This is WAY cool! It's a 360 degree view from INSIDE Texas Stadium of its implosion as it was being demolished. Don't think the script is working, so here is the link:
FAREWELL TO TEXAS STADIUM
FAREWELL TO TEXAS STADIUM
Saturday, May 1, 2010
Calvin and Hobbes Download quotes
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ever produced by Bill Watterson.
Boston water emergency
'Boil-water' order issued for nearly 2 million in Mass. May 1, 2010
A major pipe bringing water to the Boston area has sprung a "catastrophic" leak and is dumping eight million gallons of water per hour into the Charles River. Governor Deval Patrick declared a state of emergency and issued a "boil-water" order for Boston and dozens of other communities.
"The water is not suitable for drinking. ... All residents in impacted communities should boil drinking water before consuming it," he said at a news conference this afternoon.
Patrick said the state had asked bottled water companies to make more water available in the state and emergency drinking water supplies could also be made available to the affected communities through the National Guard.
"I ask everyone to check in on elderly or vulnerable neighbors," he said, and he asked people to avoid "unnecessary use of water, such as washing cars and lawnwatering."
The break is in a 10-foot-diameter pipe on Recreation Road in Weston, the authority said in a statement.
"That is a catastrophic break and we are currently activating the reserves," said MWRA spokeswoman Ria Convery. MWRA officials said nearly two million people would be affected in 30 cities and towns.
People flocked to stores to buy bottled water when they heard the news. In Lexington, an hourlong run on water cleared a supermarket's shelves. In Boston, Mayor Thomas M. Menino declared a state of emergency and took a number of steps to inform residents, including reverse 911 calls and sending officers into the streets with bullhorns. Downtown restaurateurs declared the boil order a major inconvenience.
The failed tunnel connects the MetroWest Tunnel to the much older City Tunnel, as water flows east through the suburbs from reservoirs in central Massachusetts towards Boston, officials said.
MWRA Executive Director Fred Laskey said the leak began between 10 a.m. and 11 a.m. today and the pipe continued to break until it failed "catastrophically."
The "good news" is that "we continue to maintain the flow for firefighting" and for toilets and other non-drinking purposes, said Laskey, who joined Patrick at a news conference at the Massachusetts Emergency Management Agency headquarters in Framingham.
Because of turbidity it is impossible to see down to the leak and contractors and engineers have to wait until the tunnel drains – hopefully by tomorrow – until they can figure out what went wrong, Laskey said.
In a case of what a grim Laskey called “Murphy’s Law”, a system that would have protected against this catastrophic failure is under construction.
A far older aqueduct built in the 1940s – the Hultman - that carried water on the last leg of its journey to Greater Boston – was so riddled with leaks MWRA officials built the MetroWest Tunnel seven years ago. The Hultman was then shut off to repair the leaks and a series of connector pipes were built – much like the one that failed – to ensure clean water gets to the City Tunnel and then to faucets. Now, Laskey said, "we thought we could rely on this connector during that rehabilitation. It is Murphy’s Law."
The City Tunnel carries an average of nearly 179 million gallons per day towards the city, officials said.
Convery, the MWRA spokeswoman, said that a backup system would be used, which would pull water from the Chestnut Hill Reservoir and Spot Pond Reservoir, as well as an alternate aqueduct, the Sudbury Aqueduct.
But she said the water that flows from the system would need to be boiled. Communities as far north as Wilmington and as far south as Stoughton would be affected.
Water gushed out from the ground at the MWRA facility on Recreation Road near Interstate 95 in Weston this afternoon and flowed rapidly downhill into the Charles River. Crews stood by, waiting for the water to be shut off, as a crowd of reporters watched.
Laskey said he could not speculate how long the leak would take to fix. However, if a temporary patch to the steel pipe does not work, a new custom-made piece of pipe may have to be created.
“I don’t really want to speculate,’’ Laskey said at the scene in a phone interview. “We gotta get there to know.”
The state Department of Conservation and Recreation said the millions of gallons pouring into the Charles would not be a problem, even as the river’s elevation has risen.
“Our dams can handle this,’’ said spokeswoman Wendy Fox.
Tom Lindberg, an MWRA spokesman, said no homes or properties in the immediate area were affected by the rushing water.
The MWRA system provides water to a total 48 communities, according to the authority's website. The water comes from the Quabbin Reservoir, 65 miles west of Boston, and the Wachusett Reservoir, 35 miles west of Boston, and flows through aqueducts east into the Boston area.
"The water is not suitable for drinking. ... All residents in impacted communities should boil drinking water before consuming it," he said at a news conference this afternoon.
Patrick said the state had asked bottled water companies to make more water available in the state and emergency drinking water supplies could also be made available to the affected communities through the National Guard.
"I ask everyone to check in on elderly or vulnerable neighbors," he said, and he asked people to avoid "unnecessary use of water, such as washing cars and lawnwatering."
The break is in a 10-foot-diameter pipe on Recreation Road in Weston, the authority said in a statement.
"That is a catastrophic break and we are currently activating the reserves," said MWRA spokeswoman Ria Convery. MWRA officials said nearly two million people would be affected in 30 cities and towns.
People flocked to stores to buy bottled water when they heard the news. In Lexington, an hourlong run on water cleared a supermarket's shelves. In Boston, Mayor Thomas M. Menino declared a state of emergency and took a number of steps to inform residents, including reverse 911 calls and sending officers into the streets with bullhorns. Downtown restaurateurs declared the boil order a major inconvenience.
The failed tunnel connects the MetroWest Tunnel to the much older City Tunnel, as water flows east through the suburbs from reservoirs in central Massachusetts towards Boston, officials said.
MWRA Executive Director Fred Laskey said the leak began between 10 a.m. and 11 a.m. today and the pipe continued to break until it failed "catastrophically."
The "good news" is that "we continue to maintain the flow for firefighting" and for toilets and other non-drinking purposes, said Laskey, who joined Patrick at a news conference at the Massachusetts Emergency Management Agency headquarters in Framingham.
Because of turbidity it is impossible to see down to the leak and contractors and engineers have to wait until the tunnel drains – hopefully by tomorrow – until they can figure out what went wrong, Laskey said.
In a case of what a grim Laskey called “Murphy’s Law”, a system that would have protected against this catastrophic failure is under construction.
A far older aqueduct built in the 1940s – the Hultman - that carried water on the last leg of its journey to Greater Boston – was so riddled with leaks MWRA officials built the MetroWest Tunnel seven years ago. The Hultman was then shut off to repair the leaks and a series of connector pipes were built – much like the one that failed – to ensure clean water gets to the City Tunnel and then to faucets. Now, Laskey said, "we thought we could rely on this connector during that rehabilitation. It is Murphy’s Law."
The City Tunnel carries an average of nearly 179 million gallons per day towards the city, officials said.
Convery, the MWRA spokeswoman, said that a backup system would be used, which would pull water from the Chestnut Hill Reservoir and Spot Pond Reservoir, as well as an alternate aqueduct, the Sudbury Aqueduct.
But she said the water that flows from the system would need to be boiled. Communities as far north as Wilmington and as far south as Stoughton would be affected.
Water gushed out from the ground at the MWRA facility on Recreation Road near Interstate 95 in Weston this afternoon and flowed rapidly downhill into the Charles River. Crews stood by, waiting for the water to be shut off, as a crowd of reporters watched.
Laskey said he could not speculate how long the leak would take to fix. However, if a temporary patch to the steel pipe does not work, a new custom-made piece of pipe may have to be created.
“I don’t really want to speculate,’’ Laskey said at the scene in a phone interview. “We gotta get there to know.”
The state Department of Conservation and Recreation said the millions of gallons pouring into the Charles would not be a problem, even as the river’s elevation has risen.
“Our dams can handle this,’’ said spokeswoman Wendy Fox.
Tom Lindberg, an MWRA spokesman, said no homes or properties in the immediate area were affected by the rushing water.
The MWRA system provides water to a total 48 communities, according to the authority's website. The water comes from the Quabbin Reservoir, 65 miles west of Boston, and the Wachusett Reservoir, 35 miles west of Boston, and flows through aqueducts east into the Boston area.
