Conflict of Interest, Hollywood-Style

Actors' Union vs. Movie Producers
By DAVID MACARAY  

I recently had lunch with David Clennon, the movie and television actor (Being There, The Thing, The Right Stuff, Syriana, Ghost Whisperer, thirtysomething, Saved, Boston Legal, etc.), at a coffee shop in Santa Monica.  We were there to share a meal and discuss some union issues.  In addition to being a distinguished actor, Dave Clennon is also a committed political and labor activist.  

How committed?  He once turned down a role on the hit television series, 24, because he felt the show’s depiction of torture indirectly contributed to the U.S. government’s use of torture as a legitimate form of interrogation, and, accordingly, to the public’s acquiescence or tacit approval of it.  In the real world, turning down a paying gig because of political principles is rare; in Tinsel Town, it’s practically unheard of.

As for the labor scene, what made the last couple of Screen Actors Guild (SAG) negotiations so frustrating and disappointing to Clennon and other SAG activists is the glaring conflict of interest that exists within the movie industry.  Indeed, when you hear it explained, it seems truly bizarre.   

The group with whom SAG (with 120,000 members) negotiates its contracts is the AMPTP (Alliance of Motion Picture and Television Producers), the people who more or less run the movie business.  On one side of the table you have the rank-and-file actors, looking for a larger slice of the pie, and on the other side you have the producers, looking to retain the whole pie.  At first glance this “actors vs. producers” scenario seems like any other labor vs. management scrimmage.

However, what makes this SAG scenario so different is that some of the union’s most influential members happen to be producers themselves.  It’s a concept that’s hard to wrap your mind around.  Recalling my days as a negotiator, Clennon asked, “How would you feel about having the CEO of the company you’re negotiating with also being an influential member of your union?”

And of all the successful hyphenates (actor-producers) in Hollywood, none is more successful or more formidable than Tom Hanks (Forrest Gump, Philadelphia, Saving Private Ryan), who owns Playtone, his own production company.  Not only does Hanks earn more as a producer than as a performer (and he’s very well paid as a performer), it’s been said that Playtone consistently employs more actors each year than any studio in town. 

Given his executive profile, his acting whiskers, and his unique role in the union, to say that Tom Hanks wields considerable clout is a gross understatement.  In truth, he is arguably the single most influential human being in Hollywood.  

Of course, the problem with having union members like Hanks (and Meryl Streep, Alec Baldwin, Robert DeNiro, et al) is immediately apparent.  As successful producers or multi-millionaire actors (or both), their needs don’t coincide with the needs of SAG’s rank-and-file members who rely on such things as TV residuals and DVD sales to make their living.  

While George Clooney no longer has to worry about residuals from “ER,” or his cut from future DVD sales, the majority of SAG’s membership still do.   Residuals and DVD sales are vital to them.  And, as happens at every negotiation with the AMPTP, the producers are reluctant to part with their money.  It’s always been a battle.  Which is why it’s so alarming to have as your union spokesmen people who, to put it bluntly, not only don’t need the money as much as you do, but may have an entirely different agenda. 

In February of 2008, a “secret,” invitation-only meeting was held to discuss the upcoming SAG negotiations.  Hanks, Clooney, James Cromwell, Mike Farrell, and Melissa Gilbert (former SAG president), among others, were in attendance.  They represented a group of SAG members called Unite for Strength, who were opposed within SAG by another group, a more activist faction, known as MembershipFirst, of which then-president Alan Rosenberg was a member.

Hanks and his supporters were worried that Rosenberg and company were going to enter the upcoming negotiations with a giant chip on their shoulder, that they were going to be overly aggressive in pursuing a new contract, particularly after concluding that the Alliance had screwed them out of money and benefits in previous negotiations.  The rumor circulating among the cognoscenti was that the MembershipFirst crew was looking for payback.  

The fact that the WGA (Writers Guild of America) were already on strike (they would stay out 100 days), was another burr under Unite for Strength’s saddle.  Clearly, the writers taking so militant a stand—and being out for so long a period—had put the fear of God into the moderates.  Unite for Strength was worried that Rosenberg, who’d been reported to be hanging out with Patrick Verrone, president of the striking WGA, was going to follow the writers’ lead and force the Actors Guild into a strike.

Normally, in the run-up to a negotiation, a rumor like this would be gold, a cause for jubilation.  Every union in America prays for the leverage provided by this kind of pre-negotiation notoriety, where you’re perceived as already being in full-blown strike mode—especially these days, when so few unions actually pull the plug.  Typically, when unions engage in saber-rattling displays, nobody (including their own membership) believes them, which is why management is so willing to call their bluff.  

But this was different; this threat was perceived as real.  Having the producers genuinely fearful that the bargain could wind up in a ditch was manna from Heaven.  Unfortunately, instead of parlaying this perception into dollars and cents, Hanks and others moved to squelch the opportunity.  They moved to squelch it because they were well-heeled company men who had absolutely no interest in rocking the boat.

On February 14, 2008, Unite for Strength took out full-page ads in the trade papers, urging the parties (SAG and AMPTP) to sit down together and “just talk,” ostensibly as a means of averting any hostility.  The damage that such a reckless tactical blunder can do in the run-up to a contract negotiation—publicly circumventing the elected leadership—is incalculable.  

Then, the next day, February 15, Hanks and Clooney took it a step further.  At what was presumed to be Hanks’ urging, they co-authored a letter to the editor that appeared prominently in the Los Angeles Times, in which they cautioned the actors to approach the negotiations in a rational, open-minded fashion. 

What this amateurish, sad-sack plea did was effectively strip Rosenberg of the only trump card a union has—i.e., evidence of unwavering membership solidarity.  Basically, the only thing that Hanks and Clooney’s letter succeeded in doing was to announce to the world that SAG was riddled with dissension.  Well done, boys.

Of course, what happened next was predictable.  The Alliance exploited the dissension, the subsequent contract offer was ratified, the MembershipFirst slate was soundly defeated in the next SAG Board of Directors election, and the “moderates” took charge of the Guild. 

So the question that Dave Clennon and others have raised remains unanswered.  And it’s a good question.  Indeed, it’s the same fundamental question that was made famous by the 1930s Florence Reece labor song of the same name:  Which Side Are You On?

Fearful Nation

Washington's Internal Security Apparatus: a Long History
By RON JACOBS

US citizens of almost all political stripes tend to live their lives ignorant of what the government that operates in their name is really up to. Some of this is due to the government's obsession with secrecy and some of it is due to the people's political naivete (or ignorance). Perhaps the only exceptions to this statement are those that exist on what are considered the fringes of US political discourse. Thanks in part to this ignorance, most US residents live their lives unaware of the police state author Andrew Kolin describes in his recently published book State Power and Democracy: Before and During the Presidency of George W. Bush.

This isn't just another book raging against the excesses of the George Bush administration. In fact, it is a historical survey of the slow but steady journey of the US polity towards an authoritarian regime designed to protect a relative few from the democratic urgings of the people. Kolin begins his book with a brief look at the debates over the writing of the US Constitution and its eventual incarnation as a blueprint for a centralized authority whose intention was to keep government away from the hoi polloi. Adjunct to this endeavor was a desire to expand the nation. This was done by killing the indigenous peoples living on the land to be expanded into. In order to justify this genocide, it was necessary to delineate the natives as something other than human. According to Kolin, the need for such an "other" is essential to the development of an authoritarian state. The Native Americans and the African slaves filled the need quite nicely given their obvious physical and cultural differences.

Another aspect of Kolin's proposition that differentiates it from so many other commentaries that have been written on the police state tactics of the Bush administration is his contention that the US police state is not a future possibility. It already exists. We are living in it. He backs up this contention with an argument that dissects the elements generally considered essential to the definition of a police state and applies them to the present day United States. From torture to propaganda techniques; from the government's ability to eavesdrop on anyone to its ability to wage war at will--these are but a few of the indices Kolin examines in his study. According to Kolin, however, the ultimate indicator of a police state is defined by whether or not the leader of a particular government (in this case, that of the United States) exists above the laws of the nation and the world. In other words, if the leader does something, is it ever illegal? Kolin provides multiple examples of every administration since Abraham Lincoln's operating in a vein suggesting that they all operated in this way at times. However, it was not until the inauguration of George W. Bush and the events of September 11, 2001, that the word of the president became a law onto its own. When George Bush said he was "the decider" he wasn't joking. He and every president to follow him truly have that power. They can decide who to kill, who to spy on, who to lock up, and who to attack without any restriction other than their own morality. Furthermore, they can also determine how such actions are to be done. As far as the presidency is concerned, no laws--not the Bill of Rights nor the Geneva Conventions--apply.

