workers’ wages and living standards, income growth, adjusted for inflation and taxes, slowed sharply. It rose only 0.5 percent after growing by 4.4 percent in the second quarter.

The dismal GDP report coincided with other economic data released this week pointing to the indefinite continuation of the economic slump and a worsening of the social distress and impoverishment that go with it. On Friday, the Thomson Reuters/University of Michigan index of consumer sentiment for October was released, showing a drop to 67.7 from 68.2 in September. The decline brought the measure of consumer confidence to its lowest point since November of 2009.

On Thursday, the foreclosure listing firm RealtyTrac reported that 133 out of 206 metropolitan areas posted an annual rise in home foreclosures this summer. Interviewed on the PBS “News Hour” program, Rick Sharga, senior vice president of RealtyTrac, said, “We’re looking at historically high and almost unprecedented rates of foreclosure activity, six times the rate of activity we would normally expect to see in a regular mortgage market. And we’re five years into this cycle. It’s simply unprecedented historically, and it won’t get much better until the economy gets better and until jobs start to come back.”

On Tuesday, the Standard & Poor’s/Case-Shiller home price index for August was released, showing a further decline in home prices. Home prices overall fell 0.2 percent in August from July in the 20 large cities included in the survey. Values fell in 15 of the cities.

The Labor Department’s report on first-time jobless benefit claims, released Thursday, showed a drop of 21,000 to a seasonally adjusted total of 434,000 for the week ended October 23. The four-week average of claims also dropped marginally.

However, the number of workers claiming jobless benefits remains abnormally high and far above levels that reflect an economy that is creating a healthy number of new jobs. Emergency jobless benefit rolls fell by 400,000, a grim indicator of the hundreds of thousands of long-term unemployed workers who are exhausting their eligibility for relief and losing all cash income.

US non-farm payrolls have declined by almost 400,000 since May, and the process of downsizing and cost-cutting continues unabated, in both the private and public sectors. USA Today on Friday reported Bureau of Labor Statistics figures showing a reduction of 258,000 state and local government jobs over the past year. Three-fourths of the job cuts came in five states—New Jersey, New York, California, Ohio and Michigan. Government payrolls were reduced in 35 of the nation’s 50 states.

“The outlook is for more cuts,” said Donald Boyd, finance expert at the Rockefeller Institute of Government.

President Obama continued to downplay the scope of the economic crisis and defend his policies at an appearance Friday outside of Washington, DC. He went to the Stromberg Metal Works factory in Beltsville, Maryland, to promote yet another proposal to slash corporate taxes.

Briefly alluding to the Commerce Department GDP report, released earlier that morning, Obama attempted to portray it as a positive sign of economic recovery. “Now, this morning,” he said, “we learned that our economy grew at a rate of 2 percent over the last three months. We’ve had nine consecutive months of private-sector job growth, after nearly two years of job loss.”

He neglected to note that the rate of private-sector job creation is far less than what is needed simply to keep pace with the normal growth of the labor force, and that the small increases in private sector jobs have in recent months been eclipsed by public-sector job losses.

He proceeded to tout his plan to let companies, big and small, take immediate tax deductions for the full cost of new equipment purchases. Together with business tax breaks enacted last month, his new proposal would provide a massive windfall of $200 billion in tax savings for companies through 2011, according to the Treasury Department.

This follows reports that Obama has met with top corporate executives to discuss a plan, to be advanced after the November 2 congressional elections, to slash the basic corporate tax rate from 35 percent to 24 percent.

Such corporate-friendly policies, combined with the Federal Reserve’s policy of near-zero interest rates and virtually free credit for major banks and corporations, have already enabled big business to rack up record profits in the midst of the worst recession since the 1930s.

For the most part, the profit surge and accompanying stock market boom have been achieved by downsizing and cost-cutting. With the help of the Obama administration, corporations have turned the economic crisis to their advantage, using mass unemployment as a bludgeon to drive down wages and impose speedup.

Now, as Obama prepares to push through new windfalls for big business after Tuesday’s vote, he is sending signals that his administration, in the name of fiscal “responsibility” and bipartisanship, will drop any proposals for infrastructure spending to create jobs or even the most minimal measures to provide relief for the unemployed.

USA Today gave some indication of the profit bonanza that has been facilitated by the policies of the Obama administration and the Democratic-led Congress. It reported Thursday that with nearly half of the companies in the Standard & Poor’s 500 stock index having released their third-quarter results, a record 81 percent have delivered better-than-expected earnings.

Over the past four quarters, moreover, three-quarters of companies have exceeded expectations.

S&P 500 firms have posted an average profit growth of 36 percent, according to Standard & Poor’s. This is the best rate of third-quarter earnings in at least 20 years.

The degree to which the profit boom is based on the impoverishment of workers and an intensification of their exploitation, rather than an expansion of sales, production and hiring, is indicated by the fact that S&P 500 companies are expected to post only 6 percent revenue growth for the quarter.

The biggest beneficiaries of the profit surge are the banks, private equity firms and hedge funds. The very institutions that precipitated the financial crash and global recession are enjoying an overall 92 percent rise in their profits.

US government undervaluing losses on AIG bailout

US government undervaluing losses on AIG bailout

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The White House has sought to undervalue government losses from the 2008 bailout of failed Wall Street insurer AIG, according to a report issued Tuesday by Neil Barofsky, the inspector general of the Troubled Asset Relief Program.

Last month, the US Treasury Department cut its official estimates of its loss in the AIG bailout from $45 billion to $5 billion. The Treasury achieved this figure by changing the model used to evaluate the losses.

“This conduct has left Treasury vulnerable to charges that it has manipulated its methodology for calculating losses…as part of a multifaceted publicity campaign touting the positive aspects of TARP and emphasizing the reduction in anticipated losses,” Barofsky wrote.

The bailout of AIG, which insured many of the toxic assets used for speculation by Wall Street banks and hedge funds, was only part of the vastly unpopular bailout of the banks under Bush and Obama. Much of the money handed to AIG found its way onto the balance sheets of Goldman Sachs and other institutions that had purchased insurance.

The US Treasury plans to transform its TARP investment in AIG by converting $49 billion worth of preferred shares into 1.7 billion shares of common stock. As a result of this swap, the government’s ownership share in the company will jump from 79 percent to about 92 percent.

Barofsky said that the government’s calculation of the value of its holdings do not present a valid picture of the Treasury’s position, because so little of AIG’s common stock is publicly traded. As a result, the US government will likely be unable to sell its stock in the company without dramatically reducing the price.

Barofsky’s report makes a scathing assessment of the bank bailout two years after its inception, saying that it has “fallen woefully short” of its stated intention of providing economic relief to the population.

The report compares the economic hardship facing the American people to the bonanza bestowed on the biggest Wall Street banks, saying, “There is no question that the dramatic steps taken by Treasury and other Federal agencies through TARP and related programs were a success for Wall Street. Those actions have helped garner a swift and striking turnaround, accompanied by a return to profitability and seemingly ever-increasing executive bonuses.”

The opening section of the report goes through each of the stated intentions of the bank bailout and shows how each of them have been completely swept aside in the interests of preserving the profitability of the banks.

While the bank bailout was sold to the American public as a means to get banks to increase lending to consumers and small businesses, the report notes that the bank bailout has failed “to ‘increase lending,’ with small businesses in particular unable to secure badly needed credit. Indeed, even now, overall lending continues to contract, despite the hundreds of billions of TARP dollars provided to banks with the express purpose to increase lending.”

The further report presents a scathing denunciation of the Obama administration’s mortgage modification program, saying that “the most specific of TARP’s Main Street goals, ‘preserving homeownership,’ has so far fallen woefully short, with TARP’s portion of the Administration’s mortgage modification program yielding only approximately 207,000...ongoing permanent modifications since TARP’s inception, a number that stands in stark contrast to the 5.5 million homes receiving foreclosure filings and more than 1.7 million homes that have been lost to foreclosure since January 2009.”

While the Obama Administration initially estimated that 3 million people would receive assistance under the Home Affordable Modification Program (HAMP), only 495,898 people have thus far received permanent home mortgage modifications. This is less than one-twentieth the number of homes that real estate tracker expects to be foreclosed by 2012.

Far from reversing the distress in the housing market, some types of foreclosure are now more prevalent than ever. The report notes that at the present rate, the number of bank repossessions will be 19 percent higher in 2010 than last year.

“Treasury’s claim that ‘every single person’ who participates in Hamp gets ‘a significant benefit’ is either hopelessly out of touch with the real harm that has been inflicted on many families or a cynical attempt to define failure as success,” the report concludes.

Barofsky’s findings underscore the basic fact that the bank bailout, marketed by the Obama administration as a measure to alleviate popular economic hardship from the economic downturn, has served only to funnel hundreds of billions of dollars into the balance sheets of the banks.

American economy exhibits unhealthy zombie look

American economy exhibits unhealthy zombie look

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The American economy is exhibiting an unhealthy zombie glow. Third-quarter GDP numbers, released just before the Halloween weekend, suggest worrisome imbalances rising again. The gain in real GDP was about equal to the growth in net imports and exceeded by the rise in inventories. Consumption was solid but government spending rose sharply as the savings rate fell. It’s not an altogether pretty picture.

In a well-balanced economy, consumption grows in tandem with overall GDP, with savings adequate to finance investment. Moreover, government spending growth is restrained, while inventories grow only as fast as consumption and the balance of payments deficit remains under control.

