Monday, December 26, 2011
A tale of two systems
Dec. 21, 2011 — American autoworkers are constantly told that high-wage work is an unsustainable relic in the face of a hyper-competitive, globalized marketplace. Apostles of neo-liberal economic theory — both in the public and private sectors — have stressed the message that worker adaptation is necessary to survive. Indeed, Steven Rattner, President Obama’s “car czar” during the restructuring of General Motors and Chrysler in early 2009, spoke last week of his regret that the federal government had not required the United Auto workers to take a wage cut at that time to enhance the competitiveness of those companies, comments similar to those he made in a recently published book (after the outcry created by last week’s remarks, Rattner yesterday backed away from them, though reiterating his view that more “shared sacrifice” would have bolstered American competitiveness).
Governments, too, the globalists have contended, should not think that markets can or should be controlled. As Remapping Debate reported earlier this year in an article about the role of large consulting firms in the promotion of the notion that national policy can and must allow global capital a free hand, McKinsey & Co. was already arguing back in 1994 that “a national government has no choice but to move forward to embrace the global capital market unless it wants to harm its own citizens, its economy and its own purposes.”
But the case of German automakers — BMW, Daimler, and Volkswagen — tells a different story. Each company produces vehicles not only in Germany, but also in “transplant” factories in the U.S. The former are characterized by high wages and high union membership; the U.S. plants pay lower wages and are located in so-called “right-to-work” (anti-union) states.
It turns out that “inevitability” has nothing to do with the differing conditions; the salient difference is that, in Germany, the automakers operate within an environment that precludes a race to the bottom; in the U.S., they operate within an environment that encourages such a race.
Sales and profitability
In 2010, over 5.5 million cars were produced in Germany, twice the 2.7 million built in the United States. Average compensation (a figure including wages and employer-paid benefits) for autoworkers in Germany was 48.97 Euros per hour ($67.14 US), while compensation for auto work in the United States averaged $33.77 per hour, or about half as much as in Germany, all according to 2007 data from the Bureau of Labor Statistics. For Germany-based auto producers, the U.S. is a low-wage country.
Despite German companies’ relatively high labor costs in their home markets, these firms are quite profitable. An examination of the latest publically available financial statements of BMW, Daimler (Mercedes-Benz cars), and Volkswagen reveals strong sales and profits even in the midst of the currently weak consumer markets in Europe and the U.S. In 2010, for example, BMW, produced 1.48 million cars (63 percent of them in Germany), and earned a before-tax profit from its automotive division of 3.88 billion Euros. The Mercedes-Benz car division of Daimler, likewise produced 1.35 million cars (72.4 percent in Germany) in 2010, and earned a before-tax profit of 4.65 billion Euros.
Race to the bottom in the U.S.
Officials in anti-union states have long sought to lure businesses with the promise of free rein in relation to labor (and to regulation more generally). Sen. Lamar Alexander (R -Tenn.) delivered the weekly Republican Party address this past June, telling his listeners frankly that, when he was Tennessee’s governor in 1979, the state’s right-to-work law was part of his successful pitch in getting Nissan to open an auto plant.
Alexander participated in a ceremony celebrating the opening of a new Volkswagen assembly plant earlier this year near Chattanooga, and again he cited the state’s right-to-work law as among the reasons that Volkswagen chose to come there.
At that Chattanooga plant, according to a company spokesperson, new employees earn $14.50 an hour, with wages gradually rising to $19.50 after 3 years on the job.
A representative of BMW’s Spartanburg plant declined to divulge wages employees earn in its South Carolina (non-unionized) facility, but the Washington Post reported last year that employees at the plant earned $15 per hour.
Workers at American companies have seen their wages eroded. As Remapping Debate has reported, the UAW has made significant concessions on wages, especially through the creation of a permanent “Tier 2” level for all new employees. Whereas incumbent “Tier 1” workers earn about $28 an hour, all new UAW hires at the GM, Ford, and Chrysler earn around $15 per hour.
The companies have argued that this new tier is essential. Marci Evans, a Ford spokesperson, told Remapping Debate, “It is our [Ford’s] preference to build competitively in the markets we sell in.” She added, “reduced cost through introducing an entry level [Tier 2] workforce” is an important part of that strategy.
Gary Casteel, the Region 8 director of the UAW, the region covering the whole southeast of the country, acknowledged the creation of “Tier 2” as “concessionary,” and said, “It’s never attractive to not have equal pay for equal work, but when you’ve got Nissan hiring in Mississippi for $12.50…and Volkswagen for $14…how are we going to maintain a wage level when our competition is doing this?”
The counter-example in Germany
Workers in the German auto industry maintain high wages and good working conditions through two overlapping sets of institutions. First, in the auto industry, virtually all workers are unionized members of IG Metall, the German autoworkers’ union. With such union density, workers have considerable power to keep wages high. German autoworkers have the right to strike, but as Horst Mund, head of the International Department of IG Metall explained to Remapping Debate, they “hardly use it, because there is an elaborate system of conflict resolution that regularly is used to come to some sort of compromise that is acceptable to all parties.”
In addition to high trade union density supporting the power of German autoworkers’ wages, the German constitution itself includes a second mechanism for keeping employees involved in the decisions of the firm for which they work. The Works Constitution Act provides for the creation of Works Councils in each factory. The Works Councils provide a mechanism through which a company's management must work with employees, whether they are in a union or not, on issues affecting work life, such as shop floor conditions, scheduling shifts, and other issues particular to the factory. This system, according to Mund, institutionalized “direct contact for workers’ representatives with management at various levels, from lower to middle to senior management in daily affairs. So you exercise some kind of dialogue where you don’t always wear your management pin or your union pin.”
Mund points out that the German example goes “against all mainstream wisdom of the neo-liberals. We have strong unions, we have strong social security systems, we have high wages. So, if I believed what the neo-liberals are arguing, we would have to be bankrupt, but apparently this is not the case. Despite high wages…despite our possibility to influence companies, the economy is working well in Germany.”
Are German unions nice and American unions nasty?
Mund says “there are strong contradictions between the way companies that…are used to dealing with unions in Germany, behave differently when they go elsewhere, not only in the U.S., but also in other countries.” What accounts for the differences?
Michael Maibach, president and chief executive officer of the European American Business Council, described this apparent difference by saying that union-management relations in the U.S. were “adversarial" as opposed to the "collaborative” German model. J. Ed Marston, a spokesperson for the Chattanooga Area Chamber of Commerce, likewise told Remapping Debate that “Workers councils in Germany promote cooperation between workers and mangers and they deliver value and they continue to thrive…Compared to UAW, where there is an adversarial relationship.”