The march towards this police state that Kolin describes is best characterized by the phrase "two steps forward, one step back." Historically, for every presidential administration where excesses occurred, there followed another that saw a relaxation of some of those excesses. The repression of the Palmer Raids was followed by a decade where the Communist Party became legal; the McCarthy Era was followed by a relaxation of the anti-communist hysteria in the 2960s; Nixon's attempts to subvert the democratic process were answered with convictions and a series of laws that were supposed to prevent similar excesses. Yet, the march towards authoritarianism continued its quiet goosestep. Nowhere was this more obvious than in US foreign policy. After the US turmoil around its war against the Vietnamese, Congress passed a War Powers Act that supposedly limited the president’s ability to send US troops to other nations. In answer, every single president afterward pushed the limits of that law so that by the 1980s it was meaningless. Other attempts to limit the White House's ability to make war like the Boland amendment which made arming the Nicaraguan Contras illegal were just ignored. By the time Bill Clinton took power in 1991, the ability of the president to attack whenever and wherever was no longer seriously challenged by Congress, leaving the White House in sole control of the nations' military might.

The nation described in Kolin's book is a fearful one. It is a nation whose agents torture at will and whose military wages war for no apparent reason other than profit and power. It is a nation whose political police forces operate as both judge and jury and often fail to leave their personal prejudices at home. It is a nation whose judicial system rarely interprets a law different than the chief executive and when it does that executive ignores the ruling. It is a nation where so many of its citizens live their lives under the illusion that the authoritarian rule they increasingly live with is somehow protecting them. It is a nation that refuses to prosecute officials including the former president that were involved in torture that violated domestic and international laws. Finally, according to Kolin, it is a nation without redemption that will see the powers of the police state continue to grow unless its people wake up and dismantle it.

How TV Ruined Your Life

Oh, do watch this. It's amazingly harsh and drastically funny. The host, Charlie Brooker, is beautifully cynical.

vidlink-how tv ruined your life

Obama and Geithner's Stupid Plan to Hand the Entire Housing Industry Over to the Banks

Obama should be punishing the banks that sabotaged the American dream of home ownership -- instead he's giving them the whole enchilada.
By Robert Scheer, Truthdig
Posted on February 17, 2011

This article first appeared on TruthDig.

A most dastardly deed occurred last Friday when the Obama administration issued a 29-page policy statement totally abandoning the federal government’s time-honored role in helping Americans achieve the goal of homeownership. Instead of punishing the banks that sabotaged the American ideal of a nation of stakeholders by “securitizing” our homesteads into poker chips to be gambled away in the Wall Street casino, Barack Obama now proposes to turn over the entire mortgage industry to those same banks.

The proposal, originated by Treasury Secretary Timothy Geithner, involves nothing less than a total “winding down” of the 80-year-old federal housing program, setting instead a new goal of a two-tiered America in which the masses are content to be mere renters of the American Dream. Such a deal for a country where, as the report concedes, “Half of all renters spend more than a third of their income on housing, and a quarter spend more than half.”

This is the same Geithner who during his tenure in the Clinton Treasury Department championed the total deregulation of the then-emerging market in collateralized debt obligations that sliced and diced people’s home mortgages into the toxic securities that created what his new report calls the greatest economic crisis since the Great Depression. Later, as president of the New York Fed, he cheered on the banks as they went hog-wild, conning folks into buying homes they couldn’t afford and stuffing them into the incomprehensible securities that form the rot at the core of our bankrupt economy.

This is a made-in-the-U.S. nightmare that we inflicted on the world, thanks to an explosion in those toxic securities brought on by the deregulation that most of the Obama economic brain trust supported when they worked for President Bill Clinton and during the ensuing bubble years when they enriched themselves. As the report admits: “The U.S. is … the only high income country in which securitization plays a major role in housing finance.” Yet instead of ending that practice Obama now calls for more of the same: “The Administration believes the securitization market should continue to play a key role in housing finance.” Indeed, the plan’s goal of eliminating Fannie Mae and Freddie Mac will dry up the alternative public funding that has provided a source of mortgage support ever since President Franklin Delano Roosevelt launched Fannie Mae to check the power of the banks over mortgages. Now Obama proposes to eliminate that check and leave would-be homeowners to the tender mercy of the banking giants.

Of course Fannie Mae and Freddie Mac also bear responsibility for the meltdown. They had morphed into for-profit enterprises and, just as with the Wall Street firms, the massive bonuses paid out to their top executives were contingent on the value of their stock prices, which in turn were fattened by the sale of those same toxic assets. As the Obama report puts it, “Fannie Mae and Freddie Mac’s profit-maximizing structure undermined their public mission.” What the administration should have proposed is to return the government-sponsored housing agencies to their original function as nonprofit entities supplementing, rather than aping, the practices of greedy bankers.

It wasn’t meant to end this way, and key Democrats, quite a few of them Clinton alums now in the Obama administration, bear the responsibility for the sad fate of Roosevelt’s dream. As the Obama proposal concedes: “Improving how housing was financed was an important part of these broader Depression-era reforms. In the 1930s, following severe mortgage market disruptions, widespread foreclosures, and sinking homeownership rates, the government created the Federal Housing Administration (FHA), Fannie Mae, the Federal Home Loan Banks (FHLBs) and several decades later, Freddie Mac to help promote secure and sustainable homeownership for future generations of Americans. Fannie Mae and Freddie Mac held true to their original mission for many years.” What the report then neglects to discuss is the demise of Roosevelt’s grand experiment at the hands of Democratic Party hustlers who turned the agencies away from their “original mission” and into their personal piggy banks while getting Democrats in Congress to approve regulations enabling their greed.

The folks around President Obama know this sad tale well because some of them were principal actors in the housing agencies’ betrayal of the public trust. Just take the case of Tom Donilon, whom Obama recently appointed to the highly sensitive position of national security adviser. It was Donilon who was the top legal counsel and lobbyist for Fannie Mae from 1999 to 2005, a period when the agency went off the tracks in backing Countrywide and other private-sector bandits in their irresponsible rip-off scams. “He was in charge of the lobbyists. … That process involved using the Hill to rein in the regulators,” noted Stephen Blumenthal, who, as director of the Office of Federal Housing Enterprise Oversight, was hindered by Donilon’s lobbying. As the report concedes without mentioning Donilon’s role, “Over the years, Fannie Mae and Freddie Mac’s aggressive lobbying efforts had successfully defeated efforts to bring them under closer supervision.”

Donilon, who received $10 million in the three years leading up to the scandal of 2004, when Fannie Mae was fined $400 million for juggling its books to enhance executive bonuses, will never have any trouble financing a home purchase. Not so the tens of millions of Americans who have lost their homes because of his reprehensible actions and the many more in the future who will be denied government support in trying to get a place of their own.

This Budget Cutting Math Doesn’t Add Up

Thursday, February 17, 2011 by CommonDreams.org
by Robin Aura Kanegis

It’s simple math: A military budget that has doubled in twelve years + worries about the resulting deficit = deep cuts to military spending.

Yet in a display of backward logic, the House majority’s initial announcement of planned cuts to current spending only included cuts to non-military discretionary spending, the spending that helps invest in our communities, schools, and our economic infrastructure. It seems the Pentagon has developed the ultimate cloaking mechanism -- to protect military budget bloat from mathematical reality.

The US military budget currently accounts for over half of our discretionary budget -- and nearly half of all military spending the world over.

Despite this incredibly lop-sided investment, increased military appropriations are set to glide past Congressional “budget hawks” like Harry Potter in his invisibility cloak. Meanwhile the fragments of federal funding which would address human needs, long-term infrastructure, or non-military actions in the world are scrutinized down to the dollar – at a time when the number of Americans in need is growing with every lost job or home foreclosure.

Reducing government spending by shrinking investments in our long-term well-being rather than cutting the military budget is as sensible as dieting by cutting back on salad while eating three desserts a day.