That’s not what the Bureau of Economic Analysis’s advance GDP report showed. Inventory growth was $116 billion compared to overall GDP’s real growth of $66 billion. In other words, the country is producing more stuff, but letting more of it pile up. Real final sales grew only 0.6 percent, and that growth was exceeded by a surge in imports.

Consumption growth was moderate, and while fixed investment grew marginally it was held down by a fall in housing investment after the April end of the home-buyer subsidies. In the meantime government spending grew rapidly, worsening an already unsustainable deficit, while the already inadequate savings rate declined.

America’s economic imbalances stem from over-expansive monetary and fiscal policies. With real interest rates negative and the government spending more than it takes in, savings are discouraged, imports surge and both raw and finished goods are stockpiled as commodity prices surge. Further quantitative easing by the Fed next week may exacerbate the problem.

Sure, some growth is better than a contraction. But the imbalances of inadequate savings, excessive imports and rising budget deficit all worsened in the quarter, and were joined by a bloating of inventories. That doesn’t signify an economy in good health and ripe for stock market investment. Rather it suggests that those entrusting their savings to the U.S. economy will find them eaten by the zombie lurking inside this feeble recovery.

Ohio McDonald's Gives Voting Advice With Paychecks

Ohio McDonald's Gives Voting Advice With Paychecks

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A handful of McDonald's employees in northeastern Ohio received handbills in their most recent paychecks suggesting they vote for three Republican candidates.

"If the right people are elected we will be able to continue with raises and benefits at or above our present levels," the insert said. "If others are elected we will not."

The fast food chain's corporate headquarters in Oak Brook, Ill., distanced itself from the action by Canton franchisee Paul Siegfried, saying it was not reflective of the company's position. Secretary of State Jennifer Brunner, the Democratic elections chief, said she was launching an investigation because the action appeared to violate Ohio election laws.

Allen Schulman, an attorney representing one of the employees, said Friday he had forwarded the paycheck insert to Canton's city law director, citing state and federal laws against corporate advocacy in elections.

"It's no surprise to anyone that Ohio is a battleground state in this election, and for a multinational corporation like McDonald's to threaten employees like this is morally and legally wrong," Schulman said in a statement.

Siegfried issued an apology later Friday, emphasizing the value he places on employees and their freedom of choice in the upcoming election.

"Distributing this communication was an error of judgment on my part," Siegfried said in a statement. "Please know, it was never my intention to offend anyone. For those that I have offended, I sincerely apologize."

The handbill with a simple McDonald's logo at the top recommended votes for Republicans John Kasich for governor, Rob Portman for U.S. Senate, and Jim Renacci for Ohio's 16th congressional district. A Renacci campaign flier was also included.

Shirley Rogers Reece, general manager for the company's Ohio region, said McDonald's had no knowledge that the handbill was being distributed.

"We wholeheartedly respect diverse views and opinions, and our employees' right to vote," she said in a statement. "Our position is that every employee should make his or her own choice."

Shulman told city law director Joe Martuccio the letter was "clearly designed to intimidate, threaten and coerce a captive group of employees to vote for specific candidates at the risk of their jobs, their raises, and their benefits."

He called it "particularly egregious that in this time of harsh economic conditions, a corporation would stoop to this level of voter intimidation."

In her statement, Reece said that McDonald's did not endorse any of the candidates mentioned in the handbill.

"While clearly this was poor judgment, we don't believe it was intended to offend anyone," Reece said.

Kasich faces Gov. Ted Strickland in Tuesday's election. Portman is running against Lt. Gov. Lee Fisher for the open seat currently held by U.S. Sen. George Voinovich. Renacci is challenging first-term Rep. John Boccieri in one of the most closely watched congressional races in the country. Strickland, Fisher and Boccieri are all Democrats.

Brunner said her office would investigate the letter and hand off findings to the state attorney general.

"Voter intimidation is a form of voter fraud. It is a serious offense requiring a strong response," she said in a statement.

She also issued an overall warning to the state: "The election is just four days away. All involved would be best to play fair, fight hard for what they believe in and work together for all Ohioans and our country in this democratic process not enjoyed in countries elsewhere."

Why Is Indiana Putting Armed Security Guards Into 36 Unemployment Offices Across The State?

Why Is Indiana Putting Armed Security Guards Into 36 Unemployment Offices Across The State?

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Did you ever think that things in America would get so bad that we would need to put armed guards into our unemployment offices? Well, that is exactly what is happening in Indiana. Armed security guards will now be posted at all 36 full-service unemployment offices in the state of Indiana. So why is this happening now? Well, Indiana Department of Workforce Development spokesman Marc Lotter says that the agency is bringing in the extra security in anticipation of an upcoming deadline when thousands upon thousands of Indiana residents could have their unemployment benefits cut off. But it is not just the state of Indiana that could have a problem. In fact, one recent study found that approximately 2 million Americans will lose their unemployment insurance benefits during this upcoming holiday season unless Congress authorizes another emergency extension of benefits by the end of November. At this point, however, that is looking less and less likely.

So perhaps all the states will have to start putting armed security guards in their unemployment offices. The truth is that frustration among unemployed Americans is growing by the day.

Could we soon see economic riots similar to what we have seen in Greece and France?

Let's hope not.

The following is a video news report about the armed guards that are going into Indiana unemployment offices....

So could things really get out of hand when thousands of unemployed workers in Indiana find out that they aren't going to get checks any longer?

Indiana Department of Workforce Development spokesman Marc Lotter makes it sound like that is very much on his mind....

"Given the upcoming expiration of the federal extensions and the increased stress on some of the unemployed, we thought added security would provide an extra level of protection for our employees and clients."

So who is paying for all of this extra security?

The Feds of course.

The additional cost of the new security will be approximately $1 million, and it will be paid for with U.S. government funds designated for the administration of the unemployment system according to Lotter.

This is not a good trend. As you go through your daily life, just start taking note of the places that now have armed security that did not have armed security five or ten years ago.

Unfortunately, as the U.S. economy goes downhill even further, the amount of security that people feel is "necessary" is likely to go up even more.

So is America going to become an armed camp where the people and institutions with money are protected by armed guards from the hordes of frustrated unemployed workers that can't feed themselves or their families?

Americans are certainly not in a good mood about the economy. According to a recent poll conducted by CNBC, 92 percent of Americans believe that the performance of the U.S. economy is either "fair" or "poor".

The lack of jobs is the main thing that the American people are so mad about. In fact, it is hard for even highly educated people to find work in 2010. In America today, 317,000 waiters and waitresses have college degrees.

People are really hurting and they are getting to the end of their ropes. Over 41 million Americans are now on food stamps, and one out of every six Americans is enrolled in at least one federal anti-poverty program. It is getting hard to believe that this is even America anymore. For many more statistics that reveal the economic horror we are now facing as a nation, please see my previous article entitled "30 Reasons Why People Should Be Getting Really Nervous About The State Of The U.S. Economy".

But it is not just unemployment that is the problem. In recent years, millions upon millions of Americans have been forced to take reduced hours or a cut in pay due to the economy. Millions of others have had to take jobs that barely enable them to survive. In fact, the number of Americans working part-time jobs "for economic reasons" is now the highest it has been in at least five decades.

So why aren't there even close to enough jobs for everyone? Well, there are a number of contributing factors, including the fact that we have been "offshoring" and "outsourcing" millions of our jobs and now it is really starting to catch up with us. I have discussed this so many times now that I am starting to sound like a broken record.

But instead of fixing the fundamental problems with our economy, the Federal Reserve wants to print yet another gigantic pile of paper money and throw it at the problem. It is called "quantitative easing", and it may help smooth things over for a few months, but it is also going to make our long-term problems even worse.

Unfortunately, the Federal Reserve does not really seem concerned about protecting the value of the U.S. dollar at this point. Not that they ever did, but it would be nice to see Fed officials paying at least some lip service to the dangers of inflation.

Instead, various Fed officials have been publicly making statements about the need for more quantitative easing for weeks. Right now they seem desperate to put the American people back to work - even if it ends up crashing the value of the dollar.

But now even the IMF seems supportive of a dollar devaluation. On Thursday, the IMF actually said that the U.S. dollar is "overvalued" and that adjustments need to be made.

We'll see what the Fed decides to do next week. Most analysts believe that they will announce a quantitative easing program of some sort or another.

But what have we come to as a nation when those who control our economy believe that the best solution to our economic problems is to print another big pile of paper money and chuck it into the system?

We've got an absolutely gigantic economic mess on our hands, and none of our "leaders" seem to have any idea about how to fix it.

Meanwhile, millions of unemployed Americans are just going to become more and more frustrated - especially when it gets to the point when they aren't receiving unemployment checks anymore.

A Ground's Eye View of How Millions of Shady Corporate Political Dollars Are Hijacking This Election

A Ground's Eye View of How Millions of Shady Corporate Political Dollars Are Hijacking This Election

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What does a torrent of cash from anonymous corporate donors look like on the ground, in the heat of a Congressional race?

Rep. Bruce Braley is one of dozens of Democrats who’s discovering the answer to that question this fall. Braley has represented Iowa’s 1st -- a Democratic leaning district that encompasses Davenport -- the largest of the Quad Cities -- and college towns like Dubuque and Cedar Falls, since 2007. He took 64 percent of the vote in 2008.

