The Commentariat -- Aug. 23, 2013

** Juan Cole: "Greg Palast at Vice exposes the way Larry Summers, Tim Geithner and others in the Treasury Department conspired with JP Morgan and other pirate investment banks not only to destroy Glass-Steagall in the US but throughout the world, removing the difference between commercial banks. and investment banks. Basically, they used US financial muscle to leverage the world into letting banks play poker with your money and forcing regulators to treat toxic bad loans as 'assets.'" CW: Cole calls Summers "sleazy"; that's the adjective I was looking for. Thanks to contributor Barbarossa for the link. Update: safari simultaneously linked to the both pieces. I'm sorry to say his comment seems to me to be exactly right. ...

... Here's Palast's piece, with "the Memo confirm[ing] every conspiracy freak's fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet." I agree with Barbarossa; it is also worth reading. And, yeah, it will make you sick.

President Obama speaks to Chris Cuomo of CNN:

      ... CNN: "The time is nearing for a potentially definitive U.S. response to alleged Syrian government atrocities and an increasingly violent military crackdown in Egypt, President Barack Obama" told CNN." ...

     ... Here's the full transcript of the interview. ...

... Kicking It Down the Road. Lori Montgomery of the Washington Post: "House Speaker John A. Boehner said Thursday that he plans to avert a government shutdown at the end of September by passing a 'short-term' budget bill that maintains sharp automatic spending cuts, known as the sequester." ...

... Wingers Are Not Amused. Here's Daniel Horowitz of Red State: "At some point, rank-and-file conservative activists will have to confront an inconvenient reality. The Republicans in Washington are not just dumb or spineless -- they are the problem. They don't share our values and seek to undermine our beliefs. The only way that will change is if we return the favor and thwart their political careers." He goes on, in outrage mode, for some while. Via Greg Sargent. ...

... Jonathan Weisman of the New York Times: "Mr. Boehner pressed gingerly for a straight short-term extension of funds to avoid an immediate government shutdown in October, but faced immediate opposition from conservatives demanding that funds be stripped from the health care law. One thought is to use a short-term spending bill to keep the government running into November, when Congress must raise the government's statutory borrowing limit. That way, with both a debt default and government shutdown looming, Republicans could apply maximum pressure on the White House to either agree to scuttle President Obama's health care law or accept significant changes in programs like Medicare and Social Security."

Eric Holder in a Washington Post op-ed: "Despite the promise of the court's ruling in Gideon, however, the U.S. indigent defense systems -- which provide representation to those who cannot afford it -- are in financial crisis, plagued by crushing caseloads and insufficient resources. And this year's forced budget reductions, due largely to sequestration, are further undermining this critical work.... I join with those judges, public defenders, legal scholars and countless other criminal justice professionals who have urged Congress to restore these resources...." ...

... Oh Yeah? Tulsa World: "'Sequestration is a hard way to do things, but it's better than nothing,' [Sen. Tom Coburn, {R-Okla}] said [at a townhall meeting].... A public defender gently challenged Coburn on the issue, saying sequestration was actually costing the federal government because the Justice Department had laid off so many staff attorneys it had to hire private ones at an hourly rate. Coburn disagreed. 'Your agency, Justice, is one of the most wasteful in Washington. It's not my fault if the money is not getting to you,' Coburn said." (See related content below.) ...

... CW: What you're seeing here is a U.S. Senator openly opposed to paying for a government function that is mandated by the Constitution. In a way, this is worse than the nutball push to defund ObamaCare. The ACA is, after all, an act of Congress & Congress has a right to rescind it. It does does not have a right to rescind a Constitutional Amendment, which is what Coburn is, in effect, advocating. Indeed, he told his constituents that he rejects the Constitution itself. (His idea of a national Constitutional convention isn't a bad one per se, but the reasons for his support of such a convention are.)

Foxes to Observe Henhouse. Paul Lewis of the Guardian: "The review of US surveillance programs which Barack Obama promised would be conducted by an 'independent' and 'outside' panel of experts looks set to consist of four Washington insiders with close ties to the security establishment.... A report by ABC News, which has not been denied by the administration, said the panel would consist of Michael Morell, a recent acting head of the CIA, and three former White House advisers.... In addition to Morell, who was deputy director of the CIA until just three months ago, the panel is believed to consist of former White House officials Richard Clarke, Cass Sunstein and Peter Swire."