Even cutting nearly a trillion dollars out of the defense budget over the next ten years—a sliver off that third dessert— would leave us spending 14 percent more than we did during the Cold Warera, according to analysis by the Sustainable Defense Task Force.

Yet the measure the House will consider this week for FY 2011 funding would cut just 2.8 percent from the president's FY 2011 defense budget request, compared with 20.6 percent from the budget for non-military foreign operations. Under this proposal the “Defense” budget will still increase by $8.1 billion dollars from the previous year.

We invest tax dollars in a shared safety net so it will be there to catch us during hard times. In our current slow-grinding economic crisis, more Americans have fallen into poverty, needing help with things like food and housing. The fact that the burden has increased on such programs as low-income housing and preventive health care clearly shows they are needed more than ever, not that they should be taken away.

Jack Lew, the Director for the White House Office of Management and Budget, writes that, “the sacrifices needed to begin putting our fiscal house in order must be broadly shared.” Yet all the cuts being proposed this week in Congress hit low- and middle-income families and communities the hardest.

Lew says the easy cuts are behind us. But simple math above says we have yet to seriously consider them. It’s time to pull back the cloak and make budget cuts where we need them most: in our off-the-charts military spending habit.

Government Shutdown Looms As Boehner Rejects Funding Stopgap

Thursday, February 17, 2011 by Huffington Post
by Elise Foley

WASHINGTON -- House Speaker John Boehner (R-Ohio) upped the odds of a government shutdown Thursday, saying he would not support a short-term funding bill if his near-certain budget battle between the House and the Democratic-run Senate takes longer than two weeks.

As the clock ticks down to March 4, when the current stopgap funding measure expires, Boehner shot down what many considered to be the surest way to keep government agencies running while the two chambers hammer out the differences between their respective spending bills.

"We are hopeful that the Senate will take up the House‑passed bill that comes out of here today, tonight, tomorrow morning, whenever it is, and we hope that they will move it," he said at a press conference. "But I am not going to move any kind of short‑term CR at current levels. When we say we're going to cut spending, read my lips: We are going to cut spending."

The House GOP version of the CR, or "continuing resolution," which would fund the government in lieu of a formal budget through the end of the current fiscal year on Sept. 30, would cut some $60 billion from current funding levels, though there are further amendments on the table.

In any of its likely forms, however, the bill will face strong opposition from the Senate, where Majority Leader Harry Reid (D-Nev.) has called the House GOP's funding plan irresponsible and extreme. President Barack Obama said on Tuesday he would veto the House's bill if it made it to his desk.

Taking the possibility of a short-term continuing resolution off the table drastically reduces the timeline for reaching a compromise. Rep. Mike Simpson (R-Idaho), head of the House Appropriations subcommittee on Interior and the Environment, told reporters last week that he expected leadership to pass such a short-term measure.

"Leadership does not want a government shutdown," he said. "Could it ultimately end up there? Sure, it's possible. But most people realize it's going to take us some time to try to get a conference report" -- that is, a compromise bill.

If a government shutdown occurs, thousands of government programs would shut down immediately, with workers and contractors losing their paychecks until funding started up again, at which point they would be paid retroactively.

If the House GOP's spending plan is passed as is, economists estimate that 1 million Americans could lose their jobs. Boehner, who previously said "so be it" when presented with the possibility of public-sector job losses resulting from budget cuts, seemed to stand behind that sentiment on Thursday.

"I don't want anyone to lose their job, whether they're a federal employee or not," he said at the press conference. "But come on! We're broke! We've got to make tough decisions."

Following the press conference, the Associated Press reported that Boehner quickly walked off stage, saying "I can't believe I just said that."

His office did not immediately return a request to clarify what he meant by that remark.

Does Secretary Clinton Have a Double Standard on Internet Freedom?

Thursday, February 17, 2011 by Save the Internet
by Timothy Karr

Secretary of State Hillary Clinton on Tuesday highlighted new U.S. Internet freedom policy that is designed to help democracy movements gain access to open networks and speak out against authoritarian regimes.

According to Clinton, the program will provide $25 million in new grants to support "technologists and activists working at the cutting edge of the fight against Internet repression."
It will help fund efforts like circumvention and encryption services, which enable users to evade Internet blockades, and technology to wipe sensitive data from cell phones when activists are detained by security forces.

Protecting Our Freedom to Connect

In a speech seen as a follow-up to her 2010 address on the issue, Clinton reasserted the administration's belief in our universal "freedom to connect," something the Secretary of State and the White House see as a natural extension of our longstanding rights to free speech, assembly and association.

Her remarks carried a heightened sense of urgency in light of events still unfolding across the Middle East.

Clinton said the Internet was both an "accelerant of political and social change" and a "force for repression." She called for a global commitment to Internet freedom. "The freedoms to assemble and associate also apply in cyberspace," she said.

Clinton urged countries everywhere to bet that "an open Internet will lead to stronger, more prosperous countries... that open societies give rise to lasting progress."

But her call for unfettered and uncensored access to the Internet around the globe needs to resonate here at home as well.

No Double Standard at Home

The Obama administration's recent failure to stand up for a strong Net Neutrality rules, its slow-footed response to the export of invasive snooping technologies, and apparent reluctance to abandon the idea of an Internet "kill switch" all suggest a double standard in what the administration seeks for foreign governments and what it will accept in the United States.

(Ethan Zuckerman of Harvard's Berkman Center critiques other aspects of Clinton's speech)
At the end of 2010, Obama's FCC distanced itself from the president's prior commitment "to take a back seat to no one" in his support for Net Neutrality. Instead of ensuring openness on wireless Internet devices like the iPhone and Droid, the FCC exempted the mobile Internet from vital openness protections.

This move enshrines Verizon and AT&T as gatekeepers to the expanding world of the mobile Web. And both have a checkered past when it comes to protecting our right to connect.
In 2007, Verizon blocked text messages sent by Naral Pro-Choice America to its members. The move put Verizon in the same league as its cohorts at AT&T, which in August that same year censored the live Webcast of a Pearl Jam performance that included criticism of then President George W. Bush. (I believe Verizon & AT&T also gave the NSA full access to the communication records of all their customers, too, but who's keeping score..?--jef)

Comcast, the nation's largest cable Internet provider was caught blocking users' ability to connect to one another and trade files using popular BitTorrent software.

And the issues go beyond the administration's unwillingness to face down corporations that block our connections. Just hours before Secretary Clinton's speech, Justice Department lawyers urged a federal magistrate in Alexandria, Virginia, to uphold a court order requiring Twitter to turn over confidential information about the use of its services by three WikiLeaks supporters.

It's hard to claim the moral high road and presume to lecture other countries on the importance of online freedom when your own promise to defend it at home takes a backseat to corporate meddling and government interference.

And it's even harder to stomach such rhetoric when U.S. companies are exporting deep-packet inspection technology that's used to spy on democracy activists, or the administration seems intent on reserving the power to shut down our communications networks.

While Clinton's call for uninterrupted access to the Internet -- and its now famous offspring Facebook, Twitter and Youtube -- is laudable, we need to be consistent and do better in our policies both at home and abroad.

When Unemployed Equals Untouchable

(It wasn't bad enough, they just thought they could make it worse, and look, they did! Thanks for the link, Rob.--jef)

+++

Feb 16 2011 - by Teresa Novellino

In the caste system of career seekers looking for jobs during this economic downturn, employers are deeming the unemployed as untouchable, worker advocates say.

The reported screening-out of applicants without jobs could lead to discrimination against women and minorities during one of the worst job markets in recent memory, those testifying at an Equal Employment Opportunity Commission hearing today said.

And while companies may not specifically have a policy to exclude the unemployed and may informally use employment status in hiring, that allegation, if true, would be of much interest to the EEOC, which enforces federal antidiscrimination laws.

Unemployment data showed that the jobless rate among blacks was 15.7 percent and that it was 11.9 percent for Hispanics, the U.S. Bureau of Labor Statistics reported. Among whites, the rate was 8 percent, and the overall rate is 9 percent.

Several examples of discriminatory help-wanted ads were presented at the hearing including an online ad from a Texas electronics company claiming it would "not consider/review anyone NOT currently employed regardless of the reason." A separate ad for a restaurant manager position in New Jersey said that applicants must be employed, the Los Angeles Times reported.