Facing challenger Ben Lange, one of the Republican National Campaign Committee’s “Young Guns” and an up-and-coming conservative, Braley has a tougher fight this cycle. He’s holding a lead -- forecaster Nate Silver gives him more than a 90 percent chance of keeping his seat -- but his opponent has made the race closer than it might have been with the help of a bundle of campaign cash from a shady corporate front group called the American Future Fund (AFF).

The New York Times estimated that AFF has spent at least $574,000 on ads attacking the Democrat this cycle, but Braley communications director Caitlin Legacki told AlterNet the figure was closer to $1.8 million, including spending that isn’t strictly counted as “electioneering.” Lange’s also enjoyed another quarter-million worth of attack ads from the U.S. Chamber of Commerce.

In the wake of the Supreme Court’s Citizens United decision, neither group is required to disclose its donors.

The American Future Fund was founded by Nick Ryan, a GOP lobbyist who served as the campaign manager for Jim Nussle’s 2006 Iowa gubernatorial run. It was started in 2007 with seed money put up by Bruce Rastetter, an ethanol company exec and reliable conservative donor, according to the New York Times.

The Des Moines Register reported that AFF has spent $8.9 million so far this cycle on behalf of conservative candidates. Despite the big money, the Register reported, “If you try to visit the ‘office’ of the Iowa-based advocacy organization that is shaking up political fundraising nationwide, you will find yourself standing in front of a mailbox at a private shipping service store on the south side of Des Moines.”

According to a complaint filed by Public Citizen and several other watchdog groups, AFF “is registered as a 501(c)(4) organization, which under IRS tax code cannot have a primary purpose of influencing elections.” The complaint alleges that the shadowy lobby “appears to be violating campaign finance law,” and called on the Federal Elections Commission to investigate its activities.

The Register noted that the anonymous nature of AFF’s donors has “raised controversy about who's seeking to influence the political process.” But it’s clear that the group is pulling in campaign dollars from corporate interest groups. AFF founder Nick Ryan boasted to the Register that in this cycle, the "corporate floodgates are opened."

“It’s pretty clear that corporations now have the ability to spend unlimited amounts of money to take on people like my boss,” said Caitlin Legacki. “This is a clear situation in which that’s happening.”

According to the Iowa Independent, the group’s leaders include “two media consultants who played key roles in the Swift Boat Veterans for Truth ads in 2004 and the Willie Horton ad in 1988, both of which helped defeat Democratic presidential candidates.”

Those campaigns have become classics of sleazy politics. Unsurprisingly, AFF’s ads have been especially nasty. According to the New York Times:

One that is particularly pernicious shows images of the ruined World Trade Center and then intones, “Incredibly, Bruce Braley supports building a mosque at ground zero.” Actually, Mr. Braley has never said that, stating only that the matter should be left to New Yorkers.

Another implies that Mr. Braley supports a middle-class tax increase because he voted to adjourn the House at a time when some Republicans had proposed cutting income taxes on everyone. In fact, Mr. Braley supports extending the Bush-era tax cuts for the middle class, while letting them expire for families making $250,000 or more to avoid adding $700 billion to the deficit.

Caitlin Legacki told AlterNet that “anytime somebody is not required to stand by their ads, as candidates are, they have a lot more room to be especially vitriolic and especially misleading.” She added: “Because there’s no instrument in place for these people to be held accountable, they have free rein.” The ad-checker Political Correction reviewed three AFF ads against Braley -- and one paid for by the U.S. Chamber of commerce -- and found they were “not based in fact.”

The New York Times reported that Braley “is only one of many candidates being pummeled this year by secret money and shamefully false advertising.” In the neighboring Third District, incumbent Democrat Leonard Boswell, who advocates reining in agricultural subsidies that help pad ethanol producers’ bottom lines, is facing a similar onslaught. Boswell handled his Republican challenger easily in 2008, defeating Kim Schmett by a 14-point margin, but last week Real Clear Politics’ electoral forecast moved this year’s race against Iowa state senator Brad Zaun into the “toss-up” column (this week it’s back to “leans Dem”).

The river of third-party cash, made legal last year by the Supreme Court, is in part a result of right-wing donors looking to capitalize on an enthusiastic conservative base, and in part by Republicans’ distrust of the National Republican Committee under the leadership of Michael Steele.

The result has been the advent of the “super-pac,” which the Washington Post described as “a new political weapon” that allows ”independent groups to both raise and spend money at a pace that threatens to eclipse the efforts of political parties.”

The corporate-funded super-PACs, led by veteran GOP operatives, are reportedly coordinating their efforts in weekly strategy sessions and dividing up Congressional districts in order to avoid overlap.

With a ton of unaccountable cash, and millions of low-information voters stirred into a near frenzy by talk of “death panels” and Kenyan interlopers in the White House taking over the economy -- and with a less energized Democratic base -- The Hill’s survey of 42 swing districts “suggest[s] a GOP pickup that could easily top 50 seats.” Veteran forecaster Stuart Rothenberg wrote this week that the Dems “face the potential of a political bloodbath the size of which we haven’t seen since the presidency of Franklin Delano Roosevelt.”

If that should prove true, it’ll be a result of the GOP successfully expanding the field of seats in play, largely because of the efforts of these third-party groups. $500,000 or a million in attack ads has far more impact on a Congressional race than it would a fight for statewide office. Although unions and other Dem-aligned groups have started to respond of late -- the Washington Post reports that a late fundraising flurry has allowed Democratic groups to spend two-thirds of what their opponents have over the past week -- outside GOP groups had been outspending their Dem counterparts seven to one before that.

Voters will never know who’s behind the onslaught of advertising the corporate-funded super-pacs are buying. But as the Times noted in a recent op-ed, “rest assured that the big corporations and donors will make their identities known to the winners they push into office. The price for their support will be high.”

Double Dip Delayed, Not Derailed; Understanding Consumer Spending

Double Dip Delayed, Not Derailed; Understanding Consumer Spending

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The BEA Advance GDP for Third Quarter 2010 came in at +2.0%. However, Table 2. Contributions to Percent Change in Real Gross Domestic Product shows that Change in private inventories contributed +1.44 while real final sales contributed a mere .6.

How sustainable is that?

The answer is not very. This is likely the last hurrah for inventory replenishment even without factoring in upcoming cutbacks at the state level.

Not a V-Shaped Recovery

In terms of real final sales, this "recovery", is the weakest on record. Dave Rosenberg has some thoughts on that in Lunch with Dave.


The major problem in the third quarter report was the split between inventories and real final sales. Nonfarm business inventories soared to a $115.5 billion at an annual rate from the already strong $68.8 billion build in the second quarter — this alone contributed 70% to the headline growth rate last quarter. If we do get a slowdown in inventory investment in Q4, as we anticipate, it would really not take much to get GDP into negative terrain. We estimate that if the change in inventories slowed to about $94.0 billion in Q4 (about $22 billion below Q3 levels), GDP would contract fractionally. In other words, it won’t take much for GDP to slip into negative terrain.

The recession may have technically ended, but outside of inventories, and the best days of the re-stocking process look to be behind us, this has been a listless recovery. At 60 basis points above zero, real final sales are just a shock away from double-dipping — a shock like looming tax hikes, accelerating fiscal cutbacks at the state/local government level or the millions of “99ers” about to fall off the extended jobless benefit rolls at the end of November.

In terms of components, the good news was that consumer spending did accelerate to a 2.6% annual rate from 2.2% in the second quarter — the best performance since Q4 2006. Non-residential construction eked out a 3.8% annualized gain, the first advance since Q2 2008. But the good news pretty well stopped there.

It is also no surprise to see imports bulge when inventories did the same, but what caught our eye in the external trade portion of the GDP report was the sharp slowing in export growth, to a 5% annual rate trend — half the pace we saw in the first half of the year. Weren’t the overseas economies supposed to be providing a big lift to the U.S. economy?

Finally, state and local government spending dipped 0.2% — the fourth decline in the past five quarters. At a 12% share of the economy, this sector is nearly twice as large as business spending, and can be expected to be a dead-weight drag on the economy as far as the eye can see.

Here is the bottom line: the double-dip has been delayed but not derailed; despite widespread cries from the economic elite to the opposite. The economic recovery is extremely fragile and unless we get an improvement in real final sales, all it would take would be a modest inventory drawdown to pull real GDP back into contraction mode.

Foreclosuregate Explained: Big Banks on the Brink

Foreclosuregate Explained: Big Banks on the Brink

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Scandal is spreading across Wall St. like a very bad case of poison ivy. A rash of fraudulent home foreclosures has exposed some of the nation's biggest banks to an even worse condition ... bankruptcy.

Until late 2007, the money boys on Wall St. made a bundle in the housing market. After the bubble burst, they were just itching to cash in on the down side, calling in all those bad loans they made and selling off millions of repossessed homes. According to RealtyTrac, Inc., which compiles such data, lenders foreclosed on 3.2 million properties in the last three years, 288,000 in the last quarter, the highest number on record.

But evidence came to light, first in New York, then Florida, Maine, Ohio, and other states that lenders were taking shortcuts to speed up foreclosures. Law firms hired so-called "robo-signers," some of whom have admitted in depositions that they routinely signed off on thousands of foreclosure papers they had never read and sometimes forged signatures of notary publics who were not present.

"Why don't we have Mickey Mouse sign the thing, instead of having a human being sign it? I mean it becomes meaningless," New York Supreme Court Judge Arthur Schack told PBS "Newshour."