FCC Should Not Dictate Programming
Genachowski Says commission will be "active partner" in supporting public media
By John Eggerton -- Broadcasting & Cable, 4/30/2010
The FCC will be an "active partner" in supporting public media as one response to a crisis in journalism, says FCC Chairman Julius Genachowski, but he also said that "this agency cannot and should not dictate programming."
Saying that whatever the FCC does, it must be "in the full spirit of the First Amendment," the chairman added that "nothing should ever be done to hobble the independence of the press."
That came in opening remarks from the chairman at a daylong workshop on the future of "Public and Other Noncommercial Media in the Digital Era," the commission's second workshop in its ongoing review of the future of media.
The first workshop focused on commercial media.
Genachowski said several seismic shifts were occurring simultaneously, prompting profound change in both noncommercial and commercial media.
He said those changes have disrupted models of journalism and threatened to create a crisis for democracy. He also said it was not about preserving the journalistic industry or journalist's paychecks, but about the citizen's access to local news and information.
The broadband plan proposes creating a media trust fund powered by what the chairman said would be "voluntary spectrum auctions."
He said he was pleased to see noncoms working together. "Keep it up," he said. "This is a big moment, and the nation is depending on you to rise to it."
Commissioner Michael Copps called it a great day, with as impressive a group as had ever been assembled at the FCC--it included the heads of CBP and PBS.
Copps said there were two problems: the "very immediate" challenge facing traditional media "on life support, where there is still life." The second, he said, was the future of online media. But he said they were actually one challenge: "Making sure that we have the information infrastructure that provides citizens what they need to know so they can make intelligent decisions about their future."
He called public media the jewel of American broadcasting, and said it was amazing what they did with the "poverty" of funding for the system.
CPB Chair Ernest Wilson, one of the panelists at the workshop, said noncom broadcasting needs to morph into public service media that uses new technological tools and platforms.
But he said tools are not enough. They also need the wisdom to use it wisely, and the courage to provide public interest information. But that will mean discarding old practices and institutions.
He said that if noncoms continue to do this, democracy will be strengthened. "We are not yet fully a public service media," he said, but he also said they were beyond, and better, than simply public "broadcasting." We have to do digital, dialog and diversity, he said, and to do that will need a fourth D: dollars.
Genachowski's reassurance that the FCC was not out to dictate content was a response to critics of the future of media inquiry who fear that government support will morph into government influence.
For example, Randolph May, president of think tank Free State Foundation, another panelist, planned to tell the FCC that it should be looking for an exit strategy for public media, rather that contemplate expanding its role.
"I am opposed to expansion of funding for public broadcasting, or for 'repurposing' government funds to support other public media, such as websites," he said, according to his prepared testimony. "Indeed, given the unprecedented national debt (almost $13 trillion) and competing budgetary demands facing the country, maybe this is a moment in time when reasonable people can agree that, in light of the media marketplace changes, an 'exit strategy' should be set for reducing or eliminating funding of public media."
By John Eggerton -- Broadcasting & Cable, 4/30/2010
The FCC will be an "active partner" in supporting public media as one response to a crisis in journalism, says FCC Chairman Julius Genachowski, but he also said that "this agency cannot and should not dictate programming."
Saying that whatever the FCC does, it must be "in the full spirit of the First Amendment," the chairman added that "nothing should ever be done to hobble the independence of the press."
That came in opening remarks from the chairman at a daylong workshop on the future of "Public and Other Noncommercial Media in the Digital Era," the commission's second workshop in its ongoing review of the future of media.
The first workshop focused on commercial media.
Genachowski said several seismic shifts were occurring simultaneously, prompting profound change in both noncommercial and commercial media.
He said those changes have disrupted models of journalism and threatened to create a crisis for democracy. He also said it was not about preserving the journalistic industry or journalist's paychecks, but about the citizen's access to local news and information.
The broadband plan proposes creating a media trust fund powered by what the chairman said would be "voluntary spectrum auctions."
He said he was pleased to see noncoms working together. "Keep it up," he said. "This is a big moment, and the nation is depending on you to rise to it."
Commissioner Michael Copps called it a great day, with as impressive a group as had ever been assembled at the FCC--it included the heads of CBP and PBS.
Copps said there were two problems: the "very immediate" challenge facing traditional media "on life support, where there is still life." The second, he said, was the future of online media. But he said they were actually one challenge: "Making sure that we have the information infrastructure that provides citizens what they need to know so they can make intelligent decisions about their future."
He called public media the jewel of American broadcasting, and said it was amazing what they did with the "poverty" of funding for the system.
CPB Chair Ernest Wilson, one of the panelists at the workshop, said noncom broadcasting needs to morph into public service media that uses new technological tools and platforms.
But he said tools are not enough. They also need the wisdom to use it wisely, and the courage to provide public interest information. But that will mean discarding old practices and institutions.
He said that if noncoms continue to do this, democracy will be strengthened. "We are not yet fully a public service media," he said, but he also said they were beyond, and better, than simply public "broadcasting." We have to do digital, dialog and diversity, he said, and to do that will need a fourth D: dollars.
Genachowski's reassurance that the FCC was not out to dictate content was a response to critics of the future of media inquiry who fear that government support will morph into government influence.
For example, Randolph May, president of think tank Free State Foundation, another panelist, planned to tell the FCC that it should be looking for an exit strategy for public media, rather that contemplate expanding its role.
"I am opposed to expansion of funding for public broadcasting, or for 'repurposing' government funds to support other public media, such as websites," he said, according to his prepared testimony. "Indeed, given the unprecedented national debt (almost $13 trillion) and competing budgetary demands facing the country, maybe this is a moment in time when reasonable people can agree that, in light of the media marketplace changes, an 'exit strategy' should be set for reducing or eliminating funding of public media."
National ID Talk is Baaaaack...This Time from the Democrats
Dems spark alarm with call for national ID card
Published on 04-30-2010
A plan by Senate Democratic leaders to reform the nation’s immigration laws ran into strong opposition from civil liberties defenders before lawmakers even unveiled it Thursday.
Democratic leaders have proposed requiring every worker in the nation to carry a national identification card with biometric information, such as a fingerprint, within the next six years, according to a draft of the measure.
The proposal is one of the biggest differences between the newest immigration reform proposal and legislation crafted by late Sen. Edward Kennedy (D-Mass.) and Sen. John McCain (R-Ariz.).
The national ID program would be titled the Believe System, an acronym for Biometric Enrollment, Locally stored Information and Electronic Verification of Employment.
It would require all workers across the nation to carry a card with a digital encryption key that would have to match work authorization databases.
“The cardholder’s identity will be verified by matching the biometric identifier stored within the microprocessing chip on the card to the identifier provided by the cardholder that shall be read by the scanner used by the employer,” states the Democratic legislative proposal.
The American Civil Liberties Union, a civil liberties defender often aligned with the Democratic Party, wasted no time in blasting the plan.
“Creating a biometric national ID will not only be astronomically expensive, it will usher government into the very center of our lives. Every worker in America will need a government permission slip in order to work. And all of this will come with a new federal bureaucracy — one that combines the worst elements of the DMV and the TSA,” said Christopher Calabrese, ACLU legislative counsel.
“America’s broken immigration system needs real, workable reform, but it cannot come at the expense of privacy and individual freedoms,” Calabrese added.
The ACLU said “if the biometric national ID card provision of the draft bill becomes law, every worker in America would have to be fingerprinted.”
A source at one pro-immigration reform group described the proposal as “Orwellian.”
But Senate Democratic Whip Dick Durbin (Ill.), who has worked on the proposal and helped unveil it at a press conference Thursday, predicted the public has become more comfortable with the idea of a national identification card.
“The biometric identification card is a critical element here,” Durbin said. “For a long time it was resisted by many groups, but now we live in a world where we take off our shoes at the airport and pull out our identification.
“People understand that in this vulnerable world, we have to be able to present identification,” Durbin added. “We want it to be reliable, and I think that’s going to help us in this debate on immigration.”
Implementing a nationwide identification program for every worker will be a difficult task.
The Social Security Administration has estimated that 3.6 million Americans would have to visit SSA field offices to correct mistakes in records or else risk losing their jobs.