As the unemployed struggle to find work, there has also been a rise in the business of employing temporary workers. According to figures from one remote-staffing firm, oDesk, the number of employers hiring contractors on an ongoing basis rose 800 percent over the past three years.
U.S. employers review nine applicants for every two available jobs, William E. Spriggs, assistant secretary of Labor for policy, said at the hearing.

That is slightly better than in June, when unemployment stood at 9.5 percent and there were five job seekers for every posted job, a figure that does not really reflect how many candidates there actually were per job, since the unemployed or others could be applying to multiple jobs.

Even experienced executives looking for jobs have had a difficult search if they are out of work and are having to find ways to market themselves.

Fun with a Great White Shark

Optical Illusion

U.S. Government Shuts Down 84,000 Websites, ‘By Mistake’

 02/16/11

The US Government has yet again shuttered several domain names this week. The Department of Justice and Homeland Security’s ICE office proudly announced that they had seized domains related to counterfeit goods and child pornography. What they failed to mention, however, is that one of the targeted domains belongs to a free DNS provider, and that 84,000 websites were wrongfully accused of links to child pornography crimes.

As part of “Operation Save Our Children” ICE’s Cyber Crimes Center has again seized several domain names, but not without making a huge error. Last Friday, thousands of site owners were surprised by a rather worrying banner that was placed on their domain.

“Advertisement, distribution, transportation, receipt, and possession of child pornography constitute federal crimes that carry penalties for first time offenders of up to 30 years in federal prison, a $250,000 fine, forfeiture and restitution,” was the worrying message they read on their websites.

As with previous seizures, ICE convinced a District Court judge to sign a seizure warrant, and then contacted the domain registries to point the domains in question to a server that hosts the warning message. However, somewhere in this process a mistake was made and as a result the domain of a large DNS service provider was seized.

The domain in question is mooo.com, which belongs to the DNS provider FreeDNS. It is the most popular shared domain at afraid.org and as a result of the authorities’ actions a massive 84,000 subdomains were wrongfully seized as well. All sites were redirected to the banner below.

This banner was visible on the 84,000 sites

The FreeDNS owner was taken by surprise and quickly released the following statement on their website. “Freedns.afraid.org has never allowed this type of abuse of its DNS service. We are working to get the issue sorted as quickly as possible.”

Eventually, on Sunday the domain seizure was reverted and the subdomains slowly started to point to the old sites again instead of the accusatory banner. However, since the DNS entries have to propagate, it took another 3 days before the images disappeared completely.

Most of the subdomains in question are personal sites and sites of small businesses. A search on Bing still shows how innocent sites were claimed to promote child pornography. A rather damaging accusation, which scared and upset many of the site’s owners.

One of the customers quickly went out to assure visitors that his site was not involved in any of the alleged crimes.

“You can rest assured that I have not and would never be found to be trafficking in such distasteful and horrific content. A little sleuthing shows that the whole of the mooo.com TLD is impacted. At first, the legitimacy of the alerts seems to be questionable — after all, what reputable agency would display their warning in a fancily formatted image referenced by the underlying HTML? I wouldn’t expect to see that.”

Even at the time of writing people can still replicate the effect by adding “74.81.170.110 mooo.com” to their hosts file as the authorities have not dropped the domain pointer yet. Adding mooo.com will produce a different image than picking a random domain (child porn vs. copyright), which confirms the mistake.

Although it is not clear where this massive error was made, and who’s responsible for it, the Department of Homeland security is conveniently sweeping it under the rug. In a press release that went out a few hours ago the authorities were clearly proud of themselves for taking down 10 domain names.

However, DHS conveniently failed to mention that 84,000 websites were wrongfully taken down in the process, shaming thousands of people in the process.

“Each year, far too many children fall prey to sexual predators and all too often, these heinous acts are recorded in photos and on video and released on the Internet,” Secretary of Homeland Security Janet Napolitano commented.

“DHS is committed to working with our law enforcement partners to shut down websites that promote child pornography to protect these children from further victimization,” she added.
A noble initiative, but one that went wrong, badly. The above failure again shows that the seizure process is a flawed one, as has been shown several times before in earlier copyright infringement sweeps. If the Government would only allow for due process to take place, this and other mistakes wouldn’t have been made.

Coverage on previous copyright related seizures can be found here, here and here.

Will Middle Man stand up for erstwhile ally, Egyptian Strongman?

This Modern World
By Tom Tomorrow

Where’s my Flying Car and Disintegrator Ray Gun?

by Bob Wallace - February 16, 2011 - Strike the Root

I’ve been a little miffed since I was 12 years old because I didn’t have a flying car, and most especially, a disintegrator ray gun. They existed in the movies, books, and on TV, but as for real life, forget it.

I can’t remember the first time I encountered both of them. I do remember a TV program about puppets, called Fireball 500, which was off the air before I was born, so I saw the reruns. And everyone in it had flying cars. There were no disintegrator ray guns, unfortunately. I think they had rockets, though.

I think the first time I saw a disintegrator pistol was in a pretty bad movie called Teenagers from Outer Space, which was also made before I was born. There was a scene in it where one of our juvenile delinquent teenager aliens disintegrated some guy. Next thing I see is a skeleton clattering to the ground. Evaporated the flesh right off of him. I was amazed. I was probably about six.

Then of course there was the original Star Trek, which made the word “phaser” into a cliché. And I do remember reading Edgar Rice Burroughs when I was about 11, and running across flying cars you could park in the sky while you slept, and not only were there disintegrator pistols--called “radium” pistols, a word almost as dumb as “phaser”--but also swords. Swords, flying cars, and disintegrator pistols. What more could you ask for? Well, there were the scantily-clad Martian princess babes!

I really believe I would have a flying car, a disintegrator pistol, and also cures for all diseases, if the State hadn’t been meddling in the human race since before recorded history. It’s been meddling since the beginning of recorded history, so why not before? Its nature hasn’t changed.

The Romans were clearly on the verge of the Industrial Revolution, and the Greeks before them had shown some signs. Both the Greeks and the Romans collapsed, courtesy of their respective States. All empires collapse, just as the United States, an empire, is going to collapse.

If the Greeks had succeeded, we’d be 2,000 years ahead of where we are now. It wouldn’t be 2011; it’d be 4011. I’d have my flying car and disintegrator pistol!

I’ve read estimates that perhaps up to 200 million people were killed in the 20th Century, in State-created wars. (Contrary to the mythology, the Communists were ten times as bad as the Nazis. The Communists and the West won, so, as always, the winners write the history.)

That’s a lot of people dead before their time. How much advancement would we have had if they hadn’t been killed? How many Edisons and Teslas died? Aristotles? Isaac Newtons? Who survives and gains political power? The Bushes, the Gores…the Obamas. Ugh.

Imagine if we didn’t have the State crushing everything and everyone. Life would be so much easier – and happier.

Wages stopped going up in 1973, again courtesy of the State. Two main things caused it to happen at that time – Nixon going off of the gold standard in ’71, allowing the Federal Reserve Bank (which is not federal, has no reserves, and if it’s a bank I’m a banana) to destroy the dollar through inflation, and the second thing was the oil crisis, in which we sent trillions of dollars to our enemies in the Middle East, instead of becoming energy self-sufficient and keeping that money in the U.S.

At the minimum, imagine how it would be if we had no Federal Reserve Bank destroying the value of the dollar through inflation. Imagine no national debt. Imagine the Fed not buying up the debt – “monetizing the debt.” The dollar would still be worth a dollar, not a penny when compared to 100 years ago.

I have estimated the average salary now would be $70,000 a year, but Tyler Cowan, an economist at George Mason University, estimates it would be over $90,000 a year. If what he writes is true, imagine how cheap a flying car and a disintegrator pistol would be! How much? Three months salary?

I consider the State to be the Blob. It’s a close to perfect metaphor. The State expands, with increasing inflation and national debt, growing taxes, more laws and regulations – the Blob. The Blob grows and civilization recedes. Only there’s no Steve McQueen to save us.

When I was about 12 years old, I read a story by Robert Heinlein called Waldo. One of the characters gets in his flying car and goes to the moon. I remember that night when I was outside, I looked at the moon and thought, “Darn.”

Imagine flying to the moon in your private car, maybe hitting a few golf balls around in your private spacesuit, and then flying home. Or imagine if some criminals try to break in your house. Bzzzt. No evidence. Why even call the police?