Legally meaningless maybe, but not without consequence for hundreds of thousands of Americans who have been evicted from their homes, many of whom have no jobs, and who were snookered into sub-prime mortgages in the first place.

In the wake of mounting public outrage, attorneys general of 50 states and the District of Columbia have launched a joint investigation into what financial writers are calling "Foreclosuregate." Industry spokespersons have downplayed the controversy surrounding foreclosure mills and "robo-signers." Bank of America and JP Morgan Chase are conducting internal reviews of thousands of foreclosures, but say they believe all the underlying facts in their foreclosures are true and that any potential issues will be quickly addressed.

However, Bank of America and GMAC stopped foreclosures in all 50 states and Chase stopped them in the 23 states where a judge must approve foreclosures. Other lenders like PNC Financial and Litton Loan Savings followed suit in what amounted to a national moratorium on foreclosures. But it only lasted a couple of weeks. Bank of America and GMAC have since started up foreclosure suits again despite the bad press, pressure from bondholders and even the Federal Reserve, which wants big lenders to start buying back the bad mortgages on which they are trying to foreclose.

"The bottom line is not that those properties won't be repossessed. They simply won't be repossessed as quickly," said Rick Sharge, vice president of RealtyTrac. But others predict that if GMAC and Bank of America stick to their guns, they just might go down in smoke.

"This is not simply a glitch in paperwork," wrote Iowa Attorney General Tom Miller, who is heading up the states' joint investigation into the mortgage paper fraud mess.

"This was an industry wide scheme designed to defraud homeowners," Florida attorney Peter Ticktin told The Associated Press.

Ohio Attorney General Richard Cordray filed a lawsuit against lender GMAC in October that aims to stop sales of all repossessed homes foreclosed with robo-signed documents and to reverse judgments on those foreclosed homes that have not yet been sold. In addition, the suit seeks damages for homeowners and a $25,000 fine for every fraudulently filed court document.

In Kentucky, Heather McKeever filed a class action lawsuit against GMAC on behalf of homeowners there alleging the giant lender, a recipient of $16 billion in federal bailout money, violated the RICO Act. "This is organized crime by people in suits but it is still organized crime," she said.

If other states file similar lawsuits like those in Ohio, Kentucky and Mississippi, it could mean billions of dollars in damages and fines, criminal perjury prosecutions of "robo-signers" and disbarment for the lawyers who filed the fraudulent papers. Some analysts say the potential liability of major banks is so large, another financial crisis is a real possibility.

The fraud allegations raise the question of who actually owns the bad loans. If banks cannot show an unbroken chain of title from the original borrower to themselves, they have no legal right to foreclose. At least that's the argument defense lawyers are making.

"When they tried to industrialize the loan securitization market, which is really what they did, they tried to automate everything they could. They started digitizing loan documents and shredding originals.... and, of course what that means is, we have no clue who owns what," foreclosure expert Walter Hackett told PBS "Newshour."

Hackett turned into a consumer advocate after nearly three decades on the inside. He knows exactly where to bite the hand that used to feed him. And he was referring to a private database lenders have relied on for years to track loans that would be bundled into investment vehicles called mortgage-backed securities (MBS), which are traded back and forth between investors daily.

To collect fees from those trades, Wall Street relies on the Mortgage Electronic Registry System (MERS), which had three million loans listed in its database in early 2001. Today, it has more than 62 million and virtually all of the home loans made in the US since 2005. But since MERS is essentially Excel spreadsheets shared between bankers and brokers, it is really just a bunch of numbers. MERS was designed to make money out of the mortgage market, not parse exactly who owes what to whom.

One foreclosure expert estimates that just 6 to 7 percent of the loans made in the last three years can produce properly recorded title transfers from borrower to final lender. Legally assigning, or recording title transfers was much too slow and cumbersome for the fast-paced trade in MBS, so most banks just ignored those requirements, according to testimony, analysts and consumer advocates like Hackett. On many mortgages, the loan owner's name was routinely left blank, the titles never recorded and title transfer fees not paid.

Banks invented an investment vehicle in 1987 called REMICs (Real Estate Mortgage Investment Conduits) to allow them to profit from MBS trading. A Real Estate Mortgage Investment Conduit is what the name implies - an empty pipe that allows banks to collect fees as trustees of MBS' without owning any of the assets that back them. It also allows them to avoid taxes and title transfer fees since they only pass through titles to property held as collateral for the MBS' they sell.

But this is clearly a convenient fiction for huge consumer lenders like Bank of America and GMAC, which are trying to have things both ways. REMICs were a real sweet deal for banks until the bottom fell out of the housing market in 2007, triggering the worse recession in 75 years. Banks soon found themselves going to court to repossess property they had been claiming for years they never owned.

They hired foreclosure mills to retroactively produce documents showing the chain of ownership ended with them. In many cases, foreclosure mills provided affidavits of lost mortgage notes attempting to prove banks' control of mortgages in hopes of winning a favorable judgment.

Banks are in a big pickle. If they can prove they own the title to properties they want to foreclose on, they are liable to the IRS for unpaid taxes and penalties. If they don't, the are liable to be sued by bond holders for lack of due diligence in the bundled mortgages they sold to investors.

This is good news for homeowners facing eviction, and there has been an increase in the number of contested foreclosures in Florida, ground zero of the foreclosure scandal.

Both Bank of America and GMAC got billions in federal bailouts, so playing hardball with borrowers when the Obama administration put up an additional $75 billion to persuade banks to refinance troubled loans may jeopardize their "too big to fail" status in Washington.

Housing Secretary Shaun Donovan told reporters in Washington last Wednesday that the federal government would act soon to force banks to offer loan modifications for mortgages backed by the Federal Housing Administration. (How many?)

Meanwhile, investigations are underway not only by the states' attorneys general, but also by federal banking regulators, the US Justice Department and the Securities Exchange Commission. A number of lawsuits have been filed in Ohio, Kentucky, Mississippi, and other states, and all this attention may force banks to renegotiate their loans with more affordable terms for borrowers.

But banks are not heading down that path, instead, they are redoing questionable foreclosure papers they hope will pass muster in court.

"There has been an attempt by some of the major services to indicate there are no problems," Iowa Assistant Attorney General Patrick Madigan, told The New York Times.

"We're not at the end of this process. We're at the beginning," he said.

Only time will tell how the foreclosure scandal plays out. Federal regulators say their investigation won't be completed before the end of the year. And several foreclosure experts agree with Madigan that the fight over foreclosures is just beginning.

Coal Ash: The Glowing National Security Threat

Coal Ash: The Glowing National Security Threat

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Like the proverbial broken clock, the nuclear industry is occasionally right, as when it charges that a coal plant releases more radiation than a nuclear power plant.

The gloat relies on a narrow frame, but it is true that burning coal concentrates naturally occurring radioactive materials including uranium and thorium--along with heavy metals such as mercury, arsenic and lead. When filtered out by smokestack control equipment, the toxins do not magically disappear. Rather, they accumulate in the slag that remains, so the cleaner the air, the filthier and more radioactive the coal ash.

Linked to cancer, organ failure, and other serious health problems, coal ash from U.S. power plants is building up in some 900 lagoons, old mines and quarries in almost every state. Sixty-seven of 584 U.S. coal ash dump sites have leaked, contaminating nearby earth and groundwater. Some slag--heavy metal, uranium and all--is recycled into roads, concrete and wallboard.

Around the world, the 6 billion tons of coal burned annually creates 650 million tons of coal ash. China, which unveils a new coal facility every seven to 10 days, generates more than half that total, and adds it to the 2.7 billion tons of coal combustion wastes it already stores.

The radioactive content is small, but if you know nothing else about radiation, know these three things: It is carcinogenic. It is cumulative. And there is no known safe dose. No one can predict how much radiation-caused DNA damage it takes to trigger birth defects and cancers in a particular individual. So when you hear the familiar PR sunshine speech--"You get more radiation from a day at the beach or a mammogram, a CT scan, a cross-country plane ride, a leak at your local nuclear power plant or coal plant emissions"--reach for the BS detector and a lead shield.

As the mountains of concentrated waste from coal-burning power plants grow, so does the volume of their radioactive components. An Oak Ridge Laboratory Review report predicts that by 2040, a century of coal burning will have released into the world's environment 828,632 tons of uranium, including 5,883 tons of U-235, along with more than 2 million tons of thorium.

There's figurative gold in them thar hills. In March, Toronto-based Sparton Resources signed a deal to recycle uranium from China's slag heaps. The company can extract almost a half pound of uranium per ton, Sparton President Lee Barker told the Wall Street Journal. After three years, he expects Sparton's China operations to produce 2 million pounds of uranium annually.

Although recycling sounds green, precipitating uranium involves sulfuric and hydrochloric acids, and other highly toxic chemicals that have wreaked havoc in poorly regulated extraction industries around the world.

This includes the United States, where coal's radioactive by-products are not classified as radioactive waste, and where many storage sites escape rigorous monitoring. Citing fear of terrorism, the Obama administration has exacerbated the oversight problem by removing from public records the locations of the 44 coal ash dump sites that pose a "high hazard."

Environmentalists charge that official and corporate malfeasance is a worse security threat than al-Qaeda plots. They cite the 2008 failure of the earthen wall of a 40-acre coal ash disposal pond at a Kingston, Tenn., power plant. The disaster unleashed a 1 billion-gallon flood that covered 300 acres with thick sludge, contaminating rivers and land with concentrated toxins.