Angela Kelley, vice president of immigration policy at the Center for American Progress, a liberal think tank, said the biometric identification provision “will give some people pause.”
But she applauded Democrats for not shying away from the toughest issues in the immigration reform debate.
“What I like about the outline is that Democrats are not trying to hide the ball or soft-pedal the tough decisions,” Kelley said. “It seems a very sincere effort to get the conversation started. This is a serious effort to get Republicans to the table.”
Reform Immigration for America, a pro-immigrant group, praised Democrats for getting the discussion started but said the framework fell short.
“The proposal revealed today [Thursday] is in part the result of more than a year of bipartisan negotiations and represents a possible path forward on immigration reform,” the group said in a statement. “This framework is not there yet.”
Democrats and pro-immigration groups will now begin to put pressure on Republicans to participate in serious talks to address the issue. The bipartisan effort in the Senate suffered a serious setback when Sen. Lindsey Graham (R-S.C.) pulled back from talks with Sen. Charles Schumer (D-N.Y.).
“We call on Republican Senators to review this framework and sit down at the negotiating table in good faith,” Reform Immigration for America said in a statement. “This is a national problem that requires a federal solution and the input of leaders in both parties.”
Durbin said Democratic leaders are trying to recruit other Republican partners.
“We’re making a commitment to establishing a framework to work toward comprehensive immigration reform, and I think it’s a good framework and now we’re engaging our friends on the other side of the aisle to join us in this conversation,” Durbin said.
Published on 04-30-2010
A plan by Senate Democratic leaders to reform the nation’s immigration laws ran into strong opposition from civil liberties defenders before lawmakers even unveiled it Thursday.
Democratic leaders have proposed requiring every worker in the nation to carry a national identification card with biometric information, such as a fingerprint, within the next six years, according to a draft of the measure.
The proposal is one of the biggest differences between the newest immigration reform proposal and legislation crafted by late Sen. Edward Kennedy (D-Mass.) and Sen. John McCain (R-Ariz.).
The national ID program would be titled the Believe System, an acronym for Biometric Enrollment, Locally stored Information and Electronic Verification of Employment.
It would require all workers across the nation to carry a card with a digital encryption key that would have to match work authorization databases.
“The cardholder’s identity will be verified by matching the biometric identifier stored within the microprocessing chip on the card to the identifier provided by the cardholder that shall be read by the scanner used by the employer,” states the Democratic legislative proposal.
The American Civil Liberties Union, a civil liberties defender often aligned with the Democratic Party, wasted no time in blasting the plan.
“Creating a biometric national ID will not only be astronomically expensive, it will usher government into the very center of our lives. Every worker in America will need a government permission slip in order to work. And all of this will come with a new federal bureaucracy — one that combines the worst elements of the DMV and the TSA,” said Christopher Calabrese, ACLU legislative counsel.
“America’s broken immigration system needs real, workable reform, but it cannot come at the expense of privacy and individual freedoms,” Calabrese added.
The ACLU said “if the biometric national ID card provision of the draft bill becomes law, every worker in America would have to be fingerprinted.”
A source at one pro-immigration reform group described the proposal as “Orwellian.”
But Senate Democratic Whip Dick Durbin (Ill.), who has worked on the proposal and helped unveil it at a press conference Thursday, predicted the public has become more comfortable with the idea of a national identification card.
“The biometric identification card is a critical element here,” Durbin said. “For a long time it was resisted by many groups, but now we live in a world where we take off our shoes at the airport and pull out our identification.
“People understand that in this vulnerable world, we have to be able to present identification,” Durbin added. “We want it to be reliable, and I think that’s going to help us in this debate on immigration.”
Implementing a nationwide identification program for every worker will be a difficult task.
The Social Security Administration has estimated that 3.6 million Americans would have to visit SSA field offices to correct mistakes in records or else risk losing their jobs.
Angela Kelley, vice president of immigration policy at the Center for American Progress, a liberal think tank, said the biometric identification provision “will give some people pause.”
But she applauded Democrats for not shying away from the toughest issues in the immigration reform debate.
“What I like about the outline is that Democrats are not trying to hide the ball or soft-pedal the tough decisions,” Kelley said. “It seems a very sincere effort to get the conversation started. This is a serious effort to get Republicans to the table.”
Reform Immigration for America, a pro-immigrant group, praised Democrats for getting the discussion started but said the framework fell short.
“The proposal revealed today [Thursday] is in part the result of more than a year of bipartisan negotiations and represents a possible path forward on immigration reform,” the group said in a statement. “This framework is not there yet.”
Democrats and pro-immigration groups will now begin to put pressure on Republicans to participate in serious talks to address the issue. The bipartisan effort in the Senate suffered a serious setback when Sen. Lindsey Graham (R-S.C.) pulled back from talks with Sen. Charles Schumer (D-N.Y.).
“We call on Republican Senators to review this framework and sit down at the negotiating table in good faith,” Reform Immigration for America said in a statement. “This is a national problem that requires a federal solution and the input of leaders in both parties.”
Durbin said Democratic leaders are trying to recruit other Republican partners.
“We’re making a commitment to establishing a framework to work toward comprehensive immigration reform, and I think it’s a good framework and now we’re engaging our friends on the other side of the aisle to join us in this conversation,” Durbin said.
The World's First Major Virtual Currency?
Facebook Credits
Facebook is projected to do over a billion dollars in revenue this year, more than some small countries, and its 400 million strong userbase is larger than the population of most big ones. So why shouldn’t the social network have its own private currency? In the future, we may pay for some goods not with dollars, yen or euros, but with Facebook Credits.
Credits wasn’t the biggest news last week for Facebook, which announced an aggressive initiative to make itself the consumer web’s connective tissue that CEO Mark Zuckerberg called “the most transformative thing we have ever done.”
Creating a new virtual economy is a pretty big deal too, but Credits, which allow people to buy units of a virtual currency that can then be spent on various applications across Facebook, remained in the background. That’s because the program is still in private beta — independent payment companies control most of the $1 billion virtual goods market.
But most of those virtual goods are sold on Facebook itself, on games like Zynga’s FarmVille, in which players can buy special items for their farms and gifts for friends. Selling these in-game items, which help gamers get ahead more quickly, has turned into a big business very quickly, but Facebook isn’t far behind; the company looks impatient to start taking a cut. Credits would do just that, giving Facebook a solid 30 percent of the pie.
That’s not the best deal for companies like Zynga and Playdom that sell the virtual goods, and it’s a terrible one for the current payment processors, but it’s starting to look like Facebook might push out the competition, according to Inside Social Games:
At the same conference where the new Open Graph was announced, Zuckerberg told press that Credits aren’t about the revenue for Facebook. Journalists may be math-disabled, but even they can figure out what a 30 percent cut of a billion dollars is. (Hint: It’s a lot of money.)
But Facebook hasn’t yet come off as the bully. That’s partially because Facebook’s various representatives haven’t yet said anything firm, but mainly because the new model, even with its huge cut of each transaction, could ultimately be great for the social game and app companies that would have to switch to Credits.
The advantage is a lower barrier to adoption for users, who would have the advantage of only having to pay into a single system, and being able to take their pool of Credits to any app. The difference doesn’t seem immediately important, but there’s plenty of evidence from the iPhone that users care about convenience — anecdotally, the iPhone has triple the average revenue per user that Facebook apps do. (Apple, by the way, also takes 30 percent.)
So if Facebook can create a similar system they’ll open the way for virtual goods to become a lot bigger than a billion dollar market, and possibly for other apps besides games to successfully tap into the virtual economy. Exactly how far this would go, nobody knows, because if Facebook succeeds with its plans, it will have created the world’s first major virtual economy.
Facebook is projected to do over a billion dollars in revenue this year, more than some small countries, and its 400 million strong userbase is larger than the population of most big ones. So why shouldn’t the social network have its own private currency? In the future, we may pay for some goods not with dollars, yen or euros, but with Facebook Credits.
Credits wasn’t the biggest news last week for Facebook, which announced an aggressive initiative to make itself the consumer web’s connective tissue that CEO Mark Zuckerberg called “the most transformative thing we have ever done.”