It drove me crazy then and it still drives me crazy now. It just isn’t fair. Someone deserves to be disintegrated for this.

World Bank: Food prices at "dangerous levels"

by Christopher Leonard, Ap Agribusiness Writer – Tue Feb 15, 4:39 pm ET

ST. LOUIS – Global food prices have hit "dangerous levels" that could contribute to political instability, push millions of people into poverty and raise the cost of groceries, according to a new report from the World Bank.

The bank released a report Tuesday that said global food prices have jumped 29 percent in the past year, and are just 3 percent below the all-time peak hit in 2008. Bank President Robert Zoellick said the rising prices have hit people hardest in the developing world because they spend as much as half their income on food.

"Food prices are the key and major challenge facing many developing countries today," Zoellick said. The World Bank estimates higher prices for corn, wheat and oil have pushed 44 million people into extreme poverty since last June.

The report comes a day before Finance ministers and central bank chiefs from the Group of 20 leading economies meet in Paris. Zoellick said he's worried some countries might react to food inflation by banning exports or implementing price controls, which would just aggravate the problem.

The World Bank's food price index rose by 15 percent between October and January alone. The increase has been driven by volatile global trading in wheat, corn and soybeans. Global corn futures more than doubled since this summer, from $3.50 to $7 a bushel, in part because of higher demand from developing countries and a growing biofuels industry.

Prices are rising in part because global grain traders have gotten jittery about historically low reserve levels of corn, wheat and soybeans, said Chris Nagel, an analyst with Northstar Commodity in Minneapolis. Growing demand from customers in China and elsewhere is putting pressure on the supply of most commodities, he said.

The U.S. Department of Agriculture predicted last week U.S. corn farmers will have just 675 million bushels of corn at the end of August, before next year's harvest begins. That's just an 18-day supply, Nagel said.

The slim reserves mean traders will likely bid up crop prices further at any weather event that reduces next year's planting.

"We need to get good crops, all around the world, in all of these commodities," Nagel said. "You just don't have much foot room for error.

The global price of fats and oils rose 22 percent and wheat rose 20 percent between October and January, according to the World Bank. The prices of sugar rose by 20 percent in that time.

Industrialized nations like the United States are insulated from the price increases because raw ingredients account for just a fraction of the total food costs. But in many developing counties, prices get transmitted more drastically.

Between June and December, wheat prices climbed 54 percent in Kyrgyzstan, 45 percent in Bangladesh and 16 percent in Pakistan, for example.

Zoellick warned that higher prices could stoke political instability in countries like Egypt and Tunisia. Both countries are big wheat importers and higher grain costs could aggravate social unrest as the countries form new regimes, he said.

"That's where the international system needs to try to be aware of these issues, and try to do things at a minimum not to exacerbate food prices," he said.

How To Fake An Economic Recovery

By Giordano Bruno - Neithercorp Press
Published on 02-16-2011
 
This may be a highly distasteful proposition, but just for a moment, I want you to sit back, and imagine that you are a member of the corporate banking elite. You are a walking talking disease ridden power mad pustule who naively believes himself intellectually superior to the vast majority of humanity and above the inherent laws of conscience, honor, and general good taste. You are a villain in the purest sense, in that you not only do great harm to the world, you actually SEEK to do great harm to the world, if only to benefit yourself and your exclusive circle of “friends”; a clan of degenerate blood thirsty sociopaths with delusions of omnipotence that stalk the night like Armani wearing Chupacabra exsanguinating the joy from poor unsuspecting cultures. You are capable of anything, and sadly, you take “pride” in this fact…

You aren’t “rich” in the traditional sense. You aren’t a “Bill Gates” or a “Donald Trump” (I’m beginning to wonder if Donald Trump is even solvent, or if his entire fortune is a special-effect courtesy of NBC). No, you don’t “make” money, you MAKE the money. You are a global financier. You are a central banker. You create the fiat that the rest of the country uses to sustain its fantasy economy. You dominate trade through monopoly and corporate fraud. You control the flow of currency through an economic system using fractional reserve banking, artificially pegged interest rates, and your ever trusty printing press. You put your substantial monetary clout behind BOTH major political parties, and groom presidential candidates to your globalist standards.

Any politician who desires to climb the ladder of power turns to you for assistance, not the voting public. You have a tremendous financial stake in every corporate news provider in the country, if not own them outright. You invite their top reporters to posh banquets, give them unlimited access to prominent social figures and high rollers, and fly them to private alcohol addled orgies in the middle of the California Redwoods (I wish this was all made up). Forget responsible journalism, they love hanging out with you, and would probably write whatever you tell them to.

Now that you have placed yourself in the tight fitting shoes of the “enlightened few”, I want you to imagine that you have engineered an implosion in national credit sectors using ultra-low interest rates to fuel mortgage and derivatives bubbles that would contract at an unprecedented pace once it is revealed to the wider investment world that those equities which they prized only days before are now “toxic”, essentially worthless, due to mass debt defaults on loans which never should have been made in the first place. Yeah, you’re a real dirtbag.

Of course, you aren’t finished yet! Your ultimate goal is centralization, and the key to centralization is to remove all options available to the masses but one; the option which garners you the greatest amount of dominance. A global economic system based on a single world currency and a single unaccountable governing body would be ideal. What would you call this world currency? I don’t know, how about something innocuous sounding like….Special Drawing Rights (SDRs), which you can then label as a mere “basket of currencies” when it is really a parasitic financial instrumeunent meant to absorb currencies until it replaces them completely:
http://money.cnn.com/2011/02/10/markets/dollar/index.htm

http://www.rte.ie/news/2011/0214/g20-business.html

In order to begin instituting this world currency, you would first need to remove the standing world reserve currency from its exalted position, that currency being the U.S. dollar. This seems rather impossible to many mainstream analysts who cannot fathom the possibility of a breakdown in the mighty Greenback, but you have already set the stage. You have created a progressive debt singularity so immense that no amount of fiat, no amount of taxation, no amount of austerity could ever satiate its hunger. You now have the perfect excuse to print the dollar with wild abandon until its withered, corpsified remains are six feet underground, leaving the door wide open for the tap dancing fast-talking SDR to take its place.

The issue is, how do you convince the general public that all is well until you are ready to unleash hyperinflation and fiscal Armageddon? How do you make them believe with all their hearts that they are not in the midst of a debt meltdown and the end of their financial sovereignty, but basking in a full-on economic recovery?!

You can’t stop wealth destruction now that the avalanche has been set in motion. You can’t stop inflation and dollar devaluation (nor would you want to. Hey, you’re evil incarnate, remember?). The effects on mainstreet are beyond your ability to hide, but, what you CAN manipulate, are the statistics and indices that Americans rely on for psychological comfort. You give everyone a blindfold and a cigarette and you do what you do best; lie!

Here is a step by step guide to fabricating an economic recovery out of thin air….

Don’t Count The Unemployed, Discount Them: Jobless people are a real downer and a pesky nuisance because they represent living breathing proof that a recovery is not taking place. By most standards, a recovery in jobs markets can be claimed if meaningful evidence shows a return to unemployment standards (normal unemployment) set before the recession / depression was triggered. If you are a global banker today, however, this will not do. Instead, you simply change the definition of “normal unemployment”. Thus, the debilitating jobless rate which was originally thought of as “bad”, is now thought of as “natural”. You must then publish long-winded white papers using more subjective statistics devoid of common sense while feigning a logical pretense:
http://www.frbsf.org/publications/economics/letter/2011/el2011-05.html

This only satisfies a small portion of the populace, though. Next, you must rig the manner in which unemployment is calculated to always overlook certain subsections of jobless. Never count those people who have been unemployed so long that they no longer receive benefits. Always count people who are underemployed as fully employed, even if they are only able to scrape together ten hours a week through part time McSlavery. After this, change the manner in which raw data on unemployment is actually collected.

First, the Labor Department derives most of its raw data on unemployment not through any traditional mathematical means, but through two separate surveys which are open to wide interpretation; an establishment survey, and a household survey. The establishment survey is what we hear about at the beginning of every month, while the household survey tends to float under the mainstream radar. In 2009 and 2010, the Labor Department deemed the household survey data (a phone driven survey of 60,000 households) “more reliable” for indicating job growth, because it was supposedly accurate in counting small business hiring and self-employment. So, you have two separate surveys (unscientific indicators of employment) combined together to produce a job growth rate number, and an unemployment percentage, both of which represent, at the most, a GUESS on the current state of jobs in this country.