A more frightening risk could come from all that uranium, which can be extracted and processed into yellowcake, a first step toward enriched uranium. The source--coal ash--is abundant, and the technology to extract enough uranium to make a dirty or "clean" bomb, while expensive and time consuming, is well known.

Compared to nuclear power plants, and within the context of coal's health and environmental risks--mining accidents, lung and other diseases, global warming, mountaintop removal, etc.--radioactive slag is not the paramount concern. But given the cumulative and unpredictable impacts of increasing human exposure to carcinogenic radiation from environmental and medical sources, the dangers are real and rising.

Halliburton, BP Knew of Cement Flaws Before Spill, Panel Says

Panel Says Firms Knew of Cement Flaws Before Spill

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Halliburton officials knew weeks before the fatal explosion of the BP well in the Gulf of Mexico that the cement mixture they planned to use to seal the bottom of the well was unstable but still went ahead with the job, the presidential commission investigating the accident said on Thursday.

In the first official finding of responsibility for the blowout, which killed 11 workers and led to the biggest offshore oil spill in American history, the commission staff determined that Halliburton had conducted three laboratory tests that indicated that the cement mixture did not meet industry standards.

The result of at least one of those tests was given on March 8 to BP, which failed to act upon it, the panel’s lead investigator, Fred H. Bartlit Jr., said in a letter delivered to the commissioners on Thursday. “There is no indication that Halliburton highlighted to BP the significance of the foam stability data or that BP personnel raised any questions about it,” Mr. Bartlit said in his report.

Another Halliburton cement test, carried out about a week before the blowout of the well on April 20, also found the mixture to be unstable, meaning it was unlikely to set properly in the well, but those findings were never sent to BP, Mr. Bartlit found after reviewing previously undisclosed documents.

Although Mr. Bartlit did not specifically identify the cement failure as the sole or even primary cause of the blowout, he made clear in his letter that if the cement had done its job and kept the highly pressurized oil and gas out of the well bore, there would have been no accident.

“We have known for some time that the cement used to secure the production casing and isolate the hydrocarbon zone at the bottom of the Macondo well must have failed in some manner,” he said in his letter to the seven members of the presidential commission. “The cement should have prevented hydrocarbons from entering the well.”

The failure of the cement set off a complex and ultimately deadly cascade of events as oil and gas exploded upward from the 18,000-foot-deep well. The blowout preventer, which sits on the ocean floor atop a well and is supposed to contain a well bore breach, also failed.

In an internal investigation, BP identified the faulty cement job as one of the main factors contributing to the accident and blamed Halliburton, the cementing contractor on the Macondo well, as the responsible party. Halliburton has said repeatedly in public testimony that it tested and used a proper cement formula and that BP’s flawed well design and poor operations caused the disaster.

Jesse Gagliano, a Halliburton technical adviser, told federal investigators in Houston in August that the company was confident of the cement job and said that BP’s decision to use six well-stabilizing devices known as centralizers contributed to the failure of the cement work.

Another Halliburton official, Thomas Roth, told a National Academy of Engineering panel last month that Halliburton’s cement met industry standards and that it had been successfully used at more than 1,000 other wells. Mr. Roth said BP ignored “multiple red flags” in the drilling and completion of the well.

The Deepwater Horizon drilling rig was operated by a third company, Transocean.

Cathy Mann, a Halliburton spokeswoman, said the company was reviewing the panel’s findings. A BP spokesman said the company would have no comment.

Halliburton, a major oil field services company and one of the nation’s largest defense contractors, was once led by former Vice President Dick Cheney. Mr. Bartlit’s law firm, Bartlit Beck Herman Palenchar & Scott, has done legal work for Halliburton in the past but has not represented the company since 2005, the firm said.

The commission obtained from Halliburton samples of the same cement recipe used on the failed well, including the same proportion of nitrogen used as a leavening agent and a number of chemicals used to stabilize the mixture. The slurry was sent to a laboratory owned by Chevron for independent testing.

Chevron conducted nine separate stability tests intended to reproduce conditions at the BP well and the cement failed them all, the staff report said.

“Although laboratory foam stability tests cannot replicate field conditions perfectly,” Mr. Bartlit’s letter said, “these data strongly suggest that the foam cement used at Macondo was unstable.”

One and a half gallons of the actual mixture used on the doomed BP well survived and are being held as evidence in criminal and civil investigations.

Shortly before technicians began pumping cement slurry down the well on April 19, Halliburton conducted one last test of the mixture. The company changed some of the conditions of the test and appeared satisfied with the result, although those findings were not communicated to BP until after the well explosion, the commission found.

The commission concluded, “Halliburton may not have had — and BP did not have — the results of that test before the evening of April 19, meaning that the cement job may have been pumped without any lab results indicating that the foam cement slurry would be stable.”

Further, the panel found, “Halliburton and BP both had results in March showing that a very similar foam slurry design to the one actually pumped at the Macondo well would be unstable, but neither acted upon that data.”

The commission, appointed by President Obama in May, is led by Bob Graham, the former senator and governor of Florida, and William K. Reilly, a former administrator of the Environmental Protection Agency. The commission is scheduled to present its interim findings on Nov. 8-9 and its final report to the president in mid-January. It released this report early, it said, because other wells may be planning to use similarly flawed cement.

Mr. Bartlit, who conducted a much-praised investigation of the 1988 Piper Alpha blowout in the North Sea off Britain that killed 167 workers, said the flawed cement was not the whole story. Many human and mechanical failures combined to create the disaster, he said, and backup procedures were skipped or ignored.

“Because it may be anticipated that a particular cement job may be faulty, the oil industry has developed tests, such as the negative pressure test and cement evaluation logs, to identify cementing failures,” he wrote. “It has also developed methods to remedy deficient cement jobs. BP and/or Transocean personnel misinterpreted or chose not to conduct such tests at the Macondo well.”

In its investigation, BP said that on the morning of April 20, its team decided not to conduct a cement evaluation log. It said that in relying on other types of assessments, the team ignored BP’s own guidelines.

BP dispersants ‘causing sickness’

BP dispersants 'causing sickness'

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Investigation by Al Jazeera online correspondent finds toxic illnesses linked to BP oil dispersants along Gulf coast.

Denise Rednour of Long Beach, Mississippi, has been sick with chemical poisoning since July [Erika Blumenfeld]

Two-year-old Gavin Tillman of Pass Christian, Mississippi, has been diagnosed with severe upper respiratory, sinus, and viral infections. His temperature has reached more than 39 degrees since September 15, yet his sicknesses continue to worsen.

His parents, some doctors, and environmental consultants believe the child's ailments are linked to exposure to chemicals spilt by BP during its Gulf of Mexico oil disaster.

Gavin's father, mother, and cousin, Shayleigh, are also facing serious health problems. Their symptoms are being experienced by many others living along the coast of the Gulf of Mexico.

Widely banned toxic dispersants

Injected with at least 4.9 million barrels of oil during the BP oil disaster of last summer, the Gulf has suffered the largest accidental marine oil spill in history. Compounding the problem, BP has admitted to using at least 1.9 million gallons of widely banned toxic dispersants (one that has been banned in the UK), which according to chemist Bob Naman, create an even more toxic substance when mixed with crude oil. And dispersed, weathered oil continues to flow ashore daily.

Naman, who works at the Analytical Chemical Testing Lab in Mobile, Alabama, has been carrying out studies to search for the chemical markers of the dispersants BP used to both sink and break up its oil.

According to Naman, poly-aromatic hydrocarbons (PAHs) from this toxic mix are making people sick. PAHs contain compounds that have been identified as carcinogenic, mutagenic, and teratogenic.

Fisherman across the four states most heavily affected by the oil disaster - Louisiana, Mississippi, Alabama, and Florida - have reported seeing BP spray dispersants from aircraft and boats offshore.

"The dispersants are being added to the water and are causing chemical compounds to become water soluble, which is then given off into the air, so it is coming down as rain, in addition to being in the water and beaches of these areas of the Gulf," Naman added.

"I’m scared of what I'm finding. These cyclic compounds intermingle with the Corexit [dispersants] and generate other cyclic compounds that aren’t good. Many have double bonds, and many are on the EPA's danger list. This is an unprecedented environmental catastrophe."

Commercial fisherman Donny Matsler also lives in Alabama.

"I was with my friend Albert, and we were both slammed with exposure," Matsler explained of his experience on August 5, referring to toxic chemicals he inhaled that he believes are associated with BP's dispersants. "We both saw the clumps of white bubbles on the surface that we know come from the dispersed oil."

Gruesome symptoms

"I started to vomit brown, and my pee was brown also," Matsler, a Vietnam veteran who lives in Dauphin Island, said. "I kept that up all day. Then I had a night of sweating and non-stop diarrhea unlike anything I’ve ever experienced."

He was also suffering from skin rashes, nausea, and a sore throat.

At roughly the same time Matsler was exposed, local television station WKRG News 5 took a water sample from his area to test for dispersants. The sample literally exploded when it was mixed with an organic solvent separating the oil from the water.

Naman, the chemist who analyzed the sample, said: "We think that it most likely happened due to the presence of either methanol or methane gas or the presence of the dispersant Corexit."

"I'm still feeling terrible," Matsler told Al Jazeera recently. "I'm about to go to the doctor again right now. I'm short of breathe, the diarrhea has been real bad, I still have discoloration in my urine, and the day before yesterday, I was coughing up white foam with brown spots in it."