Creating a new virtual economy is a pretty big deal too, but Credits, which allow people to buy units of a virtual currency that can then be spent on various applications across Facebook, remained in the background. That’s because the program is still in private beta — independent payment companies control most of the $1 billion virtual goods market.
But most of those virtual goods are sold on Facebook itself, on games like Zynga’s FarmVille, in which players can buy special items for their farms and gifts for friends. Selling these in-game items, which help gamers get ahead more quickly, has turned into a big business very quickly, but Facebook isn’t far behind; the company looks impatient to start taking a cut. Credits would do just that, giving Facebook a solid 30 percent of the pie.
That’s not the best deal for companies like Zynga and Playdom that sell the virtual goods, and it’s a terrible one for the current payment processors, but it’s starting to look like Facebook might push out the competition, according to Inside Social Games:
At its f8 developer conference this week, company chief executive Mark Zuckerberg told Bloomberg that “‘there’s just going to be one currency that people use on all apps.” Later that day, Facebook’s Deb Liu was presenting about Facebook’s Credits plans, and she was asked if Facebook would continue to allow people to use third-party virtual currency services like Social Gold. She replied: “It’s still too early to tell, Credits is still in beta.”
Together with Zuckerberg’s statement, that sounds like it could be simply “no.” Another possibility is that third party virtual currency services can continue to exist, but will just be much less used than Credits, at least partially due to incentives Facebook will give to developers who use Credits — like free marketing.
At the same conference where the new Open Graph was announced, Zuckerberg told press that Credits aren’t about the revenue for Facebook. Journalists may be math-disabled, but even they can figure out what a 30 percent cut of a billion dollars is. (Hint: It’s a lot of money.)
But Facebook hasn’t yet come off as the bully. That’s partially because Facebook’s various representatives haven’t yet said anything firm, but mainly because the new model, even with its huge cut of each transaction, could ultimately be great for the social game and app companies that would have to switch to Credits.
The advantage is a lower barrier to adoption for users, who would have the advantage of only having to pay into a single system, and being able to take their pool of Credits to any app. The difference doesn’t seem immediately important, but there’s plenty of evidence from the iPhone that users care about convenience — anecdotally, the iPhone has triple the average revenue per user that Facebook apps do. (Apple, by the way, also takes 30 percent.)
So if Facebook can create a similar system they’ll open the way for virtual goods to become a lot bigger than a billion dollar market, and possibly for other apps besides games to successfully tap into the virtual economy. Exactly how far this would go, nobody knows, because if Facebook succeeds with its plans, it will have created the world’s first major virtual economy.
Corporate Warmongering + Security Outsourcing
Outsourcing Security Greases Corporate Warmongering
American anti-war activists are turning their sights on the big businesses that are behind their country's military machine. They say that so long as conflict creates cash, there will be no end to US involvement in wars.
In Washington DC the anti-war movement is sick of America's wars overseas. They blame it on the force of the military industrial complex: by definition a system of perpetual war fueled by profit and global expansion.
In his farewell address to the nation, the 34th president of the United States Dwight D, Eisenhower - a decorated military general himself - gave an infamous warning about the dangers of war nearly half a century ago on January 17, 1961. He said, "We have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations."
"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist," Eisenhower said back then.
Today, Eisenhower's chilling message is the reality of America's ongoing military operations worldwide.
War is big bucks, especially for civilian, defense and private security contractors - the vital organs of today's military apparatus.
"Right now on the ground of Afghanistan the US has 140,000 people that are called contractors," Jeremy Scahill, investigative journalist and author, estimated. "Many of them are mercenaries just on the Department of Defense payroll. The State Department has another 14,000. [Barack] Obama during his presidency has doubled the number of armed contractors in Afghanistan. So, what we see is a radical outsourcing of war," Scahill noted.
To put figures into perspective, government records show nearly 70% of the military budget is spent on contractors. Multinational corporations like Boeing Company, Raytheon Company and NorthRup Grumman Corporation, to name a few, are making a killing off of war.
"The whole system is the US addiction to privatized warfare," Jeremy Scahill elaborated.
As a result of the sheer expense of privatized warfare on the US taxpayer, it has driven protestors to demand Congress to pass the "Stop Outsourcing Security Act" - a bill that would drastically downsize the use of corporate contractors in war zones.
It would appear that the anti-war activists are up against an unbeatable force, but most hope that, by holding public teachings, the warning Eisenhower echoed on his last day in office will finally be considered by politicians and the Pentagon.
American anti-war activists are turning their sights on the big businesses that are behind their country's military machine. They say that so long as conflict creates cash, there will be no end to US involvement in wars.
In Washington DC the anti-war movement is sick of America's wars overseas. They blame it on the force of the military industrial complex: by definition a system of perpetual war fueled by profit and global expansion.
In his farewell address to the nation, the 34th president of the United States Dwight D, Eisenhower - a decorated military general himself - gave an infamous warning about the dangers of war nearly half a century ago on January 17, 1961. He said, "We have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations."
"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist," Eisenhower said back then.
Today, Eisenhower's chilling message is the reality of America's ongoing military operations worldwide.
War is big bucks, especially for civilian, defense and private security contractors - the vital organs of today's military apparatus.
"Right now on the ground of Afghanistan the US has 140,000 people that are called contractors," Jeremy Scahill, investigative journalist and author, estimated. "Many of them are mercenaries just on the Department of Defense payroll. The State Department has another 14,000. [Barack] Obama during his presidency has doubled the number of armed contractors in Afghanistan. So, what we see is a radical outsourcing of war," Scahill noted.
To put figures into perspective, government records show nearly 70% of the military budget is spent on contractors. Multinational corporations like Boeing Company, Raytheon Company and NorthRup Grumman Corporation, to name a few, are making a killing off of war.
"The whole system is the US addiction to privatized warfare," Jeremy Scahill elaborated.
As a result of the sheer expense of privatized warfare on the US taxpayer, it has driven protestors to demand Congress to pass the "Stop Outsourcing Security Act" - a bill that would drastically downsize the use of corporate contractors in war zones.
It would appear that the anti-war activists are up against an unbeatable force, but most hope that, by holding public teachings, the warning Eisenhower echoed on his last day in office will finally be considered by politicians and the Pentagon.
BP Enjoys Lobbying Strength
Close Ties to Lawmakers as Federal Investigation Looms
by Cassandra LaRussa
On Thursday, oil giant BP asked for U.S. government assistance in cleaning up massive amounts of crude oil ominously approaching the coast of Louisiana -- the messy results of a recent oil rig explosion 40 miles off-shore.
In response, the Obama administration promised support in both clean up and containment of the environmental crisis. The president also sent clear signals indicating a potential federal investigation to determine cause and responsibility for the accident.
If BP faces heavy federal scrutiny, it's well-positioned to fight back: The London-based company has consistently spent top dollar to influence legislative and regulatory activity in Washington, D.C., the Center for Responsive Politics finds.
During the 2008 election cycle, individuals and political action committees associated with BP -- a Center for Responsive Politics' "heavy hitter" -- contributed half a million dollars to federal candidates. About 40 percent of these donations went to Democrats. The top recipient of BP-related donations during the 2008 cycle was President Barack Obama himself, who collected $71,000.
BP regularly lobbies on Capitol Hill, as well. In 2009, the company spent a massive $16 million to influence legislation. During the first quarter of 2010, it spent $3.53 million on federal lobbying efforts, ranking it second (behind ConocoPhillips) among all oil and gas industry interests.
Its registered lobbyists include a number of former federal government and high-ranking political campaign officials, including longtime political operative Tony Podesta, former congressional chief of staff Bob Brooks, former congressional legislative director David Pore and vice presidential aide Michael S. Berman, the Center's research shows.
The oil and gas industry, of which BP is a member, reported $169 million in 2009 lobbying expenditures.
Comparatively, the entire environmental industry spent $22 million on lobbying in 2009 -- not much more than BP alone spent for the year. The most active member of the environmental industry, the Nature Conservancy, reported $2.2 million in 2009 expenditures. Last year, BP was active lobbying on the American Clean Energy Leadership Act of 2009, which allows increased oil and gas leasing in the Gulf of Mexico, in areas closer to shore than current law allows.