While the establishment survey showed only 36,000 jobs created, the household survey somehow showed around 600,000 new jobs created!?:
http://www.bls.gov/news.release/pdf/empsit.pdf

Basically, the BLS is asking you to believe that over 600,000 people either started their own businesses, or were hired by home based businesses in the month of January alone. I’m curious as to where all the capital inflows are coming from to launch such a revolution in home entrepreneurship in the middle of the greatest credit crisis in history. Oh well, if the Labor Department says it’s true, it must be…

The juxtaposition of odd data collection methods is the reason why the government was able to claim a drop from 9.4% to 9% in the jobless rate while announcing only 36,000 jobs created! The household survey has become an incredibly useful tool for generating arbitrary employment data which can be molded to say whatever government officials and central bankers want it to say. Anyone who controls the source data for a calculation controls the outcome of that calculation. It’s that simple.

What I wouldn’t want, if I was the Labor Department, is for some outside independent citizens group to monitor my survey methods while in progress. That would make life for a statistical huckster very difficult indeed.

As Long As Stocks Are Green, The World Is Golden: Near zero interest rates can be very useful if a central bank wishes to throw a tidal wave of fiat into a particular index in order to make it appear healthy. Certainly, the Fed has avoided admitting to any manipulation of the stock market. QE measures are all “above the board”, and all is well in Bernanke’s Mayberry. A question arises here though that desperately begs to be answered; if the stock market’s meteoric rise from near destruction to the 12,000 point mark is “real”, and completely in tune with a legitimate recovery, then why is the Fed still keeping interest rates at near zero after almost three years, and why are they continuing quantitative easing measures? Could it be that without constant liquidity injections from the Fed, the stock market would once again collapse like a wet paper sack? We know that in 2009, it was revealed that bailout funds which were supposed to go towards muting the effects of toxic bank assets were actually being pumped into the equities of healthy banks instead, meaning,the money has not been allocated to the areas promised:
http://www.associatedcontent.com/article/143606/more_shocking_news_on_2009_bailout.html

We also know that top hedge fund managers have openly stated that stocks will remain bullish because QE funds are propping up the market:
http://www.marketwatch.com/story/tepper-tells-cnbc-fed-will-prop-up-market-2010-09-24

And, frankly, if you are a global banking cartel intent on keeping the American people in the dark, it makes perfect sense to prop up stocks. A Dow in the green is like a mass dose of fiscal lithium; it calms investors into a stupor. Even people who are otherwise unconcerned about economics will keep track of the Dow as if it is a solid indicator of their personal financial safety. A great test would be to observe market reactions to a Federal Reserve interest rate hike and a freezing of QE in order to counter inflation. Will the Dow stand on its own two feet then? I seriously doubt it, but then again, I don’t know that the Fed will ever raise interest rates again…

Inflation? What Inflation?: Unmitigated inflation spells doom for any society. It’s like some monetary based animal instinct deep down in our collective unconscious. The moment we hear the word “inflation” or see prices rise dramatically, we revert to survival mode and begin honing our mammoth bone battle mallets. Governments and central banks throughout history have made it their top priority to hide the effects of inflation from the citizenry at all costs.

To mask inflation is nearly impossible, especially where commodities and base goods are concerned. That’s why our government and private central bank calculate the Consumer Price Index (CPI) without counting food or energy. Most grains and crude oil have doubled in price over the past year alone, and this does not reflect well on the safety of the dollar, or the effectiveness of liquidity measures by the Fed. China, whose inflation is but a prequel to our own, is also distancing food and energy price surges from its CPI numbers, giving the false impression of leveling markets:
http://www.zerohedge.com/article/china-lowers-weighting-surging-food-prices-cpi

Corporate retail chains have a tendency to absorb rising prices of base goods to avoid alienating their customer foundation, hoping that the increases are temporary. When retailers realize that prices are not going to drop back down, they eventually relent, and shelf costs skyrocket. The bottom line is clear; overall worldwide food averages were up over 28% in 2010:
http://www.fao.org/worldfoodsituation/FoodPricesIndex/en/

Crude oil prices continue to hover near the $90 mark even though inventories are at a 20 year high:
http://www.zerohedge.com/article/gasoline-inventories-jump-20-year-high-gas-price-surges

The World Bank is now warning of possible disasters (which they helped create) in the wake of “dangerous price levels”:
http://www.reuters.com/article/2011/02/15/us-worldbank-food-idUSTRE71E5H720110215

Our government’s response? Complete denial that there is any significant threat of inflation. Denial that overprinting of the dollar and its subsequent devaluation has anything to do with rising prices. Scapegoating everything from weather, to speculators, to the fake “recovery” itself for price spikes. The longer they keep the terminology of inflation out of the mainstream, the less Americans are likely to prepare for an onslaught of the dollar.

Create Debt To Pay Off Debt: This is pretty self explanatory. If foreign investors want nothing to do with you, your explosive national debt, or your depreciating currency, where is your government going to get the money to continue spending like a drunken trophy wife at Macy’s? If you default, the jig is up, and no one will buy your recovery yarns. Instead, print even more fiat and use it to purchase your own Treasury bonds! This serves two purposes; first, it props up the federal bureaucracy which gives the impression of stability (at least for a time), and, it furthers your goal of squeezing the dollar like a grape.

Remove All Checks And Balances: If you plan on decimating an economy, you can’t very well have people pointing fingers at you while you do it. That would be inconvenient. It’s funny, but for years, ratings agencies like Moodys helped global banks facilitate the mortgage and derivatives crisis by categorizing worthless assets as AAA securities. Without them, no one would have invested in such garbage in the first place, and the banking fraud would have been immediately exposed. Now that ratings agencies are finally doing their job and downgrading the creditworthiness of banks and countries that possess extreme liabilities, the SEC is moving to marginalize them:
http://www.reuters.com/article/2011/02/09/us-financial-regulation-creditraters-idUSTRE7180OD20110209

Interesting that as the U.S. nears a possible credit downgrade, we suddenly no longer care what ratings agencies have to say.

The SEC in itself is one enormous joke, and in no way a practical overseer of banking activity. The organization has shown itself to be either fantastically incompetent, or deliberately indifferent to ongoing financial fraud. I never thought I would find myself agreeing with a cretin like Bernie Madoff, but according to the middle-weight Ponzi artist, global banks he dealt with, like JP Morgan and HSBC, had to be perfectly aware of the scam he was undertaking, otherwise, it could not have been possible:
http://www.reuters.com/article/2011/02/16/us-madoff-interview-idUSTRE71F0QD20110216

Likewise, the SEC’s complete lack of proper investigation into such activities turned Wall Street into a globalist playground where much bigger conmen than Madoff have nested and bred like fleas. It’s not that the system needs more regulation, or more legal wrangling; this would accomplish nothing, because the system is regulated by the criminals! Therefore, new laws can be enacted in concert, and the government can deem the system reformed and recovered, all while the underlying corruption remains untouched. If the poison that instigated the fall of the markets is not uprooted, treachery will continue to reign supreme, and healthy markets a childish illusion.

The Creeping Terror

Two years ago I was in my local Borders bookstore and noticed that they had downsized their stock selection by what looked to be nearly a third. I made a point to ask if this was a chain wide phenomenon. Most employees I talked with said yes. I then asked if they had begun cutting employee hours by significant margins and specifically laying off longtime workers that had built up substantial pay increases. Again, the consensus was yes. Finally, and most importantly, did Borders discuss these changes with their staff in a manner that was informative and open, or, was there a lot of confusion amongst employees as to what exactly was going on? The response was that they were overwhelmingly bewildered by Borders’ lack of clear communication as to the direction of the corporation.

My suggestion to them was to start looking for another job, because their company was about to declare bankruptcy. They, of course, denied this was remotely likely:
http://online.wsj.com/article/SB10001424052748704329104576138353865644420.html

It may sound like a stretch, but the reason I bring up Borders’ impending chapter 11 is because, to me, it represents a microcosm of the creeping nature of economic collapse, especially when that collapse is being wielded and delegated.