Zeke Miller of Time: "President Barack Obama on Thursday visited the site of the historic 1848 women's rights convention in Seneca Falls, N.Y., leaving behind a copy of the first bill he signed in office, the Lilly Ledbetter Fair Pay Act. Obama's visit, ahead of Women's Equality Day next week, came during his bus tour through upstate New York and Pennsylvania promoting his college affordability proposals. Obama also left a copy of his remarks during the 2009 bill signing."

Aaron Blake of the Washington Post: "The U.S. Justice Department announced Thursday that it will challenge Texas's Voter ID law, saying it violates the Voting Rights Act, as well as the Constitution's 14th and 15th Amendments. In a separate case, the Justice Department will also join in a challenge to the state's GOP-drawn redistricting plans." ...

... Lyle Denniston of SCOTUSblog explains. ...

John Murawski & John Frank of the Raleigh News & Observer: "Former Secretary of State Colin Powell shook up North Carolina's annual CEO Forum on Thursday with pointed criticisms of the state's new voting law, which critics say was designed to make it harder for minorities and students to vote.... Saying he was speaking as a Republican, Powell warned that North Carolina's new voting restrictions will hurt the Republican Party, punish minority voters and make it more difficult for North Carolinians to cast a vote." ...

... Tal Kopan of Politico: "Powell also took aim at defenders of the law, including [Republican Gov. Pat] McCrory, who say such restrictions are necessary to stop voter fraud, which is hard to detect. 'You can say what you like, but there is no voter fraud,' Powell said. 'How can it be widespread and undetected?'"

Glenn Blain of the New York Daily News: "President Obama was in full campaign mode Thursday as he barnstormed across upstate New York in an armored bus to promote his plan to combat the soaring costs of higher education. Obama kicked off his bus tour with a speech to a packed auditorium on the SUNY Buffalo campus and then made stops near Rochester and Syracuse, telling the student-heavy crowds that holding down tuition costs and reducing student debt were vital to promoting a vibrant middle class":

David Savage of the Los Angeles Times: "After 12 years as FBI director, Robert S. Mueller III says he leaves office worried that America is still vulnerable to 'lone wolf' terrorists acting independently, and to a cyberattack that disables vital computer-run systems. Mueller, who took over the FBI a week before the terrorist attacks of Sept. 11, 2001, told reporters in a farewell interview that he had expected to lead a federal law enforcement agency that investigated bank robberies and other crimes." ...

... Sarah Wheaton & Michael Schmidt of the New York Times: "James B. Comey will begin shadowing the F.B.I. director, Robert S. Mueller III, next week as he prepares to take on the job himself."

Reid Wilson of the Washington Post: "Many cash-strapped cities and counties facing the prospect of shelling out hundreds of thousands of dollars in new health-care costs under the Affordable Care Act are opting instead to reduce the number of hours their part-time employees work. The decisions to cut employee hours come 16 months before employers -- including state and local governments -- will be required to offer health care coverage to employees who work at least 30 hours a week."

"The Movement to Defund Obamacare, Explained." Molly Ball of the Atlantic interviews Scott Hogenson, the campaign manager of ForAmerica's "Defund Obamacare" campaign. CW: The interview provides a good lesson in how to justify the stupid. ...

... Ferinstance.... Ed Kilgore: "From the day the Affordable Care Act was enacted, every Republican in Congress and most Republicans in state and local governments have done everything imaginable to interfere with its implementation, and have systematically opposed the kind of legislative 'fixes' that are normal for any major new law, while loudly cheering for its failure. Now we are told [by Hogenson] that executive measures to make the law work mean that it's not the law of the land."

... DeMint Advocates Irresponsibility. Igor Volsky of Think Progress: "Heritage president and former South Carolina senator Jim DeMint continued his campaign to convince Republicans to shut down the government in a ploy to defund the Affordable Care Act on Wednesday, telling a town hall in Tampa, Florida that 'This might be that last off-ramp to stop Obamacare before it becomes more enmeshed in our culture.' The law 'is not about getting better health care,' he continued. Uninsured Americans 'will get better health care just going to the emergency room.' CW: BTW, notice the size of the crowd that turned out to see President Obama in Buffalo; Jim DeMint's Defund Obama rally, which has received a great deal of publicity, drew 300 people in Tampa. ...