The bill also calls for additional research and inventory of oil and gas reserves in the U.S. Outer Continental Shelf. The bill is sponsored by Sen. Jeff Bingaman (D-N.M.), who has received $14,000 in campaign donations during the past two decades from those associated with BP, the Center finds.
In 2009, BP also lobbied on the Oil Spill Prevention Act of 2009 and the Clean Water Restoration Act.
The oil spill, which has yet to be remedied, was caused by an explosion on a BP-leased oil rig on April 20.
A state of emergency has since been enacted in Louisiana, and the White House has designated it an event of "national significance." The oil well is reportedly leaking between 1,000 and 5,000 barrels a day, and rescue crews are trying to eliminate the oil by setting it on fire, breaking it up with chemicals and skimming it off the surface of the ocean. Already, questions are being asked about cause and responsibility.
Upon hearing the cry for help in the Gulf of Mexico, Rep. Henry A. Waxman (D-Cal.), chairman of the House Energy and Commerce Committee, called for a "full blown investigation."
In 2009, individuals and political action committees associated with BP donated $16,000 to members of the House Energy and Commerce Committee.
In addition, five of the all-time top 10 recipients of BP money in the House of Representatives sit on the House Energy Committee: John D. Dingell (D-Mich.) Joe Barton (R-Tex.), Ralph M. Hall (R-Tex.), Roy Blunt (R-Mo.) and Fred Upton, (R-Mich.).
All have received upward of $13,000 from BP-related individuals and political action committees during the past two decades. Dingell, the second most favored recipient of BP money in the House, has received $31,000.
by Cassandra LaRussa
On Thursday, oil giant BP asked for U.S. government assistance in cleaning up massive amounts of crude oil ominously approaching the coast of Louisiana -- the messy results of a recent oil rig explosion 40 miles off-shore.
In response, the Obama administration promised support in both clean up and containment of the environmental crisis. The president also sent clear signals indicating a potential federal investigation to determine cause and responsibility for the accident.
If BP faces heavy federal scrutiny, it's well-positioned to fight back: The London-based company has consistently spent top dollar to influence legislative and regulatory activity in Washington, D.C., the Center for Responsive Politics finds.
During the 2008 election cycle, individuals and political action committees associated with BP -- a Center for Responsive Politics' "heavy hitter" -- contributed half a million dollars to federal candidates. About 40 percent of these donations went to Democrats. The top recipient of BP-related donations during the 2008 cycle was President Barack Obama himself, who collected $71,000.
BP regularly lobbies on Capitol Hill, as well. In 2009, the company spent a massive $16 million to influence legislation. During the first quarter of 2010, it spent $3.53 million on federal lobbying efforts, ranking it second (behind ConocoPhillips) among all oil and gas industry interests.
Its registered lobbyists include a number of former federal government and high-ranking political campaign officials, including longtime political operative Tony Podesta, former congressional chief of staff Bob Brooks, former congressional legislative director David Pore and vice presidential aide Michael S. Berman, the Center's research shows.
The oil and gas industry, of which BP is a member, reported $169 million in 2009 lobbying expenditures.
Comparatively, the entire environmental industry spent $22 million on lobbying in 2009 -- not much more than BP alone spent for the year. The most active member of the environmental industry, the Nature Conservancy, reported $2.2 million in 2009 expenditures. Last year, BP was active lobbying on the American Clean Energy Leadership Act of 2009, which allows increased oil and gas leasing in the Gulf of Mexico, in areas closer to shore than current law allows.
The bill also calls for additional research and inventory of oil and gas reserves in the U.S. Outer Continental Shelf. The bill is sponsored by Sen. Jeff Bingaman (D-N.M.), who has received $14,000 in campaign donations during the past two decades from those associated with BP, the Center finds.
In 2009, BP also lobbied on the Oil Spill Prevention Act of 2009 and the Clean Water Restoration Act.
The oil spill, which has yet to be remedied, was caused by an explosion on a BP-leased oil rig on April 20.
A state of emergency has since been enacted in Louisiana, and the White House has designated it an event of "national significance." The oil well is reportedly leaking between 1,000 and 5,000 barrels a day, and rescue crews are trying to eliminate the oil by setting it on fire, breaking it up with chemicals and skimming it off the surface of the ocean. Already, questions are being asked about cause and responsibility.
Upon hearing the cry for help in the Gulf of Mexico, Rep. Henry A. Waxman (D-Cal.), chairman of the House Energy and Commerce Committee, called for a "full blown investigation."
In 2009, individuals and political action committees associated with BP donated $16,000 to members of the House Energy and Commerce Committee.
In addition, five of the all-time top 10 recipients of BP money in the House of Representatives sit on the House Energy Committee: John D. Dingell (D-Mich.) Joe Barton (R-Tex.), Ralph M. Hall (R-Tex.), Roy Blunt (R-Mo.) and Fred Upton, (R-Mich.).
All have received upward of $13,000 from BP-related individuals and political action committees during the past two decades. Dingell, the second most favored recipient of BP money in the House, has received $31,000.
War and Liberty Aren’t Fellow Travelers
To the Tea Party: War and Liberty Aren’t Fellow Travelers
April 28, 2010
Ivan Eland
In an astute op-ed piece in the Christian Science Monitor, James Bovard points out that the love of liberty by the Tea Party crowd usually takes a backseat to a hatred of President Obama and the Left. After attending a tax day Tea Party event in Rockville, Md., a suburb of the nation’s capital, Bovard reported that the Tea Partiers oppose big government from the Left but not from the Right. Big government from the Right usually involves warfare and its accompanying enhanced police powers at home, which usually severely erode the liberty Tea Partiers claim to stand for. For example, the tea sippers extended their pinkies in a salute to torture, harsh policies toward Iran, and the wars in Afghanistan and Iraq. They didn’t seem to mind the National Security Agency’s warrantless wiretapping and vacuuming up of ordinary Americans’ phone calls either, according to Bovard.
Yet of all the causes of big government in human history, warfare is the most important. The nation-state originally came into being because wars had become too expensive for mere kingdoms to handle.
And then the welfare state followed the warfare state. In fact, a militaristic conservative, Otto von Bismarck, created the first modern welfare state in Germany in the latter part of the 19th century.
In American history too, welfare has followed warfare. The roots of the Social Security system were planted with pensions for Civil War veterans. The progressive movement—with its counterproductive regulations on business that hurt the consumers it was trying to help—followed the Spanish-American colonial war.
But World War I was what allowed big government a vast and permanent foothold in American society. War had become so expensive and large scale that the U.S. government took over the entire economy to fight it—historically, the first time that had happened. Equally important, the government crushed dissent with the worst violations of civil liberties in American history. The war’s only rivals in stifling free political discourse were the Alien and Sedition Acts passed in the late 1700s—ostensibly needed by the government to fight off the French in the Quasi War but really aimed at political opponents. After World War I, resulting anti-foreign sentiments led to a red scare and the Palmer raids by law enforcement on innocent people.
During the Great Depression, Herbert Hoover and Franklin Delano Roosevelt brought back many of the World War I wartime agencies designed to “manage” the economy and simply renamed them. The war had set the bad precedent that no sector of the American economy was immune from government meddling.
World War II, the most horrific war in world history, also gave us the most government. During the war, government again took over regulation of the economy and even accounted for more than 40 percent of the American economy’s output, an all-time high. Although for the general population, civil liberties erosion was not as great as during World War I, that was little comfort to Japanese-Americans, who had not a single instance of disloyalty but were thrown into unconstitutional internment camps anyway.
The Cold War, although spawning only periodic hot wars, corroded civil liberties because it lasted so long. The McCarthyite witch hunts for communists in the 1950s and presidential wiretapping during the Vietnam War era that led to Watergate both began over fears of compromising information to unfriendly ears during those periods.
And of course, we have George W. Bush, a big-government conservative, who curiously wins, as Bovard notes, a 57 percent approval rating from the “small government” Tea Partiers. Yet in parallel with his war on terror, domestic spending increased more than any president since Lyndon Johnson, and he dramatically increased executive power to near tyrannical proportions by illegally using torture, wiretapping, and indefinite detentions without trial.