According to Mund, however, “The accusation that American unions are more radical and destructive…definitely has to do with the hostile environment in which the unions have to act. How can they be constructive and friendly if their asses are kicked all the time?” Mund sees the lauding of “cooperation” in the German context as profoundly misleading, saying “they would not talk to us either if they had the choice.”
Mund emphasized the importance of the trade union and works councils in maintaining workers’ participation and high levels of remuneration, and said that the focus was not to maintain the good will of individual firms. He said, “Companies in Germany, while they are bound by law to work with us in works councils, and we are present on supervisory boards, they just have to do this. For most of the companies, not for all, it is not something they would do if they were not forced to do that. The companies are there to make profit, and in the eyes of many managers we are not conducive to making as much profit as possible, but rather a hindrance.”
“Because they can get away with it”
Marko Maunula, a historian and author of the book, Guten Tag, Y’All: Globalization and the South Carolina Piedmont, 1950-2000, told Remapping Debate that foreign-based manufacturers like BMW “are very cognizant of the political climate of communities,” and they behave differently depending on the legal and social context within which they find themselves. Globalization over the last 20 or 30 years, Maunula suggests, has resulted in a situation where “there is no real industrial nationality anymore.” Though “BMW is a German company and it has a very German hierarchy and management system in Germany…when they are operating in Spartanburg they have become very, very easily adaptable to Spartanburg business culture.”
Coming from a very different perspective, Maibach told a very similar story: unlike in Germany, where unionization and high wages are normalized by law and custom, “the U.S. has a different tradition” and “companies have a choice to make” about where to locate their facilities, often deciding on places where the risk of unionization is lower.
Mund relates the initial perplexity of his American counterparts in response to the anti-union stance taken by German automakers in the U.S.: “In the past we frequently had the impression that our American colleagues thought we would just have to talk to management here in Germany in the sense that ‘look, behave decently, you know us, we’re the good guys, our American colleagues from the UAW they are equally good, so behave mutually and everything will be fine.’”
“But,” Mund said with understatement, “It is not working like this.”
When asked why German firms operate so differently with respect to labor in different countries, Claude Barfield, a resident scholar at the American Enterprise Institute where he studies international trade and globalization, told Remapping Debate that they do so, in part, “because they can get away with it so far.”
Though a Volkswagen-Chattanooga spokesperson told Remapping Debate that “it is up to our production team members to decide” whether to join a union, Barfield points out that all of the German-based auto manufacturers in the U.S. located in right-to-work states are “not unhappy with the situation they have now,” citing the fact that they “have more authority, they have more power” than they would in a unionized context.
Barfield said that factors other than wages brought the German carmakers to right-to-work states. A central reason for their interest in those states, he says, “has to do with not wanting to…get involved with work rules and seniority.” They have, he continued, “a much greater flexibility just in assigning work, and to be able to have plants change as conditions change. So, they’re not unhappy with that. They would not say they are happier with this than the system they deal with in Germany, but they probably are.”
Returning to the experience of Germany’s domestic auto industry, Mund says that, while “it is not a law of nature that you have to be non-unionized to be successful,” companies are clearly choosing not to be union where they don’t have to.
Could conditions in the U.S. be changed to produce a structure that, like Germany, protects workers against declining wages and conditions?
Barfield noted that “you’d have to change major state law as well as federal law.” His prognosis is not that it is impossible as a legal matter, but that, as a practical matter, “it will never look like Germany.”
“In the U.S., there’s no prospect that we will change our laws,” he continued. “When the Democrats were in [full control of Congress] under Obama, they promised to change” — making it easier for unions to organize through a card check system — but “that didn’t happen.”
More broadly, Barfield said, “It’s a different tradition of business, government, and labor relations. Three pieces of things all together in Germany and the U.S. never had that. So I don’t think it’s just that the laws per se, it’s the attitude of corporate leaders and union leaders and governments. Not because of one specific piece of legislation.”
If he is right — and no one we spoke with disputed Barfield’s short-term political assessment —— conditions for labor in the U.S. auto industry will continue on their current path, a path described by the UAW’s Casteel as “spiraling downwards.”
On the other hand, despite Barfield’s reference to tradition, the “tradition” in the U.S. through the 1970s was having a highly unionized auto making industry, one that paid good wages. Indeed, the tradition was such that the initial forays of German automakers into the U.S. saw them accept unionization in their transplanted factories (see box below).
Casteel and Mund hope for a return to that tradition, with Casteel saying, “Corporations aren’t going to give back to the workers unless they are made to.” The UAW has said that it is renewing its efforts to organize the southern transplants, but has not released specifics on its strategy or timetable.
A different beginning
Despite the current differences in auto industry labor practices in Germany and U.S., German auto firms’ foray into manufacturing in the U.S. initially conformed to the high-wage, unionized mode of German industry. As part of a wave of foreign direct investment in the U.S. by European-based firms, in 1978, Volkswagen opened the Westmoreland Assembly Plant, 35 miles outside of Pittsburgh. At the time, most autoworkers in the United States were members of the United Auto Workers, and Westmoreland became no exception, and the plant rapidly unionized.
Volkswagen’s quick acceptance of labor organizing at its first American plant was apparently not out of the ordinary for newly arrived foreign-based firms. In 1981, two economists asked in the U.S. Labor Department’s Monthly Labor Review, “Do foreign owned U.S. firms practice unconventional labor relations?” Noting that “it is very possible that unionization may pose no great problem for foreign-owned firms, especially those with European parent companies, because they have been dealing with unions successfully for many years,” the authors’ survey of unions and firms in the U.S. concluded that “foreign owned companies do not differ from domestically owned companies in their approach to most labor relations issues.”
The Massacre Everyone Ignored: Up To 70 Striking Oil Workers Killed In Kazakhstan By US-Supported Dictator]Go To Original
With violence and government crackdowns making headlines from so many familiar parts of the world, there’s hardly been a peep in the media about the biggest and ugliest massacre of all: Last Friday in Kazakhstan, riot police slaughtered up 70 striking oil workers, wounding somewhere between 500 and 800, and arresting scores. Almost as soon as the massacre went down in the western regional city of Zhanaozen, the Kazakh authorities cut off access to twitter and cell phone coverage–effectively cutting the region off from the rest of the world, relegating the massacre into the small news wire print.