As for Matsler's physical reaction to his exposure, Hugh Kaufman, an EPA whistleblower and analyst, has reported this of the effects of the toxic dispersants:

"We have dolphins that are hemorrhaging. People who work near it are hemorrhaging internally. And that’s what dispersants are supposed to do..."

By the middle of last summer, the Alabama Department of Public Health said that 56 people in Mobile and Baldwin counties had sought treatment for what they believed were oil disaster-related illnesses.

A dispersed oil tar ball in Orange Beach, Alabama [Erika Blumenfeld]

"The dispersants used in BP's draconian experiment contain solvents such as petroleum distillates and 2-butoxyethanol," Dr. Riki Ott, a toxicologist, marine biologist, and Exxon Valdez survivor, told Al Jazeera.

"Solvents dissolve oil, grease, and rubber," she continued, "Spill responders have told me that the hard rubber impellors in their engines and the soft rubber bushings on their outboard motor pumps are falling apart and need frequent replacement."

"Given this evidence, it should be no surprise that solvents are also notoriously toxic to people, something the medical community has long known," Dr. Ott added.

"In 'Generations at Risk', medical doctor Ted Schettler and others warn that solvents can rapidly enter the human body. They evaporate in air and are easily inhaled, they penetrate skin easily, and they cross the placenta into fetuses. For example, 2- butoxyethanol (in Corexit) is a human health hazard substance; it is a fetal toxin and it breaks down blood cells, causing blood and kidney disorders."

Pathways of exposure to the dispersants are inhalation, ingestion, skin, and eye contact. Health impacts include headaches, vomiting, diarrhea, abdominal pains, chest pains, respiratory system damage, skin sensitization, hypertension, central nervous system depression, neurotoxic effects, genetic mutations, cardiac arrhythmia, and cardiovascular damage.

Even the federal government has taken precautions for its employees. US military officials decided to reroute training flights in the Gulf region in order to avoid oil and dispersant tainted-areas.

Growing number of cases

And Al Jazeera is finding a growing number of illnesses across the Gulf Coast.

Denise Rednour of Long Beach, Mississippi, has been taking walks on Long Beach nearly every day since the disaster began on April 20, and she is dealing with constant health issues.

"I've had health problems since the middle of July," she said. "At the end of August, I came home from walking on the beach and for four days had bloody, mucus-filled diarrhea, dry heaves, and blood running out of my ear."

Karen Hopkins, in Grand Isle, Louisiana, has been sick since the middle of May. "I started feeling exhausted, disoriented, dizzy, nauseous, and my chest was burning and I can’t breath well at times," she said.

Dean Blanchard, who runs a seafood distribution business in Grand Isle, is Hopkins' boss. He too is experiencing similar symptoms.

"They [BP] are using us like lab rats," he explained, "I'm thinking of moving to Costa Rica. When I leave here I feel better. When I come back I feel bad again. Feeling tired, coughing, sore throat, burning eyes, headaches, just like everyone around here feels."

Lorrie Williams of Ocean Springs says her son's asthma has "gotten exponentially worse since BP released all their oil and dispersants into the Gulf."

"A plane flew over our house recently and sprayed what I believe are dispersants. A fine mist covered everything, and it smelled like pool chemicals. Noah is waking up unable to breath, and my husband has head and chest congestion and burning eyes," Williams said.

Like others, when Lorrie's family left the area for a vacation, they immediately felt better. But upon coming home, their symptoms returned.

Wilma Subra, a chemist in New Iberia, Louisiana, recently tested the blood of eight BP cleanup workers and residents in Alabama and Florida. "Ethylbenzene, m,p-Xylene and Hexane are volatile organic chemicals that are present in the BP Crude Oil," Subra said,

"The blood of all three females and five males had chemicals that are found in the BP Crude Oil. The acute impacts of these chemicals include nose and throat irritation, coughing, wheezing, lung irritation, dizziness, light-headedness, nausea and vomiting."

Indications of exposure

Subra explained that there has been long enough exposure so as to create chronic impacts, that include "liver damage, kidney damage, and damage to the nervous system. So the presence of these chemicals in the blood indicates exposure."

Testing by Subra has also revealed PAHs present "in coastal soil sediment, wetlands, and in crab, oyster and mussel tissues."

Trisha Springstead, is a registered nurse of 36 years who lives and works in Brooksville, Florida.

"What I'm seeing are toxified people who have been chemically poisoned," she said, "They have sore throats, respiratory problems, neurological problems, lesions, sores, and ulcers. These people have been poisoned and they are dying. Drugs aren’t going to help these people. They need to be detoxed."

Chemist Bob Naman described the brownish, rubbery tar balls that are a product of BP's dispersed oil that continue to wash up on beaches across the Gulf:

"Those are the ones kids are picking up and playing with and breathing the fumes that come off them when you crush them in your hand. These will affect anyone who comes into contact with it. You could have an open wound and this goes straight in. Women have a lot more open mucus membranes and they are getting sicker than men. They are bleeding from their vagina and anus. Small kids are bleeding from their ears. This stuff is busting red blood cells."

Dr Ott said: "People are already dying from this… I’m dealing with three autopsies' right now. I don’t think we’ll have to wait years to see the effects like we did in Alaska, people are dropping dead now. I know two people who are down to 4.75 per cent of their lung capacity, their heart has enlarged to make up for that, and their esophagus is disintegrating, and one of them is a 16-year-old boy who went swimming in the Gulf."

WikiLeaks reveals private security contractors killed Iraqis with impunity

WikiLeaks reveals private security contractors killed Iraqis with impunity

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WikiLeaks’ release of nearly 400,000 US military documents from operations in Iraq between 2003 and 2009 brings to light new evidence that private security contractors killed civilians with impunity.

The armed contractors, who directly serve the interests of the US occupation, now number 40,000 in Afghanistan and Iraq. These numbers are set to increase substantially; in August it was announced that the Obama administration intends to double the number of private mercenaries in Iraq, as it reduces the number of soldiers under US uniform in the Obama administration’s “draw-down.”

The mercenaries, some of whom earn more than $500 per day, are accountable to no one. Soon after the US invasion of Iraq, Paul Bremer issued “Order No. 17,” giving security firm employees total immunity from Iraqi laws. Nor has any US court punished the contractors, even for known instances of murder. They are also not under the jurisdiction of the US military, freeing them from the court martial and even the often-flouted rules of engagement laid out in the US Army Field Manual.

WikiLeaks documents analyzed by Al Jazeera, the Arab-language media service, reveal at least 14 previously unknown cases in which employees of the most infamous private security firm, Blackwater International, fired on civilians. These attacks resulted in 10 confirmed deaths and seven serious injuries.

Blackwater, now known as Xe Services, is most notorious for a 2007 attack it carried out in Baghdad’s crowded Nissour Square, killing 17 civilians and seriously wounding 18 more. Five Blackwater mercenaries were charged with murder, but a US judge ruled the prosecution had engaged in misconduct and threw the case out.

The documents, field reports from US soldiers, reveal that Blackwater carried out many other killings that were not acknowledged by the US military or the Iraqi government, and that went unreported by the western media.

In February, 2006, as Blackwater mercenaries were escorting US diplomats through Kirkuk (part of a $465 million contract the State Department had awarded the firm), they opened fire on civilians, killing two. Protests erupted in Kirkuk after these murders.

In May of 2006, Blackwater guards let loose “uncontrolled fire” in north Baghdad, killing an ambulance driver, Jasem Abed Sarhan. The shooting apparently came as blind retaliation for their vehicle hitting a roadside bomb. After the killing, Blackwater refused to cooperate with a US army investigator.

In May of 2005, US soldiers witnessed Blackwater contractors “shoot up a civilian vehicle,” along the “Route Irish,” the code name for the road to the Baghdad airport, before speeding off in a white armored vehicle. The driver of the civilian vehicle was killed, and his wife and daughter were maimed. The field report noted that the contractors also fired in the direction of the US soldiers during the incident.

In April 2006, US soldiers came upon the scene after Blackwater mercenaries had gunned down three civilians in Baghdad. Blackwater guards claimed they had been engaged in a shootout with insurgents, who had escaped.

No Blackwater mercenary has ever been punished for killing an Iraqi. Only Monday the US Justice Department announced it was dropping charges against Andrew J. Moonen, a Blackwater employee who killed the bodyguard of an Iraqi Vice President on December 24, 2006. Moonen has admitted to being drunk at the time of the shooting, which took place in Baghdad’s Green Zone.

Blackwater, since February of 2009 known as Xe Services, still receives lucrative CIA and State Department contracts. On October 1, the Obama administration renewed Xe Services’ Afghanistan contract for another five years. The next day, the US-controlled Afghan regime of President Hamid Karzai banned it and seven other private contractors from operating in the country, in a bid to ease popular anger against the Kabul government’s complicity in crimes against the population.

Blackwater was not the only private security firm that killed and brutalized Iraqis. According to the Guardian, which also analyzed the newly-released documents, in terms of the number of incidents uncovered in the WikiLeaks documents, Blackwater is “closely followed by Erinys, a British private security company registered in the Virgin Islands, which seems to have an unusually high number of vehicle crashes.”

The New York Times also found incidents of security contractors attacking civilians. Mercenaries working for the Romanian firm Danubia Global killed three Iraqis in Falluja in 2006, “then refused to answer questions on the episode,” it reports.