As Bovard notes, Tea Partiers are right-wing Obama-haters rather than liberty-lovers. And like their icon Sarah Palin, they seem proudly ignorant of history. Even the Boston Tea Party, from which the supposedly anti-tax Tea Party movement gets its name, hardly promoted liberty. The original Tea Party was caused by the British reducing taxes, not increasing them. The British had reduced the tariff on tea, thereby ruining the smuggling business in which many of the Bostonian vandals were engaged. After the violent and unnecessary destruction of private property by a mob—which other American cities had avoided and no true proponent of liberty should celebrate—the British cracked down on Boston. This crackdown thus eventually triggered the American Revolution, which likely decreased liberty in America. Wars almost always do.
April 28, 2010
Ivan Eland
In an astute op-ed piece in the Christian Science Monitor, James Bovard points out that the love of liberty by the Tea Party crowd usually takes a backseat to a hatred of President Obama and the Left. After attending a tax day Tea Party event in Rockville, Md., a suburb of the nation’s capital, Bovard reported that the Tea Partiers oppose big government from the Left but not from the Right. Big government from the Right usually involves warfare and its accompanying enhanced police powers at home, which usually severely erode the liberty Tea Partiers claim to stand for. For example, the tea sippers extended their pinkies in a salute to torture, harsh policies toward Iran, and the wars in Afghanistan and Iraq. They didn’t seem to mind the National Security Agency’s warrantless wiretapping and vacuuming up of ordinary Americans’ phone calls either, according to Bovard.
Yet of all the causes of big government in human history, warfare is the most important. The nation-state originally came into being because wars had become too expensive for mere kingdoms to handle.
And then the welfare state followed the warfare state. In fact, a militaristic conservative, Otto von Bismarck, created the first modern welfare state in Germany in the latter part of the 19th century.
In American history too, welfare has followed warfare. The roots of the Social Security system were planted with pensions for Civil War veterans. The progressive movement—with its counterproductive regulations on business that hurt the consumers it was trying to help—followed the Spanish-American colonial war.
But World War I was what allowed big government a vast and permanent foothold in American society. War had become so expensive and large scale that the U.S. government took over the entire economy to fight it—historically, the first time that had happened. Equally important, the government crushed dissent with the worst violations of civil liberties in American history. The war’s only rivals in stifling free political discourse were the Alien and Sedition Acts passed in the late 1700s—ostensibly needed by the government to fight off the French in the Quasi War but really aimed at political opponents. After World War I, resulting anti-foreign sentiments led to a red scare and the Palmer raids by law enforcement on innocent people.
During the Great Depression, Herbert Hoover and Franklin Delano Roosevelt brought back many of the World War I wartime agencies designed to “manage” the economy and simply renamed them. The war had set the bad precedent that no sector of the American economy was immune from government meddling.
World War II, the most horrific war in world history, also gave us the most government. During the war, government again took over regulation of the economy and even accounted for more than 40 percent of the American economy’s output, an all-time high. Although for the general population, civil liberties erosion was not as great as during World War I, that was little comfort to Japanese-Americans, who had not a single instance of disloyalty but were thrown into unconstitutional internment camps anyway.
The Cold War, although spawning only periodic hot wars, corroded civil liberties because it lasted so long. The McCarthyite witch hunts for communists in the 1950s and presidential wiretapping during the Vietnam War era that led to Watergate both began over fears of compromising information to unfriendly ears during those periods.
And of course, we have George W. Bush, a big-government conservative, who curiously wins, as Bovard notes, a 57 percent approval rating from the “small government” Tea Partiers. Yet in parallel with his war on terror, domestic spending increased more than any president since Lyndon Johnson, and he dramatically increased executive power to near tyrannical proportions by illegally using torture, wiretapping, and indefinite detentions without trial.
As Bovard notes, Tea Partiers are right-wing Obama-haters rather than liberty-lovers. And like their icon Sarah Palin, they seem proudly ignorant of history. Even the Boston Tea Party, from which the supposedly anti-tax Tea Party movement gets its name, hardly promoted liberty. The original Tea Party was caused by the British reducing taxes, not increasing them. The British had reduced the tariff on tea, thereby ruining the smuggling business in which many of the Bostonian vandals were engaged. After the violent and unnecessary destruction of private property by a mob—which other American cities had avoided and no true proponent of liberty should celebrate—the British cracked down on Boston. This crackdown thus eventually triggered the American Revolution, which likely decreased liberty in America. Wars almost always do.
GOP Sticks with Wall Street rather than Free Markets
Republicans pick Wall Street over free markets
By: Timothy P. Carney
Examiner Columnist
April 30, 2010
Republican leaders have proven the Democrats right: The GOP's teeth gnashing about "permanent bailouts" was cynical populist showmanship -- and Republicans can't pull off that act as well as President Obama.
By proposing a financial reform bill that is mostly identical to the one proposed by Sen. Chris Dodd, D-Conn., Republicans have passed up an opportunity to simultaneously appeal to their base, by returning to their alleged principles of limited government, and appeal to much of the middle, by waging a populist battle against Wall Street's corporate-welfare queens who panhandle on Capitol Hill.
Republicans favoring limited government over a "pro-Wall Street" policy would have been out of character, to be sure, but events were conspiring to make such a free-market populist stance possible. For one thing, the bankers had already abandoned the GOP.
Wall Street was even longer on the Democrats in 2008 and 2009 than it had been on mortgage-backed securities in 2005 and 2006. You wouldn't know this reading most newspapers, but Obama raised more money from Wall Street than any candidate in history, and more money from Goldman Sachs than every Republican running for president, House, and Senate, combined.
Wall Street gave 60 percent of its money in 2009 to Democrats according to the Center for Responsive Politics -- the most one-sided figure since the center began keeping records. The bankers had climbed into bed with Obama, Dodd, and Charles Schumer. Instead of showing some self-respect and walking out on them, Republicans are begging the bankers to come back.
Maybe Republicans bought into the myth -- useful for big government liberals such as Obama and repeated unceasingly by lazy journalists -- that Wall Street is the beating heart of the free market.
The bailouts of 2008 should have demolished that myth, but bailouts aren't the only way Wall Street depends on big government -- which brings us to the sort of financial reform Republicans should have proposed. Call it "letting Wall Street fend for itself."
Arnold Kling, an economist associated with the free-market Cato Institute, has laid out his own ideal financial reform, and anyone who believes in free markets and wants to protect taxpayers from bailouts should listen to Kling.
First, eliminate the corporate welfare that powered our current mess: Abolish Fannie Mae, Freddie Mac, and the Federal Housing Authority. Sunset the tax deduction for mortgage interest.
Next, get the government out the business of dictating capital requirements and thus declaring who is safe and unsafe -- leave that up to credit markets. As Kling puts it: "Put senior creditors in line to lose money a default. Let them discipline the risk-taking of financial institutions."
Then there's a not-quite free-market fix that Republicans should embrace because it's less intrusive than its alternatives and more likely to prevent future bailouts: Break up the big banks. Right now, liberal Democrats are the only ones talking about breaking up the banks, but conservative Republicans should join them.
Kling argues that big banks inherently have too much political power, and that they will inevitably use that power to guarantee bailouts. I'll add that a blunt "dumb" measure like size is not as prone to financial and political gaming as the "smarter" plans that rely on regulators and politicians deciding what's best for us.
Republicans could go further, though. Why should the Federal Reserve have a "discount window" that lends to banks? Why not end the Troubled Asset Relief Program and claw back outstanding TARP money? Let's look for a real way to end bailouts -- it might take a constitutional amendment.
Republican fealty to Wall Street probably isn't mostly about campaign cash -- it's a lack of imagination. Wall Street is profitable and it has driven economic growth. So most Republicans conclude Wall Street should be preserved.
But we've let the steel industry nearly die in the name of free markets. Buggy-whip makers were a legitimate industry, but we didn't save them. Maybe Wall Street's heyday has come and gone.
Republicans have a choice today: free-market populism or pinstripe protectionism.
By: Timothy P. Carney
Examiner Columnist
April 30, 2010
Republican leaders have proven the Democrats right: The GOP's teeth gnashing about "permanent bailouts" was cynical populist showmanship -- and Republicans can't pull off that act as well as President Obama.