But not before someone was able to get a video out to YouTube last Friday, showing the moment when the striking oil workers rushed the barricades. They’ve had to have put up with inhuman, medieval abuse for months now, culminating with the murders a few months back of a striking oil worker and the 18-year-old-daughter of another union organizer, as well as the jailing of a labor lawyer working with the striking oil workers.
Keep in mind, the oil company whose workers are striking for better pay and union recognition, KazMunaiGaz, is “owned” by the billionaire son-in-law of Kazakhstan’s Western-backed president-for-life. Among Kazakhstan’s leading American partners are Chevron, whose website boasts, “Chevron is Kazakhstan’s largest private oil producer”–adding this bit of unintentional black humor:
“In Kazakhstan, as in any country where Chevron does business, we are a strong supporter of programs that help the community.”
Indeed. First, here is a video showing striking oil workers last Friday breaking up the totalitarian-state’s official celebration of its “Independence Day” (Kazakhstan was one of the 15 Soviet republics that declared independence in 1991; the republic’s Communist Party leader, Nursultan Nazarbaev, stayed on as the “democratic” ruler ever since). At about the 3:30 mark you’ll hear and see gunfire as the massacre is in full-swing:
Here is another video, the one that first went around last Friday that is more dramatic, showing the moment when the striking oil workers stormed the barricades and tore down their hated autocrat’s Independence Day stage…ending with gunfire and riot police moving into the square:
That went down on Friday. We know very little even today because the government clamped down on all communication with the outside world, cutting off cell phone communications and Twitter, imposing martial law, and bringing in special forces and riot police to terrorize Zhanaozen and other cities in the oil-rich west where sympathy strikes and protests have broken out. Journalists have been barred, and two reporters from reputable Russian online media outlets have been arrested. The government claims 15 dead; strikers, who have proven far more reliable, say at least 70 are dead and 500 wounded.
Even the brief and highly controlled “tour” arranged by the authorities for a handful of reporters in the aftermath produced this gruesome account:
Rights activists will likely also be concerned by what appeared to heavy-handed treatment of detainees at Zhanaozen’s main police station Sunday evening. Journalists at the station reported hearing screams coming from what appeared to be interrogation rooms, while a number of men with bloodied faces were lined up in a row in the corridors with their faces against the wall.
Reporters visiting the town under close supervision were not freely permitted to speak with detainees or residents.
Oil workers have been striking since the beginning of summer for the right to unionize, and for better pay. In response, the state-run oil company has already fired hundreds of workers for “violating labor laws,” while dividing up communities and the workforce. By September, workers who held out with the strike were on the verge of starvation; marriages were breaking up, and tensions were growing hotter. Amnesty International and Human Rights Watch came out criticizing the Kazakh authorities for their harsh treatment of the strikers and labor organizers. (Read this excellent English-language account here.)
While the brutality translates into living Hell or violent death for locals, keeping those labor costs down has worked wonders for Chevron’s profits, as Forbes recently reported:
Chevron Rises To $104 As Kazakhstan Kicks Up Production
Chevron, the second largest vertically integrated oil major, has been expanding its operational foothold in the oil rich state of Kazakhstan over the past few years.
The nation’s vast unexplored resources of oil and gas have become a attractive destination for companies such as Chevron, Exxon Mobil and ConocoPhillips seeking new frontiers for oil and gas exploration.
Chevron has taken the early lead in establishing operations in the former Soviet republic with two major upstream projects as well as a manufacturing facility. The future expansion of operations in Kazakhstan is expected to add greatly to Chevron’s overall production output.
We have a $104 price estimate for Chevron which is a 6% premium over its current market price.
The oil majors’ fondness for Kazakhstan’s highly profitable oil may also explain photographs like this, showing Kazakh “SpetzNaz” or special forces troops sent in to crush protests–wearing helmets and brandishing shields that read, in English, “Police”:
Here is a video of the Kazakh SpetzNaz sent in to quash sympathy protests in the nearby city of Aktau:
Reports of torture are filtering in…and of roaming undercover police death squads in white jeeps hunting the streets for working-age males to pick up and intern.
Meanwhile, the protests are still going on throughout the country, the police crackdown is getting more vicious, and almost no one outside of Kazakhstan knows a thing about what’s going on there, because there are too many uprisings going on all around the world, uprisings that are twittered and cell-phone-cammed and YouTubed…and if your massacre and your oppression doesn’t make it to Twitter or isn’t uploaded onto YouTube, then it doesn’t exist, and you are all alone.
UPDATE: Kazakhstan is represented by the lobbying firm founded by former Mississippi governor Haley Barbour, which today goes by the name “BGR Gabara.” Among other things, the lobbying firm was busted working on a plan to smear Sting after he canceled a concert in Kazakhstan recently due to human rights abuses. Christ, he’s crap as it is, why smear the one half-way decent thing Sting ever tried doing? Lovely buncha guys, the Barbour Griffith & Rogers folks are.
If A Global Recession Is Not Looming, Then Why Are Bailouts Flying Around As If The End Of The World Is Coming?
I have learned that watching what people do is much more important than listening to what they say. Back in 2008, financial authorities in the United States insisted that everything was gone to be okay. But we all know now that was a lie. Well, right now financial authorities in the U.S. and Europe are once again trying to assure us that everything is under control and that we are not headed for a global recession. Unfortunately, their actions are telling a very different story. All over the world, bailouts are flying around as if the end of the world is coming. Governments and central banks are stepping in with gigantic mountains of money to prop up bond yields, major banks and even stock markets. What we have seen over the past few months has been absolutely unprecedented. So why are such desperate measures being taken if everything is going to be just fine? Unfortunately, debt problems are never solved with more debt, so these bailouts really aren't solving anything. We are still headed for a massive amount of financial pain. It would just be nice if the authorities would quit lying to us and would actually admit how bad things really are.
Today it was announced that the European Central Bank has agreed to make $638 billion in 3 year loans to 523 different banks. Never before (not even during the last financial crisis) has the ECB loaned so much cheap money to European banks at one time.
This move by the ECB made headlines all over the globe. CNBC is calling them "ultra-long and ultra-cheap loans".
European authorities are hoping that European banks will use this money to make loans to businesses and to buy up the debt of troubled European governments.
But as we have seen in the United States, bailout money does not always get spent the way that the authorities intend for it to be spent.
The truth is that the banks could end up just sitting on the money. That is what happened with a lot of bailout money in the United States during the last financial crisis.
European authorities hope, however, that European banks will take this super cheap money and lend it to European governments at much higher interest rates.