... Over at the Wall Street Journal, Bush's Brain says nothing about making the emergency room your primary only care doctor (even though Bush himself once promoted the idea), but he argues that "Republicans do have ideas for health care." Firewalled; if the link doesn't work, just cut & paste the preceding sentence in Google search if you really want to know what ideas Republicans have. ...

... Paul Krugman: "Rove's 'solution' would actually have a devastating effect on millions of Americans who currently have decent coverage.... Rove has nothing but the usual catchphrases, and obviously hasn't thought for a moment about the actual issues." ...

... "Words on a Page." Kevin Drum: "Rove's 'plan' would blow a huge hole in the deficit; wouldn't reduce costs; and quite likely would decimate the current employer-based system without covering any of the people with pre-existing conditions who are tossed out on their asses. And the worst part of it is that Rove knows all this perfectly well. He just doesn't care. He needs words on a page, so he's put some words on a page." ...

... ObamaCare by Any Other Name.... Sahil Kapur of TPM: "A variety of Republican governors have sought federal funds under Obamacare, many of them to expand Medicaid eligibility for more residents, a centerpiece of the law that the Supreme Court made optional for states last year. But shhh! Don't call it Obamacare, they say, for they despise that law." ...

... BUT -- Dumber than Rick Perry. Kyle Cheney of Politico: "Gov. Bobby Jindal, a fierce Obamacare critic, pursued funds from an under-the-radar program in the health law until this week, when his administration reversed course, citing cumbersome federal rules. Health aides to the Louisiana governor began eyeing the program -- a long-term care reform effort called Community First Choice -- last year and went as far as submitting a formal application to CMS. But officials say they withdrew the application Monday because complicated federal stipulations would have undermined their efforts and likely led to lawsuits."

Coburn Still Crazy. Randy Krehbiel of the Tulsa World: Speaking at a public meeting in Muskogee, Oklahoma, "as he has many times in the past, [Sen. Tom] Coburn [R-Okla.] called [President] Obama 'a personal friend of mine,' but that did not prevent him from calling the president's administration lawless and incompetent and 'getting perilously close' to the Constitutional standard for impeachment." Coburn also called for a national Constitutional convention to rewrite the Constitution "to cut down an oversized federal government and counter what he repeatedly referred to as a 'lawless' Obama administration." ...

... Brianna Edwards of Politico: "Earlier this week Michigan Rep. Kerry Bentivolio told constituents at a townhall that it would be a 'dream come true' if he could write and submit the bill to impeach the president. Last week, Rep. Blake Farenthold (R-Texas) kicked off the impeachment debate, declaring that the House had enough votes to make the notion a reality." CW: if only they could find some impeachable act to hang on Obama. Details, details.

"Mystery Money." New York Times Editors: "The ease with which big-money donors are able to influence the nation's politics is nowhere better illustrated than by the charade that gives tax exemptions to obviously partisan political groups posing as 'social welfare' organizations. Representative Chris Van Hollen, a Maryland Democrat, thus merits thanks for his decision to sue the Internal Revenue Service to force it to end its controversial muddying of tax law that has allowed these groups to flourish.... The I.R.S. should be rooting for the lawsuit's success because it would relieve the agency of playing the unfortunate and increasingly incompetent arbitrator of its own flawed regulation."

Julia Preston of the New York Times: "Young immigrants in the country illegally have escalated their protests against deportations this week, creating awkward dilemmas for Obama administration officials who are pressing the House of Representatives to pass broad immigration legislation this fall.... Organizers said they wanted to highlight continuing deportations under Mr. Obama, even as the president has championed legislation that would provide legal status and eventual citizenship for millions of illegal immigrants."

Paul Krugman: "... India, Brazil, and a number of other countries are now experiencing similar problems. And those shared problems define the economic crisis du jour.... The main lesson of this age of bubbles -- a lesson that India, Brazil, and others are learning once again -- is that when the financial industry is set loose to do its thing, it lurches from crisis to crisis."

Nick Gass of Politico: "President Obama called Antoinette Tuff, the woman who calmly talked down an armed 20-year-old as he walked into an Atlanta-area elementary school, on Thursday to thank her for her 'courage.'"

The Washington Post has a special section with links to articles about the March on Washington of August 28, 1963.