By proposing a financial reform bill that is mostly identical to the one proposed by Sen. Chris Dodd, D-Conn., Republicans have passed up an opportunity to simultaneously appeal to their base, by returning to their alleged principles of limited government, and appeal to much of the middle, by waging a populist battle against Wall Street's corporate-welfare queens who panhandle on Capitol Hill.
Republicans favoring limited government over a "pro-Wall Street" policy would have been out of character, to be sure, but events were conspiring to make such a free-market populist stance possible. For one thing, the bankers had already abandoned the GOP.
Wall Street was even longer on the Democrats in 2008 and 2009 than it had been on mortgage-backed securities in 2005 and 2006. You wouldn't know this reading most newspapers, but Obama raised more money from Wall Street than any candidate in history, and more money from Goldman Sachs than every Republican running for president, House, and Senate, combined.
Wall Street gave 60 percent of its money in 2009 to Democrats according to the Center for Responsive Politics -- the most one-sided figure since the center began keeping records. The bankers had climbed into bed with Obama, Dodd, and Charles Schumer. Instead of showing some self-respect and walking out on them, Republicans are begging the bankers to come back.
Maybe Republicans bought into the myth -- useful for big government liberals such as Obama and repeated unceasingly by lazy journalists -- that Wall Street is the beating heart of the free market.
The bailouts of 2008 should have demolished that myth, but bailouts aren't the only way Wall Street depends on big government -- which brings us to the sort of financial reform Republicans should have proposed. Call it "letting Wall Street fend for itself."
Arnold Kling, an economist associated with the free-market Cato Institute, has laid out his own ideal financial reform, and anyone who believes in free markets and wants to protect taxpayers from bailouts should listen to Kling.
First, eliminate the corporate welfare that powered our current mess: Abolish Fannie Mae, Freddie Mac, and the Federal Housing Authority. Sunset the tax deduction for mortgage interest.
Next, get the government out the business of dictating capital requirements and thus declaring who is safe and unsafe -- leave that up to credit markets. As Kling puts it: "Put senior creditors in line to lose money a default. Let them discipline the risk-taking of financial institutions."
Then there's a not-quite free-market fix that Republicans should embrace because it's less intrusive than its alternatives and more likely to prevent future bailouts: Break up the big banks. Right now, liberal Democrats are the only ones talking about breaking up the banks, but conservative Republicans should join them.
Kling argues that big banks inherently have too much political power, and that they will inevitably use that power to guarantee bailouts. I'll add that a blunt "dumb" measure like size is not as prone to financial and political gaming as the "smarter" plans that rely on regulators and politicians deciding what's best for us.
Republicans could go further, though. Why should the Federal Reserve have a "discount window" that lends to banks? Why not end the Troubled Asset Relief Program and claw back outstanding TARP money? Let's look for a real way to end bailouts -- it might take a constitutional amendment.
Republican fealty to Wall Street probably isn't mostly about campaign cash -- it's a lack of imagination. Wall Street is profitable and it has driven economic growth. So most Republicans conclude Wall Street should be preserved.
But we've let the steel industry nearly die in the name of free markets. Buggy-whip makers were a legitimate industry, but we didn't save them. Maybe Wall Street's heyday has come and gone.
Republicans have a choice today: free-market populism or pinstripe protectionism.
Restricting Lobbyist Influence on Elections
Obama calls for legislation to restrict lobbyist influence on elections
Saturday, May 1st, 2010
US President Barack Obama called on Congress on Saturday to pass reforms limiting the influence of special interest groups on US elections, saying the integrity of US democracy needed to be protected.
"What we are facing is no less than a potential corporate takeover of our elections," Obama said in his weekly radio address. "And what is at stake is no less than the integrity of our democracy."
The appeal came after a recent US Supreme Court ruling that gave corporations, lobbyists, other special interest groups -- foreign and domestic -- the power to spend unlimited money to influence the outcome of US elections.
The ruling meant that corporations would be allowed to run political television advertisements ahead of national and local elections without telling voters who was paying for them, said Obama.
Congress therefore needed to adopt reforms under which campaign committees would have to reveal who was funding them, and their leaders or financiers would have to claim responsibility for their ads, the president argued.
Also, the reforms will restrict foreign corporations and foreign nationals from spending money in American elections, the president said.
"This shouldn't be a Democratic issue or a Republican issue," he argued.
"This is an issue that goes to whether or not we will have a government that works for ordinary Americans - a government of, by, and for the people.
"That's why these reforms are so important. And that's why I'm going to fight to see them passed into law."
This video was published by the White House on May 1, 2010.
Saturday, May 1st, 2010
US President Barack Obama called on Congress on Saturday to pass reforms limiting the influence of special interest groups on US elections, saying the integrity of US democracy needed to be protected.
"What we are facing is no less than a potential corporate takeover of our elections," Obama said in his weekly radio address. "And what is at stake is no less than the integrity of our democracy."
The appeal came after a recent US Supreme Court ruling that gave corporations, lobbyists, other special interest groups -- foreign and domestic -- the power to spend unlimited money to influence the outcome of US elections.
The ruling meant that corporations would be allowed to run political television advertisements ahead of national and local elections without telling voters who was paying for them, said Obama.
Congress therefore needed to adopt reforms under which campaign committees would have to reveal who was funding them, and their leaders or financiers would have to claim responsibility for their ads, the president argued.
Also, the reforms will restrict foreign corporations and foreign nationals from spending money in American elections, the president said.
"This shouldn't be a Democratic issue or a Republican issue," he argued.
"This is an issue that goes to whether or not we will have a government that works for ordinary Americans - a government of, by, and for the people.
"That's why these reforms are so important. And that's why I'm going to fight to see them passed into law."
This video was published by the White House on May 1, 2010.
An Alternative to the Obama-Dodd-Frank approach to Financial Reform...
Here's How to Forge a Finance Bill That Doesn't Suck
By Brad Reed, AlterNet
Posted on May 1, 2010
Let’s pretend that, sometime in 2002, thousands of cars started exploding. In our pretend world, oil refineries added a new chemical to gasoline that was supposed to make it burn more slowly but in fact caused horrific explosions.
And let’s say that in response to these explosions, then-President George W. Bush angrily lashed out at the “pollutifying” oil companies and demanded that the government “intensifize its scrutinimany” of Big Oil.
This populist tirade would come despite the fact that Bush had received millions of dollars from the oil and gas industries and that Bush himself began his post-alcoholism career as a Texas oil man. While it’s possible that some poor suckers would take Bush’s newfound distaste for the oil industry seriously, I think the vast majority of reactions would range from laughing to guffawing to ROFLing to OMGWTFLMAOing.
Sadly, America faces a similar situation today with President Barack Obama’s relationship with Wall Street. Put simply, when Obama smiles and tells us in his hopiest, changiest voice that he really, really wants to rein in Wall Street and make banking safer for Main Street, we should not believe him.
Why? Well, let’s start with the most obvious reason Obama does not deserve our trust: campaign contributions. Look at the insane amount of cash that employees of the major financial institutions forked over to Obama during his 2008 presidential campaign. Citigroup employees donated over $700,000; JP Morgan employees donated $695,000; and Morgan Stanley employees donated over $500,000. Employees of Goldman Sachs, the vampire squid itself, donated a whopping $995,000 to the Obama campaign in 2008, making the squid’s employees the second-largest contributor to Obama’s campaign.
As if that weren’t enough, consider the people he’s surrounded himself with. Former President Clinton recently acknowledged that he received “the wrong advice” about regulating derivatives from former Treasury Secretary Larry Summers in the late ‘90s. That would be the same Larry Summers who recently pooh-poohed the idea of breaking up our oligarchic megabanks since doing so would allegedly “hurt the competitiveness of the United States.” For those of you not paying attention, Summers currently serves as... the director of the White House’s National Economic Council! Before taking the job, Summers raked in $5.2 million working part-time for the D.E. Shaw hedge fund.