Unfortunately, global financial markets were not terribly impressed with this move by the ECB. European bond yields actually rose and the euro just kept on falling.
Every few days another major "solution" to the European debt crisis is put out there, but so far nothing has worked.
For example, the European Central Bank has already spent over 274 billion dollars directly buying up European government bonds, and yet bond yields continue to hover in very dangerous territory.
But without ECB intervention, we probably would have already seen a major financial collapse in Europe.
The financial system of Europe is a total mess right now, and everyone is becoming incredibly dependent on the ECB. The following comes from a recent Reuters article....
One of the key factors certain to have boosted demand is that banks are now more reliant than ever on central bank funds. The ECB said on Monday, in its semi-annual Financial Stability Review, that this dependency could be difficult to cure.
French banks have almost quadrupled their intake of ECB money since June to 150 billion euros, while banks in Italy and Spain are each taking more than 100 billion euros.
At this point, the ECB has the weight of the entire world on its shoulders. One false move and we could see a huge wave of bank failures and we could be plunged into a major global recession.
But even with all of this unprecedented assistance, we have already seen some big time European banks fail.
Back in Obtober, Dexia was the first major European bank to be bailed out, and the cost of that bailout is going to exceed 100 billion dollars.
The funny thing is that Dexia actually passed the banking stress test that was conducted earlier this year with flying colors.
So what does that say about all of the other major European banks that did not do so well on the stress test?
In addition, it was recently announced that Germany's second largest bank is going to need a bailout.
The following comes from a Sky News report....
Germany's second largest bank, Commerzbank, is reportedly in discussions with the German government about a bailout after regulators said it needed to raise more money to cope with a potential default on its loans to governments.
"Intense talks" have been going on for several days, according to sources who spoke to the news agency Reuters.
Even with unprecedented intervention by the ECB, the truth is that the European banking system is rapidly failing.
In Greece, a full-blown run on the banks is happening. According to a recent Der Spiegel article, funds are being pulled out of Greek banks at a pace that is astounding....
He means that the outflow of funds from Greek bank accounts has been accelerating rapidly. At the start of 2010, savings and time deposits held by private households in Greece totalled €237.7 billion -- by the end of 2011, they had fallen by €49 billion. Since then, the decline has been gaining momentum. Savings fell by a further €5.4 billion in September and by an estimated €8.5 billion in October -- the biggest monthly outflow of funds since the start of the debt crisis in late 2009.
In all, approximately 20 percent of all deposits in Greek banks have been withdrawn since the start of 2011.
Other European nations are implementing draconian measures in an attempt to protect their banks. For example, in Italy all cash transactions over 1000 euros have been permanently banned. People will either have to use checks, debit cards or credit cards for large transactions. This will "encourage" people to keep more money in the banks, and this will also make it much easier for the Italian government to track transactions and to collect taxes.
But it is not just in the EU where we find unusual steps being taken.
In the UK, the Bank of England is acting like the end of the world is about to happen. The following comes from a recent article on the This Is Money website....
The deputy governor of the Bank of England today warned the situation surrounding the single currency was ‘worrying’ and that the Bank was making preparations to support British banks, should the eurozone collapse.
A temporary loan facility has been introduced as a precaution, for use in the event of contagion from the eurozone crisis endangering UK institutions, Charlie Bean said in an interview on BBC Radio 4’s World at One.
An article posted on Business Insider a while back says that Switzerland is also preparing for "a euro collapse"....
The Swiss government is preparing for a collapse of the euro, according to Swiss Finance Minister Eveline Widmer-Schlumpf.
She told parliament that a work group was studying the imposition of capital controls and negative interest rates to protect Switzerland from the capital flight that a euro collapse would engender
On the other side of the world, the government of China is also taking action. In fact, China is actually injecting money into the stock market in order to prop up stock prices.
The following comes from an article in the China Post....
In a movement considered “long overdue” by some analysts, the injection of government money into the tanking stock market to prop up stock prices has been given the green light, government officials announced yesterday.
Vice Premier Chen, the topmost government official charged with the country's financial stability, however, insisted the fundamentals of the economy and the stock market are sound, expressing his hope for continued optimism among the people.
The Federal Reserve, the European Central Bank, the Bank of England, the Bank of Canada, the Bank of Japan and the Swiss National Bank have announced a coordinated plan to provide liquidity support to the global financial system. According to the plan, the Federal Reserve is going to substantially reduce the interest rate that it charges the European Central Bank to borrow dollars. In turn, that will enable the ECB to lend dollars to European banks at a much cheaper rate. The hope is that this will alleviate the credit crunch which has gripped the European financial system by the throat. So where is the Federal Reserve going to get all of these dollars that it will be loaning out at very low interest rates? You guessed it - the Fed is just going to create them out of thin air. Our currency is being debased so that Europe can be helped out.
If the global financial system was in good shape, all of these bailouts would not be happening.
These desperate measures are a clear sign that something is up.
The financial authorities of the world are doing their best to keep the system together, but in the end they are not going to be able to prevent the collapse that is coming.
The world is heading for incredibly hard economic times.
So is the end of the world coming?
But to many in the financial world it may feel like it. The coming global recession is not going to be fun.
We have now reached a point where it has become "normal" for governments and central banks to throw money at one financial crisis after another.
At one time, bailouts were so unusual that they provoked a great deal of outrage.
Today, bailouts have become standard operating procedure.
The bailouts will continue to get larger and larger, and authorities all over the globe will do their very best to keep the house of cards from coming crashing down.
Unfortunately, they will not be successful.
Obama and Geithner: Government, Enron-StyleGo To Original
Strongly recommend this piece at the Huffington Post by Jeff Connaughton, a former aide to Senator Ted Kaufman. Jeff is one of the smartest guys on the Hill and is particularly strong on issues surrounding Wall Street and the regulatory system. In this piece, he takes apart the oft-stated mantra that what Wall Street firms did during and after the crisis was maybe unethical, but not illegal.
He takes particular aim at Barack Obama, who recently tossed that line out on 60 Minutes in what I thought was one of the real low moments of his presidency. Here’s Jeff’s take:
Speaking in Kansas on December 6, [Obama] said, "Too often, we've seen Wall Street firms violating major anti-fraud laws because the penalties are too weak and there's no price for being a repeat offender." Just five days later on 60 Minutes, he said, "Some of the least ethical behavior on Wall Street wasn't illegal." Which is it? Have there been no prosecutions because Wall Street acted legally (albeit unethically)? Or did Wall Street repeatedly violate major anti-fraud laws (and should thus find itself in the dock)?