Borders has been on the verge of default for quite a while. Did they refuse to relay this information openly to their employees because they selfishly wanted to maintain profit margins just a little longer until they were ready to pull the plug? Of course! Do global bankers with aspirations of a centralized currency keep the true destabilization of the market spectrum and the coming international dollar dump to themselves because in the end they will benefit from our shock and awe? Of course!

Whether a person loses everything all at once, or a piece at a time, the end result is the same, however, there is something especially cruel in the idea of fiscal theater; the act of inspiring false hope that a financial environment is sound when it has, in truth, already suffocated. Why would our modern day robber barons put so much energy into constructing a fake recovery? There are many reasons, but first and foremost, to create apathy. To lure us towards inaction. To swindle us into assuming the storm will blow over, and all will return as it was. Unfortunately, recovery without intense restructuring of our economic system is impossible. The fundamentals do not support the suggestion in the slightest. The question is, who will be at the helm when the dust settles and this restructuring does eventually occur? Will the American people take the lead, as they should, and commit to a concrete free market rejuvenation of our financial environment? Or, will we sit back yet again, and let the banksters set us up for the next grand disaster?

How Big Business Subverts Democracy

Wednesday, February 16, 2011 by The Guardian/UK
by Joseph Huff-Hannon and Andy Bichlbaum

Defendants had a common plan to engage in acts … that deceived the press and public … These infringing and fraudulent acts are antithetical to public debate on important issues, because they prevent the public and the press from knowing the true position … In short, such conduct is destructive of public discourse, and cannot be tolerated under the law. – Chamber of Commerce lawsuit against the Yes Men and "John and Jane Does 1 through 20", November 2009

Just a couple of years ago, most people had no idea what the Chamber of Commerce did. Aren't they mom and pop's small-business lobby in Washington? Now, thanks in large part to the work of Chamber opponents, we've come to learn that the biggest business lobby in the world is also one of the biggest impediments to real democracy in the US, and that they're a huge force in opposing healthcare reform, employee free choice and other labour legislation, veterans' rights, banking regulations and, of course, transparency.

The US Chamber of Commerce is the public face of a corporatism that is hijacking our democracy – and so dramatically limits any chances of meaningful reform. Even local chambers, fed up, have been leaving the US Chamber en masse. But what might it take for the "Facebook generation" in the US to topple, Tunisia- or Egypt-style, this arrogant and destructive force in American politics?

Late last week, another, still-unfolding leak story revealed the anti-democratic activities of private security firms, apparently hoping to sell their services to the US Chamber of Commerce as a means to silence its critics. Despite reports on the Centre for American Progress blog suggesting that contacts took place between representatives of the Chamber of Commerce where such proposals were made, the Chamber has denied all knowledge of them and has described such reports as a "smear campaign".

In 2009, the Chamber sued members of the Yes Men, an activist group that satirises powerful corporate foes, for posing as Chamber reps and announcing, to a room of reporters, that the Chamber was doing an about-face on their dangerous opposition to climate-change legislation. The media had a good laugh at the Chamber's expense (thanks in large part to a real Chamber representative who barged into the press conference in a rage), but the Chamber found the whole thing distinctly unfunny, and promptly filed suit. (Incidentally, the same law firm involved in the "Chamberleaks" affair, Hunton and Williams, is retained by the Chamber as its attorney in this suit against the Yes Men.)

Nutty indeed. But last week's spectacular series of leaks, counter-leaks and counter-counter-leaks revealed (and continues revealing) a disdain for free speech that shocked even us. It turns out that a consortium of private "cyber-security" firms were developing a $2m proposal to use a variety of sophisticated disinformation techniques to destroy the reputations of Chamber opponents, including public-interest, consumer-advocate and worker-rights groups such as US Chamber Watch and Change to Win. (The same firm was reportedly also proposing, in a presentation for Bank of America, a plot to destroy WikiLeaks, and to "neutralise" constitutional scholar Glenn Greenwald of Salon.com.) Like the Chamber of Commerce, Bank of America has denied knowledge of these plans.

More specifically, the firm proposed to (according to a leaked document) "create a false document, perhaps highlighting periodical financial information, and monitor to see if US Chamber Watch acquires it". To help make this happen, they'd "create a fake insider persona and generate communications" with Change to Win, a labour group the firm theorised might be allied to Chamber Watch. Maybe they'd even "create two fake insider personas, using one as leverage to discredit the other while confirming the legitimacy of the second". But it didn't stop there: the security firms proposed passing off the faked documents they'd created as the fabrication of Change to Win.

We wish we could credit these jokesters with some originality – especially given the fees they were planning to charge – but there's actually nothing new here. These dirty tricks are straight out of the playbook of COINTELPRO, the FBI's notorious 1960s programme of psychological warfare that, among other things, planted false reports and forged letters to destroy reputations. Lately, COINTELPRO tactics have been making a comeback on the right, inspiring a whole new generation of "dirty tricks" operators, along with their patrons in the rightwing media and their sponsors in Congress. But it isn't just "gross and offensive" kids (Andrew Breitbart's words) who are taking up old rightwing techniques. It's actually a very big business.

According to a security expert quoted in a recent New York Times article, "the 'competitive intelligence' industry had 9,700 companies offering these services, with an annual market of more than $2bn." What that industry does is (in the own words of one firm) to "discredit, confuse, shame, combat, infiltrate, fracture" opponents, whether those opponents are rival businesses or, as in this case, groups standing up for democracy, free speech and government transparency.
Why now? Dirty tricks aren't new, so why have they only now hit the corporate mainstream? Why might firms that specialise in such tactics consider that the most cashed-up big-business lobby in the world, with a daily budget nearing $400,000, might be a potential customer? After all, it has the funds at its disposal to enable it just to buy much of the media, not to mention a good chunk of Congress.

What this affair highlights is the crass, anti-democratic and increasingly desperate quality of our current version of corporate influence on politics. With the department of justice showing no signs of investigating, perhaps the Facebook generation in the US can learn a thing or two from the brave citizens in the Middle East.

Maybe we, too, have just been waiting for the right leak.

A Real-Market Alternative

The economic choice we face is no longer between capitalism and communism, but rather between Wall Street and Main Street.
by David Korten
Wednesday, February 16, 2011 by YES! Magazine

In America we are taught from birth that capitalism is synonymous with markets, democracy, and individual liberty. Whatever its flaws, the only alternative is communism, or so we are told.

This sets up a false and dangerously self-limiting choice between two economic models both of which create concentrations of power that stifle liberty and creativity for all but the few at the top.

Communism is dead. As we now look for solutions to our current economic crisis, the relevant distinction is not between capitalism and communism, but rather between Wall Street and Main Street.

The Wall Street economy is centrally planned and managed by big banks and corporations for which money is both means and end. The primary goal is monopoly control of markets, physical resources, and technology to maximize profits and bonuses.

Main Street economy is comprised of local businesses and working people who self-organize to provide livelihoods for themselves, their families, and their communities producing real goods and services in response to community needs. Main Street exemplifies the market economy envisioned by Adam Smith; Wall Street is the antithesis.

The stronger the relations of mutual trust and caring and the more equitably power is distributed, the more the market becomes self- policing and the less need there is for formal governmental intervention.

Smith believed that people have a natural and appropriate concern for the well-being of others and a duty not to do them harm. He also believed that government has a responsibility to restrain those who fail in this duty.

Smith and the political economists who followed in his tradition developed an elegant theory of the market’s capacity to self-organize in the community interest based on a number of carefully articulated assumptions, including the following:

• Buyers and sellers must be too small to influence the market price and must honor basic principles of honest dealing.
• Income and ownership must be equitably distributed.
• Complete information must be available to all participants, and there can be no trade secrets.
• Sellers must bear the full cost of the products they sell and incorporate it into the sale price.
• Investment capital must remain within national borders, and trade between countries must be balanced.
• Savings must be invested in the creation of productive capital rather than in speculative trading.

These are the characteristics of a real market economy. Wall Street capitalism violates them all.

Capitalism is a term originally coined to refer to an economic and political regime in which the ownership and benefits of capital are appropriated by the few to the exclusion of the many who through their labor make capital productive. It describes Wall Street perfectly.

The “free market,” a code word for an unregulated market, is a contradiction.

Markets work wonderfully within a framework of clear rules and a caring community. The stronger the relations of mutual trust and caring and the more equitably power is distributed, the more the market becomes self-policing and the less need there is for formal governmental intervention. An economy comprised of powerful corporations governed by a culture of greed and a belief that their only legal duty is to maximize their profits requires a strong and intrusive governmental hand to limit the abuse and clean up the messes.