"Angry White Dummies." Tom Scocca of Gawker: "America's opportunistic race-hustlers, unsatisfied by their victory in the Trayvon Martin case, won't stop looking for reasons to rile up white people. So now the latest yapping point in our national conversation about race is the murder of Christopher Lane, the white Australian student allegedly killed for kicks by two black teenagers, with a white teenager as their accomplice in the shooting. In the world of white victimology, this proves that there is a media conspiracy to underplay crime against whites.... If you are one of the angry white dummies asking this question, try a different one: What is the outrage? ... Here's what happened in Oklahoma: a young man was shot to death. The police investigated it as a crime, arrested suspects, and charged them with murder.... The reason the killing of Trayvon Martin became a national scandal was that even though an unarmed young man was shot to death, the local authorities decided not to treat it as a crime."

Local News

Craig Gustafson of the San Diego Union-Tribune: "All signs point to Bob Filner resigning Friday as San Diego's 35th mayor, but one lingering question remains: How much is it going to cost taxpayers to show him the door? A tentative agreement between Filner and other city leaders that includes his formal resignation will be considered by the City Council in closed session Friday, but the particulars won't be revealed until after the council votes sometime in the late afternoon."

David Goodman of the New York Times: "The [New York] City Council voted Thursday to greatly increase oversight of the New York Police Department and of its widespread use of stop-and-frisk tactics.... The move on two bills marked a decisive swing of the pendulum toward reining in the practices of officers and the policies of their leaders. The votes, a week and a half after a federal judge ruled aspects of police stops in the city unconstitutional, amounted to a stinging personal defeat for Mayor Michael R. Bloomberg.... The two bills, which the mayor had vetoed and will now become law, represented an effort by frustrated elected officials to force changes on the police from the outside...."

Justin Snow of Poliglot: "The New Mexico Supreme Court ruled in a unanimous decision Thursday that a wedding photographer who refused to provide services to a same-sex couple violated the state's Human Rights Act. '[W]e conclude that a commercial photography business that offers its services to the public, thereby increasing its visibility to potential clients, is subject to the antidiscrimination provisions of the [New Mexico Human Rights Act] and must serve same-sex couples on the same basis that it serves opposite-sex couples,' the state's highest court ruled."

Susan Guyett of Reuters: "Planned Parenthood on Thursday filed a federal challenge to a new Indiana law requiring clinics that administer the so-called abortion pill to have full surgical facilities, a requirement it says would halt abortion services at a central Indiana clinic."

News Ledes

New York Times: "A military jury on Friday found Maj. Nidal Malik Hasan guilty of carrying out the largest mass murder at a military installation in American history."

New York Times: "Staff Sgt. Robert Bales, who pleaded guilty to slaughtering 16 Afghan civilians inside their homes, will spend the rest of his life in prison, a military jury decided on Friday. The decision came after three days of wrenching testimony that painted a moment-by-moment, bullet-by-bullet account of one of the worst atrocities of the United States' long war in Afghanistan."

Reuters: Bradley/Chelsea Manning, Bales & Hasan may all go to Fort Leavenworth, Kansas, "the only maximum security - or 'Level 3' - prison operated by the Department of Defense, handling military men who draw lengthy sentences for crimes deemed among the worst of the worst."

New York Times: "Senior officials from the Pentagon, the State Department and the intelligence agencies met for three and a half hours at the White House on Thursday to deliberate over options [re: Syria], which officials say could range from a cruise missile strike to a more sustained air campaign against Syria."

Comments

[Barbarossa]

Just in case you were feeling pretty good, read this:

http://www.juancole.com/2013/08/government-managing-committee.html

Greg Palast's article is worth reading as well. Unfortunately, it all seems to be legal, albeit unethical.

To quote Christina Roemer, "We're fucked."

[safari]

Voilà a scathing reproach of Obama's choices in his Economic Boys Club and the central actors to the repeal of the Glass-Steagall Act. I couldn't be much more disappointed in Obama concerning his selections in financial advisors and regulators. All this talk about the middle class while whispers ring throughout the echelons of finance of the next scam they can concoct to stiff the average worker.

The candidacy of Larry Summers is looking more and more like a guaranteed Corporate Welfare Card. With Summers at the helm, not only is the casino always open, but the drinks are on him!

http://www.vice.com/en_uk/read/larry-summers-and-the-secret-end-game-memo

Via Juan Cole: http://www.juancole.com/

[Patrick]

OK, I read Palast and Cole, and the memo, and I don't see that memo as evidence of a secret conspiracy. The attachments to the memo were not in the linked file, maybe there was something nefarious in those.