The President is confusing "legal" with "difficult to prosecute successfully."
The notion that what Wall Street firms did was merely unethical and not illegal is not just mistaken but preposterous: most everyone who works in the financial services industry understands that fraud right now is not just pervasive but epidemic, with many of the biggest banks committing entire departments to the routine commission of fraud and perjury – every single one of the major banks, for instance, devotes significant manpower to robosigning affidavits for foreclosures and credit card judgments, acts which are openly and inarguably criminal.
Banks and hedge funds routinely withhold derogatory information about the instruments they sell, they routinely trade on insider information or ahead of their own clients’ orders, and corrupt accounting is so rampant now that industry analysts have begun to figure in estimated levels of fraud in their examinations of the public disclosures of major financial companies.
Beyond that, as Jeff points out, Obama is simply not telling the truth about the supposedly insufficient penalties available to regulators. Employing the famous "mistakes were made" use of the passive tense, Obama copped out in his December 6 speech by saying that “penalties are too weak." As Jeff points out, what Obama should have said is that "the penalties my own regulators chose to dish out were too weak":
Moreover, the President is misleading us when he says that Wall Street firms violate anti-fraud law because the penalties are too weak. Repeat financial fraudsters don't pay relatively paltry -- and therefore painless -- penalties because of statutory caps on such penalties. Rather, regulatory officials, appointed by Obama, negotiated these comparatively trifling fines. This week, the F.D.I.C. settled a suit against Washington Mutual officials for just $64 million, an amount that will be covered mostly by insurance policies WaMu took out on behalf of executives, who themselves will pay just $400,000. And recently a federal judge rejected the S.E.C.'s latest settlement with Citigroup, an action even the Wall Street Journal called "a rebuke of the cozy relationship between regulators and the regulated that too often leaves justice as an orphan."
What makes Obama’s statements so dangerous is that they suggest an ongoing strategy of covering up the Wall Street crimewave. There is ample evidence out there that the Obama administration has eased up on prosecutions of Wall Street as part of a conscious strategy to prevent a collapse of confidence in our financial system, with the expected 50-state foreclosure settlement being the landmark effort in the cover-up, intended mainly to bury a generation of fraud. Here’s how Jeff puts it:
In Ron Suskind's book, Confidence Men, he quotes Treasury Secretary Timothy Geithner as saying, "The confidence in the system is so fragile still... a disclosure of a fraud... could result in a run, just like Lehman." The Obama Administration is pushing hard for a 50-state settlement with the major banks for their fraudulent foreclosure practices, even though several state attorneys general have rejected this approach because, in their view, it would shield too much wrongdoing. Regrettably, Obama's top officials and lawyers seem more eager to restore the financial sector to health than establish criminal accountability among the executives who were in charge.
In other words, Geithner and Obama are behaving like Lehman executives before the crash of Lehman, not disclosing the full extent of the internal problem in order to keep investors from fleeing and creditors from calling in their chits. It’s worth noting that this kind of behavior – knowingly hiding the derogatory truth from the outside world in order to prevent a run on the bank – is, itself, fraud!
This is exactly the mindset that led Lehman to the abuses of the "Repo 105" accounting trick, in which loans were disguised as revenues in order to prevent the outside world from knowing the dire state of the bank’s balance sheet.
Now Obama and Geithner are engaged in the same sort of activity, only they’re trying to prevent a run not on an individual bank, but the entire American financial services sector. Geithner seems really to believe that if fraud were aggressively policed, and the world made aware of the incredible extent of the illegality in our markets, that international confidence in the American financial sector would plummet and our economy would suffer – and suffer, incidentally, on Barack Obama’s watch.
Better, apparently, the Band-Aid the problem now, and let the real mess happen later on, on someone else’s watch, or at least in a second term, when there’s no need to worry about re-election.
Of course, this is exactly the wrong way to go about things. If Geithner and Obama really wanted to convince the world that America’s markets weren’t broken, they would effectively police fraud, and by extension prove to everybody that at the very least, our regulatory system is not broken.
But by taking a dive on fraud, and orchestrating mass cover-ups like the coming foreclosure settlement fiasco, what they’re doing instead is signaling to the world that not only are our financial markets corrupt, but our government is broken as well.
The problem with companies like Lehman and Enron is that their executives always think they can paper over illegalities by committing more crimes, when in fact all they’re usually doing is snowballing the problem so completely out of control that there’s no longer any chance of fixing things, thereby killing the only chance for survival they ever had.
This is exactly what Obama and Geithner are doing now. By continually lying about the extent of the country’s corruption problems, they’re adding fraud to fraud and raising such a great bonfire of lies that they probably won’t ever be able to fix the underlying mess.
If they looked at the world like public servants, and not like corporate executives, they’d understand that the only way out is to come clean. That they don’t look at things that way should tell people quite a lot.
There Is No "War on Christmas," But There is One On Our Constitutionally Guaranteed Civil Liberties
Frankly, could the right wing play the victim card any harder?
From Rush Limbaugh to Glenn Beck to Newt Gingrich to Bill O'Reilly to Michele Bachmann, you would think that the "government" is mugging Americans, forcing them to have gay sex and indoctrinating them in communist ideology.
Practically speaking, in a daily capacity, the government - at any level - has very little power or control over the lives of most Americans (unless you count programs like Medicare prolonging the lives of millions of seniors). The biggest fear most US citizens have of "state power" is a police officer pulling them over for speeding. (Of course, if you are a minority, in many jurisdictions the police might harass you solely based on racial profiling - which makes people of color real victims.)
Doesn't it just get tiring to constantly be whining about one's victimhood? Isn't it sort of an admission of wimpiness?
Take the yearly so-called "War on Christmas" tirades from FOX and the right-wing "amen" media chorus, along with the religious organizations that fundraise off of the "pending Rapture." Is the government keeping anyone from celebrating Christmas, persecuting anyone who is Christian or keeping anyone from displaying lavish Christmas decorations that require a couple of nuke plants to light up?
"War on Christmas" and Christians? Hey, try being a Muslim in America.
The Congress just passed - and Obama signed - a bipartisan bill that could result in the indefinite detention of American citizens on US soil.
Is FOX opposing it as a violation of various provisions of the Constitution?
Of course not. They are too busy stoking the coals of phantom victimhood among their viewing audience.