According to another military report, in July 2009 contractors with a firm known as 77th Security Company entered a neighborhood in the northern city of Erbil and began a shooting spree. This set off a gunfight with an off-duty police officer, during which three women were wounded. The field report concluded that “this drunken group of individuals” was “out having a good time and firing their weapons.”

As chilling as the new revelations are, they vastly underestimate the number of killings by private security firms. Firstly, they include only instances in which US soldiers directly observed the contractors in action, or came upon the scene soon after violence had been committed.

Secondly, as Pratap Chatterjee of the Guardian notes, field reports on mercenary attacks appear to understate their gravity.

Chatterjee was surprised when he could not find information related to the Blackwater massacre in Nissour Square. “Eventually, I tracked down the incident by trying a few other methods,” he writes. “It is easy to see why I missed the record: there is no mention of the company, or the location, and even the death toll is incorrectly recorded as nine, suggesting that the Pentagon casualty record is incomplete.”

He continues, “Quite possibly, there were many more incidents in which civilians were injured, or even killed, which were never reported. Some of the reports may have been altered before they were entered into the military system. But given the other records that I found, at the very least, WikiLeaks has revealed that Blackwater and other private security companies are guilty of many more injuries and killings than the media have previously reported.”

In contrast, the American press has sought to shield the private security companies.

The New York Times article concerns itself primarily with the dangers the mercenaries themselves confronted. It notes the frequency with which US or Iraqi government troops accidentally fired on the contractors’ speeding vehicles, generally unmarked SUVs and pickup trucks; the many traffic deaths among contractors; deaths resulting from IED explosions on their unarmored vehicles; instances in which confused mercenaries wound up accidentally shooting at each other; and two cases in which contractors murdered their own colleagues.

Though killings reported by Al Jazeera had not been previously reported, this did not stop the American media from claiming the opposite. In its Tuesday editorial, the Washington Post asserted that all “the incidents were extensively reported by Western journalists and by the US military when they occurred.” This shameless lie is designed to hide the Post’s complicity in the cover-up of these and countless other crimes against the Iraqi people.

Significantly, security firms are taking measures to defend themselves against charges of war crimes. On Tuesday two requested that a federal appeals court grant their employees immunity from lawsuits brought by torture victims and bereaved relatives of victims murdered at the notorious Abu Ghraib prison in Iraq.

Lawyers for L-3 Communications of New York and CACI International of Virginia argued that “war on terror” rules—which prevent US soldiers and intelligence operatives from being sued in US courts—should apply to private firms working under government contracts.

The Chamber's Foreign Oil Money

The Chamber's Foreign Oil Money

[3] http://category/primary-tags/us-chamber-commerce

France Riots Over Pension Reforms While Americans Lose Their Homes in Record Numbers With Hardly any Protest

France Riots Over Pension Reforms While Americans Lose Their Homes in Record Numbers With Hardly any Protest

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Thank God for France. While American liberals tremble at the idea of sending an angry email to congress for fear that their name will appear on the State Department's list of terrorists, French workers are on the front lines choking on tear gas and fending off billyclubs in hand-to-hand combat with Sarkozy's Gendarmerie. That's because the French haven't forgotten their class roots. When the government gets too big for its britches, people pour out onto to the streets and Paris becomes a war zone replete with overturned Mercedes Benzes, smashed storefront windows, and stacks of smoldering tires issuing pillars of black smoke. This is what democracy looks like when it hasn't been emasculated by decades of propaganda and consumerism. Here's a blurb from the trenches:

Headline: "French Energy Sector Crippled by Nationwide Strike... French energy facilities are close to total disruption in the wake of nationwide strike against the raise of the retirement age.....France has been hit by numerous protests across the country against a controversial pension reform that would rise the retirement age to 62 from 60....On October 22 morning 80 protesters blockaded Grandpuits oil refinery outside Paris, key supplier for Charles de Gaulle and Orly international airport." (The Financial)

Shut 'em down.

Take note, Tea Party crybabies who moan about restoring "our freedoms" while stuffing the backyard bunker with seed corn and ammo. Glenn Beck won't save you from the "mean old" gov'mint. Liberty isn't free anymore. If you want it, get out of the barko-lounger and organize. The amount of freedom that any nation enjoys is directly proportionate to the amount of blood its people spilled fighting the state. No more, no less. The man who is willing to accept the blunt force of a cop's truncheon on his back is infinitely more praiseworthy than the leftist/rightist scribe crooning from the bleachers. The state isn't moved by lyrical editorials or prosaic manifestos. It responds to force alone, which is why it takes people who are willing to "throw themselves on the gears" of the apparatus and stop it from moving forward. Unfortunately, most of those people appear to live in France.

The resistance is steadily building in France. The budding rebellion is cropping up everywhere -- "secondary schools, train stations, refineries and highways have been blockaded, there have been occupations of public buildings, workplaces, commercial centers, directed cuts of electricity, and ransacking of electoral institutions and town halls..." And the big unions are calling for more strikes, more agitation, more ferment.

For more than a week, transportation has been blocked across the France due to the protests by students and workers. Sarkozy's popularity has plummeted. 65% of people surveyed don't like the way the French president is handling the strikes. 79% of the people would like to see Sarkozy negotiate with the Union on terms and conditions, but he won't budge. Thus, the cauldron continues to boil while the prospect of violence rises.


This is from an anonymous striker:

"In each city, these actions are intensifying the power struggle and demonstrate that many are no longer satisfied with the order imposed by the union leadership. In the Paris region, amongst the blockades of train stations and secondary schools, the strikes in the primary schools, the workers pickets in front of the factories, people create inter-professional meetings and collectives of struggle are founded to destroy categorical isolation and separation. Their starting point: self-organization to meet the need to take ownership over our struggles without the mediation of those who claim to speak for workers.

We decided Saturday to occupy the Opera Bastille. This was to disturb a presentation that was live on radio, to play the trouble makers in a place where the cultural merchandise circulates and to organize an assembly there. So we met with more than a thousand people at the “place de la nation”, with banners stating “the bosses understand only one language: Strike, blockade, sabotage." (end of communique)

The action was met with predictable police violence and mass arrests.

The pension turmoil is not limited to France either. US pension funds are underfunded by nearly $3 trillion. Will US workers be as willing as their French counterparts to face the beatings (to defend "what's theirs") or will they throw up their hands and appeal to Obama for help?

There's no question that Washington elites have joined with Wall Street to offload the massive debts from the financial meltdown onto workers and retirees. Nor is their any doubt that they will invoke (what Slavoj Zizek calls) a "permanent state of economic emergency" to justify their actions. That will allow them to move ahead with so-called "austerity measures" that are designed to impoverish workers and strip popular government programs of their funding. The trend towards "belt-tightening" merely masks the ongoing class war which is aimed at restoring a feudal system of royalty and serfs.

This is from an article by economist Mark Weisbrot:

"If the French want to keep the retirement age as is, there are plenty of ways to finance future pension costs without necessarily raising the retirement age. One of them, which has support among the French left -- and which Sarkozy claims to support at the international level -- would be a tax on financial transactions. Such a “speculation tax” could raise billions of dollars of revenue -- as it currently does in the U.K. -- while simultaneously discouraging speculative trading in financial assets and derivatives. The French unions and protesters are demanding that the government consider some of these more progressive alternatives."

But the retirement age is not really the issue at all. This is about union busting and "putting people in their place." It's about "who will call-the-shots" and in whose interests will society be run.

The French are fighting back against this "oligarchy of racketeers" and the ripoff system they represent, while namby-pamby Americans are neutralized by signing their umpteenth petition or venting their spleen at a Palin rally.

Vive la France. Vive la RĂ©sistance.

How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street

The Great American Stick-Up: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street

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Editor's note: Excerpted from the book The Great American Stick-Up: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street, by Robert Scheer, by arrangement with Nation Books, a member of the Perseus Books Group. Copyright © 2010.

Ronald Reagan called her his favorite economist, and Wendy Lee Gramm seemed to deserve the praise. Both while she was an academic economist and after Reagan appointed her to various regulatory positions in his administration, she excelled in articulating antiregulatory rhetoric that marked her as a true believer in what would later be labeled the “Reagan Revolution.”

Reagan himself had risen in politics after six years of tutelage as a spokesman for the General Electric Company, from 1954 to 1962. It was a time of conversion, as he described it, from being a “hemophiliac liberal” Hollywood actor to a cold-blooded Big Business conservative. Carrying the company’s banner, Reagan came to absorb the message that government regulation developed during the New Deal had become a chokehold on economic growth. Although as governor of California and later in the White House Reagan would preside over massive government budgets and even expand them, he found in Gramm an ideological “small government” soul mate. The Mercatus Center, an antiregulation think tank based at George Mason University from which Gramm has proselytized mightily, proudly boasts in her website biography that the Wall Street Journal “called her ‘The Margaret Thatcher of financial regulation.’”

However, unlike the former British prime minister, neither Gramm nor President Reagan was able to bring about much change in the balance between government and the private sector. While his administration did funnel hundreds of billions of dollars in new Cold War military spending to corporate contractors -- hugely expanding the national debt in the process -- Reagan was not able to deliver to Wall Street a parallel windfall.

For Wall Street, the holy grail was not cash handouts but a deconstruction of the complex public-private partnership ushered in by Franklin Roosevelt’s New Deal to restrain capitalism’s most self-destructive patterns. For these so-called FIRE firms -- Finance, Insurance, and Real Estate -- this half-century-old regulatory system, modest as it was, was an irritant that limited their ability to gamble and leverage their dominant positions.