The “free market,” a code word for an unregulated market, is a contradiction. A market without rules facilitates and encourages the unlimited concentration and abuse of corporate power unconstrained by market discipline and democratic accountability.

Market fundamentalists selectively cull bits and pieces of market theory to argue that the public interest is best served when economic power is concentrated in unregulated globe-spanning mega-corporations engaged in monopolizing resources and externalizing costs for short-term financial gain. They distort market theory beyond recognition.

Like cancer cells that attempt to hide from the body’s immune system by masking themselves as healthy cells, Wall Street institutions attempt to conceal themselves from society’s immune system by masquerading as agents of a healthy market economy.

The credit collapse penetrated the facade to reveal the inner workings of Wall Street capitalism as a criminal syndicate engaged in counterfeiting, predatory lending, usury, tax evasion, fraud, and extortion. It may be legal because Wall Street buys the politicians and writes its own rules, but it should be illegal and treated accordingly.

A criminal syndicate is “fixed” by shutting it down through the enforcement of laws that protect the public interest. You “fix” a cancer by removing it and rebuilding the healthy tissue. Main Street is the healthy tissue from a healthy real market economy can be built.

Goldman Should Give Back $2.9 Billion to Taxpayers

Wednesday, February 16, 2011 by McClatchy Newspapers
by Gregg Gordon
WASHINGTON — Irked that Goldman Sachs appears to have reaped a $2.9 billion taxpayer-aided windfall on an investment of a mere $20 million, some experts and watchdogs say the Wall Street giant should return the money to the U.S. Treasury.

"This wasn't rocket science, what was going on," said Michael Greenberger, a University of Maryland law professor who specializes in complex securities. "Anybody who understood this market knew that there was the potential for Goldman to later unwind proprietary trades. But the Obama administration and the Fed simply never inquired." "It's a very simple call to make," said Sylvain Raynes, a frequent Goldman critic who's an expert in the kinds of deals in which the investment bank landed an apparent jackpot. "They should never have been given this money, and they should give it back."

The assessment by the Financial Crisis Inquiry Commission also exposed a potentially huge regulatory omission in the rescue of the insurance giant American International Group, which was the conduit for more than $90 billion in tax dollars to U.S. and European banks.

It's now clear that the Federal Reserve Bank of New York, which quarterbacked the hurried, $182 billion bailout of AIG to avoid a meltdown of global financial markets, did little to guard against windfalls for major banks and investment banks.

The financial crisis panel's final report late last month found that Goldman's $2.9 billion payout came on "proprietary" trades — investments in which the firm used its own money rather than the more typical deals completed on behalf of clients.

The panel, inquiring into a McClatchy report last June, said that Goldman got $1.9 billion of the payoff after the taxpayer bailout of AIG began.

Critics say that in the rush to save AIG and avert systemic collapse of the financial markets, regulators treated Goldman like everyone else. But Goldman was different.

While most banks that got billions of dollars from AIG simply relayed the money to clients they'd insured against losses, Goldman got to collect a more than 100-fold return on a number of securities that soured, because none of its clients was involved.

The prospect of a repayment by Goldman — the firm that drew the most outrage over Wall Street's role in the financial crisis — would be welcome news now as President Barack Obama has been forced to propose huge cuts in federal programs as a way of dealing with a $1.6 trillion budget deficit for fiscal 2012.

Steve Ellis, of the government waste watchdog Taxpayers for Common Sense, said that "It's up to the federal government to demand accountability and transparency" regarding Goldman's payout.

"We can't afford to shell out cash without asking hard questions and demanding that the very same actors that got the economy into this mess take some of the burden on themselves," he said.

Congress could try to impose a tax on banks' profits from the bailout or adopt some other legislation to "claw back" the money, but it would be difficult because Goldman received it unconditionally, said Michael Greenberger, a University of Maryland law professor who specializes in complex securities. The New York Fed attached no strings to the money and let AIG decide how much Goldman would get.

Goldman, which paid a whopping $31.6 billion in employee bonuses in the past two years, denies that the trades in question were proprietary, signaling that it has no plans to send more money back to Washington.

In 2009, Goldman was quick to repay a $10 billion loan from a Treasury Department program to bail out banks. Last summer, the firm paid an additional $550 million to settle a related civil fraud suit filed by the Securities and Exchange Commission.

Goldman spokesman Michael DuVally rejected the characterization of the AIG payment as a windfall.

"We used the money we received from AIG to meet our obligations to clients with whom we hedged on the other side of these trades," he said.

Joseph Mason, a finance professor at Louisiana State University-Baton Rouge who has advised federal banking regulatory agencies, said that most large banks manage their risks with so many contrary trades that assertions they profited from a particular deal "can be obviated very quickly."

The issue, however, goes to the heart of the controversy over whether any of the megabanks that helped cause the crisis got sweetheart deals as part of the bailout.

"In the heat of the moment, the Treasury and the Fed weren't worried about who was participating in the housing bubble . . . or their level of involvement" when they shelled out money, Mason said.

"You run up the market, you cause a nationwide crisis and you're given money to continue. That sounds to me like an incentive to go out and do it again."

The New York Fed said in a statement that the bailout protected Americans, as well as AIG's policyholders and trading partners "from the catastrophic consequences of AIG's disorderly failure during the worst financial crisis in generations, (and) allowed AIG to meet its contractual obligations without discrimination." A New York Fed spokesman declined to comment on whether taxpayers backstopped any other proprietary trades

Greenberger, however, sharply criticized the handling of the AIG bailout, naming Federal Reserve Chairman Ben Bernanke; Treasury Secretary Timothy Geithner, the former New York Fed president; and Larry Summers, until recently Obama's chief economic adviser.

"This wasn't rocket science, what was going on," said Greenberger, who was a senior staffer at the Commodity Futures Trading Commission during the Clinton administration. "Anybody who understood this market knew that there was the potential for Goldman to later unwind proprietary trades. But the Obama administration and the Fed simply never inquired.

"They had all the power at that point. Goldman needed that money. They were on their knees, and that was the point at which hard bargaining should have been taking place."

However, Greenberger said he worries less about recovering taxpayer money than about preventing a future financial meltdown, because the banking industry is lobbying fiercely against rules implementing recent congressional overhauls by improving market transparency and limiting risk-taking.

AIG's big debts to Wall Street emanated from the decision of its highflying London-based Financial Products unit to write insurance-like protection for major banks and investment banks on some $78 billion in offshore securities, most backed by subprime or similarly dicey home loans. In many cases, the banks had written identical insurance protection for the buyers of the securities.

When the housing crash sank the securities' value, AIG was sent reeling toward bankruptcy by a chorus of banks demanding payment of tens of billions of dollars under the terms of the contracts, known as credit-default swaps.

Geithner, Treasury secretary Henry Paulson and Ben Bernanke elected to save AIG from bankruptcy, partly to keep banks afloat. As part of the rescue, the New York Fed directed AIG to cover the full face value of $62 billion of most of its swap contracts with Goldman and other U.S. and European banks.

Goldman, which collected $14 billion of those funds, said it merely forwarded the money to investors for whom it had written the same protection.

But the inquiry panel concluded that Goldman cashed in on another $5 billion in more exotic bets on so-called synthetic securities that weren't back-to-back trades. With AIG Financial Products unworried about a housing downturn, Goldman paid 0.1 percent of the securities' face value, or about $5 million annually, to bet in 2005 and 2006 on the default of a set of securities that neither party owned.

DuVally, the Goldman spokesman, said that the deals "were client-related, not proprietary transactions," emphasizing that, "The idea that we received a . . . windfall is wrong."

DuVally declined to detail the hedges — bets in the opposite direction — and wouldn't say whether Goldman had anything close to $2.9 billion at stake.

Another $1 billion in Goldman-AIG trades had yet to be unwound as of July.

It's still unclear whether other banks also collected windfalls for proprietary bets.

The French colossus Societe Generale, investment bank Merrill Lynch (now owned by Bank of America) and Germany's Deutsche Bank collected a combined $22 billion from AIG as part of the 2008 settlements. Deutsche Bank also insured billions of dollars in securities backed by commercial real-estate loans.

Spokesmen for AIG and all three banks declined to comment.