Making people feel persecuted - instead of informing them about the difficult public policy decisions that are made in a democracy - increases ratings and advertising dollars. In fact, the "war on terror" is - to a great degree - playing upon the statistically unlikely odds of being a victim of terrorism.
There is no "War on Christmas," but there is one on our constitutionally guaranteed civil liberties.
Local police stockpile high-tech, combat-ready gearGo To Original
Fargo police Capt. Patrick Claus carries an assault rifle that is now standard issue for many departments.
If terrorists ever target Fargo, N.D., the local police will be ready.
In recent years, they have bought bomb-detection robots, digital communications equipment and Kevlar helmets, like those used by soldiers in foreign wars. For local siege situations requiring real firepower, police there can use a new $256,643 armored truck, complete with a rotating turret. Until that day, however, the menacing truck is mostly used for training runs and appearances at the annual Fargo picnic, where it’s been displayed near a children’s bounce house.
“Most people are so fascinated by it, because nothing happens here,” said Carol Archbold, a Fargo resident and criminal justice professor at North Dakota State University. “There’s no terrorism here.”
Fargo, like thousands of other communities in every state, has been on a gear-buying spree with the aid of more than $34 billion in federal government grants since the Sept. 11, 2001, terrorist attacks on New York and the Pentagon.
The federal grant spending, awarded with little oversight from Washington, has fueled a rapid, broad transformation of police operations in Fargo and in departments across the country. More than ever before, police rely on quasi-military tactics and equipment, the Center for Investigative Reporting has found.
No one can say exactly what has been purchased in total across the country or how it’s being used, because the federal government doesn’t keep close track. State and local governments don’t maintain uniform records. But a review of records from 41 states obtained through open-government requests, and interviews with more than two-dozen current and former police officials and terrorism experts, shows police departments around the U.S. have transformed into small army-like forces.
Since Occupy Wall Street and similar protests broke out this fall, confusion about how to respond has landed some police departments in national headlines for electing to use intimidating riot gear, pepper spray and rubber bullets to disperse demonstrators. Observers have decried these aggressive tactics as more evidence that police are overly militarized. Among them is former Seattle police chief Norm Stamper, who today regrets his “militaristic” answer in 1999 to the infamous “Battle in Seattle” protests.
Many police, including beat cops, now routinely carry assault rifles. Combined with body armor and other apparel, many officers look more and more like combat troops serving in Iraq and Afghanistan. The list of equipment bought with the federal grants reads like a defense contractor catalog. High-tech gear fills the garages, locker rooms and patrol cars in departments across the country.
Although local officials say they have become more cautious about spending in recent years, police departments around the country are continually expanding the equipment and tactics of their jobs, despite, in many cases, the lack of an apparent need.
The share of federal grants for Fargo and the county it anchors is more than $8 million, a considerable sum for terrorism defense given its remote location and status as one of the safest areas in America. Fargo has averaged fewer than two homicides a year since 2005, and there have been no prosecutions of international terrorism in the state for at least a decade, if ever.
North Dakota’s biggest city is a humble place set on plains so flat that locals like to say you can watch your dog run away for two weeks. Yet all patrol officers in Fargo now carry an assault rifle in their squad car.
Fargo police Lt. Ross Renner, who commands a regional SWAT team, said the world is a dangerous place, and the city wants to be ready for anything.
With that in mind, Renner pushed for military-style assault rifles to become standard issue in department patrol cars.
“It’s foolish to not be cognizant of the threats out there, whether it’s New York, Los Angeles or Fargo. Our residents have the right to be protected,” Renner said. “We don’t have every-day threats here when it comes to terrorism, but we are asked to be prepared.”
Other communities also have ramped up as well. In Montgomery County, Texas, the sheriff’s department owns a $300,000 pilotless surveillance drone. In Garland County, Ark., known for its pleasant hot springs, a local law enforcement agency acquired four handheld bulletproof protective shields costing $600 each. In East Baton Rouge, La., it was $400 ballistic helmets. In Augusta, Maine, with fewer than 20,000 people and where an officer hasn’t died from gunfire in the line of duty in more than 125 years, police bought eight $1,500 tactical vests. And for police in Des Moines, Iowa, it was two $180,000 bomb robots.
Homeland security and law enforcement officials say the expenditures and modern training have helped save civilian and police lives. Do the armored vehicles and combat dress produce a sort of “shock and awe” effect? Lt. Jeremy Clark of the West Hartford Police Department in Connecticut hopes so. He said it can persuade suspects to give up sooner.
“The only time I hear the complaint of ‘God, you guys look scary’ is if the incident turns out to be nothing,” said Clark, who organizes an annual SWAT competition.
But the gear also can be used for heavy-handed – even excessive – tactics. In one case, dozens of officers in combat-style gear raided a rave in Utah as a police helicopter buzzed overhead. An online video shows the battle-ready team wearing masks and brandishing rifles as they holler for the music to be shut off and pin partygoers to the ground.
Arizona tactical officers this year sprayed the home of ex-Marine Jose Guerena with gunfire as the man stood in a hallway with a rifle that he did not shoot [PDF]. He was hit 22 times and died. Police had targeted the man’s older brother in a narcotics-trafficking probe, but nothing illegal was found in the younger Guerena’s home, and no related arrests had been made months after the raid.
Police say greater firepower and more protective equipment became increasingly necessary not only as everyday criminals obtained deadlier weapons, but also in response to 9/11 and other terrorist attacks. They point to a 1997 Los Angeles-area shootout with heavily armed bank robbers and the bloody 2008 shooting and bombing attack in Mumbai, India, which left 164 people dead and 300 wounded.
Every community in the country has some explanation for why it needs more money, not less, to protect against every conceivable threat. It could be a shooting rampage at an amusement park, a weapon of mass destruction hidden at a manufacturing plant, a nuclear device detonated at a major coastal port. Nothing short of absolute security seems acceptable.
“The argument for up-armoring is always based on the least likely of terrorist scenarios,” said Mark Randol, a former terrorism expert at the Congressional Research Service. “Anyone can get a gun and shoot up stuff. No amount of SWAT equipment can stop that.”
Law enforcement leaders nonetheless bristle at the word “militarization,” even if the defense community itself acknowledges a convergence of the two.
“I don’t see us as militarizing police; I see us as keeping abreast with society,” said former Los Angeles Police Chief William Bratton, now chairman of Kroll Inc., the security consulting firm. “And we are a gun-crazy society.”
SWAT competition underscores training
They appear on a grainy video in slow motion, wearing battle fatigues, helmets and multi-pocketed vests.