While the companies just wanted to be free of restraint to profit at will, Reagan and Gramm were true believers, arguing that the regulatory status quo was outmoded and onerous -- even socialist -- hobbling business growth. The top target in their sights was the New Deal-enacted Glass-Steagall Act of 1933, signed into law by President Roosevelt, which regulated the financial services industry. Key to its effectiveness was the seemingly simple wall it erected between the commercial banks entrusted with depositors’ funds -- and insured by the government’s Federal Deposit Insurance Corporation (FDIC), the agency created by Glass-Steagall -- and the wilder antics of basically unregulated Wall Street investment banks like Goldman Sachs.

In 1982, Reagan signed the Garn-St. Germain Depository Institutional Act, easing regulation of savings and loans and, in the eyes of critics such as Paul Krugman, paving the way for the S&L collapse in the 1980s as well as the subprime housing crisis decades later. Nevertheless, Reagan made clear even then that this was not the biggest target on his list:

Unfortunately, this legislation does not deal with the important question of delivery of other services, including securities activities by banks and other depository institutions. But I’m advised that many in the Congress want to put this question at the top of the banking deregulatory agendas next year, and I would strongly endorse such an initiative and hope that at the same time, the Congress will consider other proposals for more comprehensive deregulation which the administration advanced during the 97th Congress.

Reagan’s timeline, however, was overly optimistic; economic problems, particularly the savings and loan meltdown and the spiraling national debt, made politicians of both parties cautious. Yet, in one of the grand twists of American politics, the proposals he sought would eventually be signed into law more than a decade later by a Democratic president with a reputation of being a liberal child of the 1960s. In fact, at the end of Reagan’s presidency, Congress passed legislation that toughened rather than weakened financial industry regulation. As Time magazine reported on August 17, 1987:

Ronald Reagan’s dream of carrying out a sweeping deregulation of the US economy has stirred a powerful backlash on Capitol Hill. Never has that been more apparent than last week, when Congress passed its first comprehensive piece of banking legislation since 1982. The White House had hoped the bill would remove many of the governmental shackles that inhibit competition between banks, securities firms and other institutions in the burgeoning field of financial services. In fact, it does just the opposite.

Reagan signed the bill, the Competitive Equality Banking Act of 1987, only after criticizing it for not only failing to tear down the Glass-Steagall walls but, worse, temporarily extending “the 1933 Glass-Steagall Act restrictions on securities activities to state-chartered, non-member banks for the first time.” He made it clear he was signing the bill despite his quite vociferous objections because it contained provisions for funding for local banks in trouble. It was at once a statement of the enormous importance he attached to decimating Glass-Steagall and an admission that he would come to the end of his last term without accomplishing that goal.

So legislatively his administration was a bust when it came to reversing the New Deal. Yet rhetorically it was an enormous success in propagandizing a view that so-called big government was the cause of America’s late-twentieth-century crisis of economic confidence. He managed to popularize and make palatable the heretofore fringe belief that government regulation of the financial sector, rather than saving capitalism from itself, was an irrational hindrance to individual profit and even a threat to our national power. Speaking at the signing of the 1987 bill, Reagan noted, “These new anti-consumer and anti-competitive provisions could hold back a vital service industry at a time when competition in the international capital markets increasingly challenges United States financial institutions, and they should be repealed.”

With great political irony, this speech would be repeated almost word for word a dozen years later, when Democrat Bill Clinton reversed a half century of his party’s core economic principles to argue for the repeal of Glass-Steagall. Clinton’s public rationale for this watershed shift was that if regulation of Wall Street were not “modernized” -- political code for weakened or eliminated -- the United States would lose out to foreign competition in capital markets.

Much of the groundwork for Clinton’s break was laid by the diligent Republican Wendy Lee Gramm and her husband, Senator Phil Gramm, also a Texas Republican. The high priestess and priest of financial deregulation met at a conference in New York, where Wendy Lee, a PhD student in economics, was interviewing with Phil Gramm for a position at Texas A&M University, where he was a senior professor. Wendy Gramm would later tell interviewers that as Professor Gramm was helping her on with her coat at the interview’s conclusion, he expressed interest in dating her if she came to Texas. She told the New York Times her response to him was “Oh, yuck,” but Gramm persisted, and six weeks after she arrived on campus, they wed.

His bold self-confidence might have helped carry the duo as apostles of an unabashedly Big Business creed then increasingly gaining currency in academic economic circles and within both political parties. Back in 1976, in fact, Jimmy Carter, now known mostly for his postpresidency activism on behalf of Third World democracy, Middle East peace, and ending poverty in America, was a strong advocate of business deregulation. As Georgia’s governor, Carter had been a fiscal conservative who, in the tradition of conservative Southern Democrats, shunned Northern liberalism.

Phil Gramm, too, came out of that tradition. After obtaining his doctorate in economics from the University of Georgia in 1967, the year after Carter lost his first bid to be that state’s governor, Gramm moved on to Texas A&M and taught economics for twelve years before jumping into politics. Gramm was elected to Congress as a Democrat in 1978; just three years later, he would become the epitome of a “Reagan Democrat” by cosponsoring the Gramm-Latta budget that implemented Reagan’s economic program. Proudly, at his retirement from the Senate, Gramm cooed, “in 1981, I wrote the first Reagan budget.” Gramm then abruptly resigned from the U.S. House of Representatives on February 12, 1983, forcing a special election for his seat, and the next month was elected to that seat as a Republican. After serving a third term, he completed his meteoric rise by being elected to the Senate in 1984. Until he retired, he would prove to be arguably the most influential Republican on financial issues.

As chair of the Senate’s Banking, Housing, and Urban Affairs Committee from 1995 to 2000, he was in a position, with Clinton’s support, to finally make Reagan’s commitment to radical deregulation of the financial markets a reality. This was accomplished with two signature pieces of legislation that he -- surely more than anyone else -- was responsible for putting into the law books: the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000.

Certainly there were many other legislators and bureaucrats pushing for what was euphemistically called “banking reform.” By now the FIRE industries were pumping hundreds of millions of dollars into each major election cycle to lobby both parties to support the reversal of Glass-Steagall’s regulatory provisions and similar regulations, and so they had plenty of eager helpers. With union membership on the decline in America, Democrats decided they no longer could let Wall Street money flow in such unequal measure to Republicans; under Clinton’s lead, the floodgates of campaign payola were now fully bipartisan.

Senator Gramm’s committee status and long-term persistence on the matter, however, gave him alpha status: The legislation that finally would reverse the venerable Glass- Steagall laws would carry his name first: the Gramm-Leach-Bliley Act, which would be signed into law as the Financial Services Modernization Act of 1999. However, some years before Glass-Steagall was dismantled, Phil’s wife played a key role, as a member of both the Reagan and the Bush I administrations, in shaping the rapid changes in the financial markets brought about by internationalization, computer-driven trading, and the introduction of a whole new discipline of “risk management,” whereby Wall Street wizards deployed complex mathematical models to create a vast array of new financial products, such as the now infamous credit default swaps and collateralized debt obligations.

As was seen throughout the Reagan and later the Bush I and Bush II administrations, the Republicans had realized they could impose de facto deregulation of Big Business by appointing to influential federal commissions and agencies “watchdogs” who were sympathetic to the corporations they were supposed to be monitoring. Of course, this end run around congressional authority was probably not as satisfying or foolproof as wiping out the regulation altogether, yet it proved quite effective in pleasing CEOs, who had spent the 1970s complaining about red tape and overzealous government investigators.

Thus it was that professional deregulation activist Wendy Gramm came to be appointed by Reagan as chair of the Commodity Futures Trading Commission in 1988, which was the governmental arm most likely to regulate those newfangled investment devices that seemed so much like futures. Gramm, who would never think of questioning any of these clever “modern” gimmicks, saw them as an unmitigated blessing.

Rather than destabilizing the world economy, as they would prove to do two decades later, these products were supposed to be a win-win that would increase market efficiency by bringing order to pricing and the management of risk. Greater productivity, lower prices, and enormous new sources of wealth would inevitably follow. Of course, the top echelon of Wall Street insiders would skim the cream off, but, the argument went, the rest of the country would benefit as well. Not only would the economy be stronger, but American individuals, pension plans, and charities could all ride this dragon skyward, through investments and through donations from the mega-rich looking for tax shelters. It is no accident, then, that in each of the recent economic collapses, from Enron to Bernie Madoff, arose the ever-present laments from charities that were suddenly defunded.

The derivatives and swaps involved buying and packaging financial risk and selling it based on a system of corresponding grades. So a bank might buy up a collection of mortgages or credit card debts from lenders, who could then take this capital to bankroll even more loans. The buyers of this securitized debt would sort and slice it into levels of predicted risk; the more risk, the higher the return, of course. A buyer in this still small but expanding market could then “insure” this risk -- for a price.

The end result by the turn of the century was a massive casino in which bettors poured money into huge gambles on expected gain or to hedge against a loss if conditions changed. Think Las Vegas -- only this market was unregulated instead of being supervised by government agencies, the same way we regulate bets made on gambling tables or the future price of products such as wheat, pork bellies, or oil on regulated commodity exchanges. Such regulations increase transparency and accuracy in the description of the commodity, the terms of trade in their future, and the accountability of the parties involved.