What I saw in the cover memo was the U.S. senior negotiator (Geithner) to the WTO round, "managing up" to his political-appointee boss (Summers), seeking his cooperation in ensuring that the heads of key financial stakeholders (I hate that word) were informed of what was about to go down, and that they were enlisted to support the effort if required. Given that WTO issues are highly political, an adverse call from a position opponent to an editor, financial reporter, senate or house committee member or staff can pull the rug out from the U.S. negotiator in the "end game" of deals, and it appears Geither was just trying to ensure against that happening by "stray voltage." Also, Geithner was ensuring that Summers knew that the U.S. position was imminently moving to closure, giving him a last minute opportunity to comment, and get comments from others.

So this memo is just a routine part of how delegations prepare for negotiations.

The sickening part is not in the memo, but in the fact that our "brightest" USG financial people believed that they were doing the right thing. Their belief was misplaced.

I recall that in 1997, many in the finance business really believed that the algorithms that gave us derivatives and swaps were really the ultimate in insurance, that they essentially eliminated risk, and therefore were "good." But anyone who thinks that they have found a way to eliminate risk, at a system level, should automatically realize that they made a mistake somewhere in their thinking, like when you think you found the key to perpetual motion or an exception to the Second Law (which provide frequent con opportunities themselves, but I digress).

Unfortunately, all bubbles are based on mass delusion, and in 1997 deregulation without risk was the popular delusion.

Were the bankers greedy? Of course. But they surely thought that with the USG underwriting their (minimized) risk, they could gamble other people's money without paying much of a price and with huge gains. Which is what they did.

Was the Treasury Department in collusion, in a scheme to defraud taxpayers, homeowners and investors? Probably not, they were just going with the delusions that financial salesmen were peddling, many of whom believed it themselves. Stupid, but not unethical, unless you believe it is unethical for a stupid person to hold authority.

Geithner is still a tool, and Summers an a-hole, but the memo does not show them colluding with the masters of the universe.

[cowichan's opinion]

Patrick: Bravo! Palast's article certainly is damning. 155 nations brought to their knees and forced at penpoint to deregulate their banking systems and grant access to the national treasury by that dastardly duo Geithner and Summers. Except how do you explain WTO members like Australia and Canada who didn't dismantle their banking safeguards? Your version of events, while nowhere as thrilling as a grand conspiracy, rings truer to facts and human nature.

How dare that Tom Coburn not propose doubling or tripling the funding of public defenders! I remember, dimly, reading of the inadequacy of funding for public defenders many times in the past so I googled "underfunding of public defenders". Among the first returns is a scholarly article written 20 years ago on the very subject. Coburn is only vocalizing what the majority in the US government are very comfortable with. That's why 98% of convictions in the justice system are plea bargains and why the standard of public defenders, in Texas for example, is so low. Come to think on it the citizenry of the US are very comfortable with the state of affairs as well. We all know who the indigent criminals are don't we.

[Ken Winkes]

@Patrick:

Always look forward to your remarks. Would quibble slightly, tho', this time around. While bubbles are certainly inflated by mass delusions, those in control of the bubbles are often not nearly so deluded as others. Running up value by timely investing and then pulling the plug while the price is still high is a standard investment strategy, successful often enough to be used again and again. I often think of a story I may have mentioned before in RC, that of the Erie Railroad, whose stock gyrations in and out of bankruptcy made many familiar names from the Robber Baron era even richer.

Then, it was the "mass" of investors that lost their shirts. In 2008, the masses lost again, twice, bailing out the professional investors greedy enough to drink their own heady brew, losing billions (trillions? We'll never know) of other people's money, and then having to struggle though an economy left in shambles by the professionals' delinquency.

Why don't we get it? It seems that while history does have a voice, it's much quieter than the sound made by today's money.

BTW, Krugman's column today has some interesting things to say on the matter of bubbles, as do many of the commenters on the piece.

[Barbarossa]

Now that fewer and fewer Rethugs are using "voter fraud" to justify draconian voting laws and claiming instead the purpose is to keep Democrats from voting, it seems that a constitutional amendment guaranteeing the right to vote is becoming more and more necessary.

Marie has made this point several times,