Figures move through the scene as though on a mission. One large man with a pistol strapped to his hip swings a battering ram into a door. A colleague shoots a flash-bang grenade into a field. A third man points an assault rifle into the distance, peering at his target through a scope. A fourth, holding a pistol and wearing a rifle strapped to his back, peeks cautiously inside a bus.
The images unfold to the pulsing, ominous soundtrack of a popular video game, “Call of Duty: Modern Warfare 2.”
These are not soldiers in a far-flung warzone. They are members of the Massachusetts State Police competing at a SWAT team competition in Connecticut. The video, posted on YouTube, underscores the training and devotion tactical officers bring to their jobs. It also illustrates the level of force police units across the country can now deliver.
The annual Connecticut SWAT Challenge, hosted by the West Hartford Police Department, is one of numerous contests and exercises that have flourished since the terrorist attacks, as ultra-equipped, better-trained units sought to enhance their skills. The number of participating units more than doubled in five years, to nearly 40 teams by 2009, and dozens of sponsors seek to ensure their products and logos are on display.
One such sponsor sells ThunderSledge breaching tools for smashing open locked or chained doors. Another, Lenco Armored Vehicles, assembles black, bulletproof box-like trucks on oversized wheels that can fit up to 15 officers. Options include radiation detectors and hydraulic rams. KDH Defense Systems markets body armor to police that matches protection “used by some of the world’s most elite warfighters.”
Clark, of the West Hartford police, says he started the competition precisely because of the new counterterrorism spending. State and local governments weren’t willing to match it with costly training necessary for the gear to be used effectively and safely. Clark is startled by the number of SWAT teams falling below the 16 hours of minimum monthly training recommended by the National Tactical Officers Association. Without proper maintenance, only luck remains.
“Luck is not for cops. Luck is for drunks and fools,” Clark said. “Invariably, what happens with a police officer is he slips and falls, he breaks his back, he’s paralyzed for the rest of his life. Some suspect gets shot with an M4 (assault rifle) through the neck, and he’s out of the hospital in a day. Police officers and military guys never seem to have that kind of stubborn luck.”
Competitions in the San Francisco Bay Area and Boston use grant cash to create realistic and elaborate challenges, said Alameda County Sheriff Greg Ahern, who created the Urban Shield event in 2007.
In one scenario, officers with goggles, rifles and fatigues swept through the cabin of a boat. Flames poured from an exploded vehicle during another. Video of the 2009 Urban Shield – with its own heart-thumping doomsday music – depicts tactical teams moving carefully through darkened quarters, roping down the sides of buildings and leaping from a van. Images of 9/11, the Columbine shootings and the 1989 Loma Prieta earthquake in California appear with the words “train, adapt, overcome.”
Special ops supplier Blackhawk Industries – founded by a former Navy SEAL – was among several elite Urban Shield sponsors this year.
Ahern points to a real-life recent case that tested area responders. A gunman killed three people and injured seven others in October at a Cupertino, Calif., cement plant where he reportedly clashed with co-workers. These incidents aren’t infrequent, Ahern insists.
“When you say low probability, I think we deal with these issues on a fairly regular basis,” Ahern said, adding that police “identify infrastructure, potential targets, in our area and try to have our teams train at those actual sites.”
No one knows for sure the number of SWAT teams nationwide. But at a time when the crime rate has been dropping, the number of police associated with SWAT duties has gone up. The National Tactical Officers Association, which provides training and develops SWAT standards, has about 1,650 team memberships, up from 1,026 in 2000, according to Executive Director John Gnagey.
“What we’ve always said is if you don’t have a specific need, you shouldn’t have one,” Gnagey said, referring to SWAT units.
Convention showcases latest tactical gear
The giant showroom in Chicago’s McCormick Place convention center provided a vivid picture of how the nation's law enforcement agencies are arming and armoring themselves. Chicago hosted the annual International Association of Chiefs of Police conference in late October. Some 800 exhibitors set up booths in 180,000 square feet of noisy space, many displaying military-style gear as thousands of police and other law enforcement professionals wandered the expo, dazzled by the latest gadgetry.
The sights and sounds are bewildering for a casual observer.
Electronic blasts and booms pour from the IES Interactive Training booth, where attendees chose among a shotgun, handgun and assault rifle with realistic recoil to aim at uncooperative suspects and inanimate targets on a life-size screen. Other booths offered combat-style apparel, such as one vest with a “Never Forget” patch, stirring up the memory of 9/11. At the Blackhawk booth, a mannequin was dressed head to toe in heavy-duty dark attire, a rifle slung from its neck and an additional sidearm strapped to its thigh. Another mannequin wore a full-face black mask.
Then there was the panoply of weapons. Colt’s Manufacturing Co. offered a selection of assault rifles. The most popular among cops? An M4 semi-automatic, “closest to what the military issues,” a salesman said.
Elsewhere, police officials admired a jumbo armored vehicle in camouflage green emblazoned with the words, “Greater Salt Lake.” It was built by Massachusetts-based truck maker Lenco, which also assembled the beefy BearCat that the Fargo-area SWAT team began using last year. The display vehicle had a battering ram affixed to the front. A man who answered questions about it showed off a remote gas delivery system that can be attached to the ram for spraying tear gas into a building from a long steel spear.
Advertising materials throughout the expo send a uniform message: The world is fraught with peril, and new high-tech gear is a solution.
“As criminal organizations are increasingly armed with military-style weapons, law enforcement operations require the same level of field-tested and combat-proven protection used by soldiers and Marines in Iraq, Afghanistan and other high-risk locations,” reads one brochure for the Oshkosh Corp.’s burly “tactical protector vehicle.” Minus passengers and cargo, it weighs more than two standard F-150 pickups built this year.
Colt makes its own appeal for a family of assault rifles: “The fundamental law enforcement mission profile has undergone drastic changes since the days of Sam Colt’s ‘gun that won the West.’ … Colt’s current law enforcement products have benefitted from decades of field and combat experience.”
Security market for state, local agencies growing
Security analyst Dilip Sarangan of Frost & Sullivan, which tracks the homeland security industry, said security spending by governments and the private sector is “event-based.” Both are suddenly willing to budget more when tragedy ignites new anxieties, such as after the 2007 Virginia Tech massacre, the 2005 London train bombings, the Mumbai terrorist attacks and, most of all, the 9/11 hijackings.
“That’s what their business is, unfortunately – anytime something bad happens, they make money,” Sarangan said.
The homeland security market for state and local agencies is projected to reach $19.2 billion by 2014, up from $15.8 billion in fiscal 2009, according to the Homeland Security Research Corp.
New opportunities are making major defense corporations more a part of our domestic lives.
Lenco, manufacturer of the BearCat and other SWAT vehicles, has sold more than 300 of its trucks to law enforcement agencies around the country. It also markets vehicles to the Defense Department, some for use in fighting improvised explosive devices. The company does not disclose sales figures, but a spokesman said more have been sold since 9/11.
In 2007, British defense giant BAE Systems spent $4.5 billion to buy a company called Armor Holdings, which had subsidiaries that made and supplied police equipment, such as riot shields, hard-knuckle gloves, Delta 4 tactical helmets and laser sight mounts for AR-15 assault rifles.
Minnesota-based Alliant Techsystems, the Army’s primary provider of small-caliber ammunition, acquired in recent years two major tactical equipment suppliers, Blackhawk Industries and Eagle Industries. Company executives told shareholders that Blackhawk was a “highly profitable business,” with $115 million in predicted sales this year.
While such companies also outfit sporting enthusiasts and the military, law enforcement agencies are cast by Alliant as essential customers “in the rapidly growing security market.”
Local officials assert that homeland security grants, used to pay for the type of equipment showcased in Chicago, have slowed. But the grants still add up to a lot of spending: The Department of Homeland Security awarded more than $2 billion in grants this year, and President Barack Obama’s 2009 American Recovery and Reinvestment Act pumped more than a half-billion dollars into existing grant programs.
The Federal Emergency Management Agency is largely responsible for distributing homeland security grants. It operates a website known as the Responder Knowledge Base, which serves as a sort of war-on-terror catalog listing what local governments are allowed to buy with readiness funds.
One item featured is an armored bulldozer with a thick front shield and propelled by “tank-like, all-terrain tracks.” The manufacturer, Dolmen Corp., says police operate in an increasingly violent world, where the arms race between good guys and bad guys is constantly escalating.
The firm says the military-style vehicle allows police to “gain the edge on crime.”
Gnagey, of the tactical officers association, said there’s a sense among some local police that the price increases when makers know it’s being paid for with federal funds. The minute new equipment arrives, he joked, “if it’s painted black and called SWAT, the price doubles.”
But the evolution continues. In the Phoenix area, Sheriff Joe Arpaio claimed this year to have his own air armada of private pilots he could dispatch to monitor illegal border crossers. He called it Operation Desert Sky. Arpaio also picked up a full-size surplus Army tank, complete with treads.
The city of Ogden, Utah, is about to launch a 54-foot, remote-controlled “crime-fighting blimp” with a powerful surveillance camera affixed to its belly by the end of the year.
Standard-duty officers seen daily on the streets of Los Angeles were retrained to break in and kill terrorists without negotiating, under an assumption that the attackers could have a death wish and not be interested in resolving matters peacefully. Many officers were also equipped with assault rifles.
Bratton, the former police chief, said in an interview that terrorism had been a low priority early in his career. By the time he retired in 2009, it consumed a significant part of his workday. After the Mumbai attacks, Bratton believed he had to act fast to prepare for such an event.
“We were not structured for that type of attack,” he said. “Within six months, we were.”
Las Vegas rushed forward as well. Everyday patrol officers were given additional training, and each shift now has “in-the-box” squads that can meet at a pre-determined location and respond as a group to would-be campus or casino attackers. Squad members carry additional gear in their cars, including gas masks, body armor and high-powered rifles.
“When you go to a substation now at a police department and you see someone walk out to their car to start their shift, no longer are they just walking out there with a briefcase,” said Las Vegas Sheriff Doug Gillespie. “They’ve got other equipment they’re taking with them that if the situation arises, they put that on and they use it.”
Charles Ramsey, who was police chief in Washington, D.C., during 9/11, said officers in the nation’s capital began to train for multiple simultaneous attacks. The Mumbai bloodshed, which took place after Ramsey headed to Philadelphia in 2008, also served as a spur for him to make further changes and spend more money to up-armor his force.
Some 1,500 beat cops in Philadelphia have been trained to use AR-15 assault rifles – akin to the high-powered weapons issued to war fighters.
“We have a lot of people here, like most departments, who are ex-military,” Ramsey said in an interview. “Some people are very much into guns and so forth. So it wasn’t hard to find volunteers.”
Preventative measures critical, Fargo police say
Fargo is not a place anyone associates with crime or terrorism. Its combination of friendly folk, low housing prices and high employment has garnered it recognition as one of the best places in the country to live. It is home to one of Microsoft's largest campuses and North Dakota State University.
Officials in Cass County, which includes Fargo, began buying gear in 2002. The spending on police gear rose from tens of thousands a decade ago to millions.
Police there said such spending is more than justified as a preventative measure. North Dakota has what could be perceived as targets, and the FBI established in Fargo one of its 104 Joint Terrorism Task Forces. Critical energy and agriculture sectors drive the booming economy in the remote border state. Drones used in the war on terror and homeland security are stationed at or operated from air bases in Grand Forks and at the local Fargo airport.
In addition, they say, some right-wing militias and white supremacists have been long-standing threats.
Fargo police justify the purchase of their SWAT truck, saying that with regular maintenance and low miles, it could serve the force for 30 years. They point to past shootings, like a 2004 incident in which a former Army ranger shot at SWAT team members and pinned down one officer who could have been aided by the truck.
In their minds, if it saves even one life, it’s worth the cost.
Other purchases, like the bomb-detection robots, are shared with federal agencies in Fargo that have outposts, but not the resources. The local police also say they’ve taken a regional approach to spend wisely, leveraging federal grants to buy equipment that has multiple uses.
“It doesn't make sense if we only use it for terrorism activity, and it doesn’t make sense if we only use it for criminal activity,” said Fargo police Capt. Patrick Claus, a former SWAT commander.
Some residents agree. Tim Kozojed, a corn and soybean farmer in Hillsboro, 40 miles north of Fargo, said he believes police ought to have the equipment they need. But he also believes they must spend money wisely. He’s not certain that’s happened with the grants.
“I’m very reluctant to get anxious about a terrorist attack in North Dakota,” Kozojed, 31, said. “Why would they bother?”
Claus, who was responsible for buying some of Fargo's military-style gear, including the BearCat truck, understands such thinking. But he contends it’s misguided, and he and other law enforcement authorities are obliged to prepare as well as they can.
“We prepare for the worst and hope it never happens,” he said. “But how many fires do you have to have before you buy a fire engine?”