Meanwhile, current Treasury Secretary Timothy Geithner is a protégé of Bob Rubin, whom Clinton says also gave him bad advice on derivatives regulation. Geithner, you may recall, was the financial genius who came up with a cunning plan last year to provide private investors with government guarantees in exchange for buying worthless mortgage-related assets from the biggest banks. Goldman Sachs’ “Timberwolf” CDO may indeed have been a shitty deal, but you can bet there are lots like it that are now potential liabilities for U.S. taxpayers thanks to Geithner’s handiwork.
And finally, consider the general Obama approach to governance. During the 2008 presidential campaign, Obama promised to use the magical powers of both hope and change to help people put aside their ideologies and govern in a civil, bipartisan fashion. Obama has kept this promise, in a manner of speaking. But instead of bringing people from all walks of life together to work cooperatively, Obama has governed by bringing together every special interest in Washington and handing them all important favors in exchange for holding their fire on his initiatives. Consider the recent health care fight in which the Obama administration ditched a public insurance option to appease insurance companies and then worked to undermine a drug reimportation amendment to appease the pharmaceutical lobby, among other things. Letting Big Pharma continue gouging consumers? Yes we can!
Unsurprisingly then, the financial reform bill currently being considered by the Senate suffers from being far too friendly to the big banks. You can read this detailed takedown of the current proposals from Nomi Prins for all the wonky details, but the basic problem with the Obama-Dodd-Frank approach is that it puts far too much faith in the same regulators who completely missed the housing bubble until it had already popped. For instance, Prins notes that the Dodd bill attempts to contain systemic risk to the banking system by creating “a new Financial Stability Oversight Council led by the Treasury Secretary to help the Fed develop better standards regarding the biggest banks it oversees.” In other words, the Dodd bill assumes that the 2008 financial crisis would never have happened had Alan Greenspan and John Snow gone out to lunch more often.
So that’s the bad news. The good news, there is a very strong and viable alternative to the plan the Obama-Dodd-Frank axis has been pushing so far. Sens. Sherrod Brown and Ted Kaufman have written a strong piece of legislation called the Safe Banking Act of 2010 that would place a hard cap limiting banks’ total liabilities to 3 percent of GDP. In other words, it would force the banks deemed “too big to fail” in the last financial crisis to break up into smaller banks that could fail without wrecking the economy.
The beauty of this legislation is that it understands that the financial crisis was caused not just by the banks’ economic power but by their political might as well. As Simon Johnson and James Kwak document in their book 13 Bankers, American megabanks have routinely used their influence over regulatory policy to game the system in their favor at the expense of consumers, investors and the government itself. To understand the magnitude of power that these institutions currently have over the government, consider that:
The Kaufman-Brown legislation is the only way to break up this hold that the financial industry has on Washington. The proposed legislation has even received surprising bipartisan support, as Republican Senator Jim “I Drink Your Unemployment Benefits” Bunning has signed on for the time being. Bunning, in his endorsement for Johnson and Kwak’s book, said that ending “too big to fail” banks and reforming the Federal Reserve were “essential for our nation’s future economic prosperity and, more fundamentally, our democratic system.”
And while I don’t agree with Jim Bunning on very much, he’s absolutely right that leaving these gigantic financial institutions in their current state imperils our economy. To borrow a metaphor from Matt Taibbi: when you have a vampire squid wrapped around the face of humanity, the solution isn’t to feed it some cupcakes and hope it stops jamming its blood funnel at you. The solution is to get the damn squid off your face – and the only way to do that is to chainsaw the sucker into pieces.
By Brad Reed, AlterNet
Posted on May 1, 2010
Let’s pretend that, sometime in 2002, thousands of cars started exploding. In our pretend world, oil refineries added a new chemical to gasoline that was supposed to make it burn more slowly but in fact caused horrific explosions.
And let’s say that in response to these explosions, then-President George W. Bush angrily lashed out at the “pollutifying” oil companies and demanded that the government “intensifize its scrutinimany” of Big Oil.
This populist tirade would come despite the fact that Bush had received millions of dollars from the oil and gas industries and that Bush himself began his post-alcoholism career as a Texas oil man. While it’s possible that some poor suckers would take Bush’s newfound distaste for the oil industry seriously, I think the vast majority of reactions would range from laughing to guffawing to ROFLing to OMGWTFLMAOing.
Sadly, America faces a similar situation today with President Barack Obama’s relationship with Wall Street. Put simply, when Obama smiles and tells us in his hopiest, changiest voice that he really, really wants to rein in Wall Street and make banking safer for Main Street, we should not believe him.
Why? Well, let’s start with the most obvious reason Obama does not deserve our trust: campaign contributions. Look at the insane amount of cash that employees of the major financial institutions forked over to Obama during his 2008 presidential campaign. Citigroup employees donated over $700,000; JP Morgan employees donated $695,000; and Morgan Stanley employees donated over $500,000. Employees of Goldman Sachs, the vampire squid itself, donated a whopping $995,000 to the Obama campaign in 2008, making the squid’s employees the second-largest contributor to Obama’s campaign.
As if that weren’t enough, consider the people he’s surrounded himself with. Former President Clinton recently acknowledged that he received “the wrong advice” about regulating derivatives from former Treasury Secretary Larry Summers in the late ‘90s. That would be the same Larry Summers who recently pooh-poohed the idea of breaking up our oligarchic megabanks since doing so would allegedly “hurt the competitiveness of the United States.” For those of you not paying attention, Summers currently serves as... the director of the White House’s National Economic Council! Before taking the job, Summers raked in $5.2 million working part-time for the D.E. Shaw hedge fund.
Meanwhile, current Treasury Secretary Timothy Geithner is a protégé of Bob Rubin, whom Clinton says also gave him bad advice on derivatives regulation. Geithner, you may recall, was the financial genius who came up with a cunning plan last year to provide private investors with government guarantees in exchange for buying worthless mortgage-related assets from the biggest banks. Goldman Sachs’ “Timberwolf” CDO may indeed have been a shitty deal, but you can bet there are lots like it that are now potential liabilities for U.S. taxpayers thanks to Geithner’s handiwork.
And finally, consider the general Obama approach to governance. During the 2008 presidential campaign, Obama promised to use the magical powers of both hope and change to help people put aside their ideologies and govern in a civil, bipartisan fashion. Obama has kept this promise, in a manner of speaking. But instead of bringing people from all walks of life together to work cooperatively, Obama has governed by bringing together every special interest in Washington and handing them all important favors in exchange for holding their fire on his initiatives. Consider the recent health care fight in which the Obama administration ditched a public insurance option to appease insurance companies and then worked to undermine a drug reimportation amendment to appease the pharmaceutical lobby, among other things. Letting Big Pharma continue gouging consumers? Yes we can!
Unsurprisingly then, the financial reform bill currently being considered by the Senate suffers from being far too friendly to the big banks. You can read this detailed takedown of the current proposals from Nomi Prins for all the wonky details, but the basic problem with the Obama-Dodd-Frank approach is that it puts far too much faith in the same regulators who completely missed the housing bubble until it had already popped. For instance, Prins notes that the Dodd bill attempts to contain systemic risk to the banking system by creating “a new Financial Stability Oversight Council led by the Treasury Secretary to help the Fed develop better standards regarding the biggest banks it oversees.” In other words, the Dodd bill assumes that the 2008 financial crisis would never have happened had Alan Greenspan and John Snow gone out to lunch more often.
So that’s the bad news. The good news, there is a very strong and viable alternative to the plan the Obama-Dodd-Frank axis has been pushing so far. Sens. Sherrod Brown and Ted Kaufman have written a strong piece of legislation called the Safe Banking Act of 2010 that would place a hard cap limiting banks’ total liabilities to 3 percent of GDP. In other words, it would force the banks deemed “too big to fail” in the last financial crisis to break up into smaller banks that could fail without wrecking the economy.
The beauty of this legislation is that it understands that the financial crisis was caused not just by the banks’ economic power but by their political might as well. As Simon Johnson and James Kwak document in their book 13 Bankers, American megabanks have routinely used their influence over regulatory policy to game the system in their favor at the expense of consumers, investors and the government itself. To understand the magnitude of power that these institutions currently have over the government, consider that:
1. The country’s largest banks – JPMorgan Chase, Wells Fargo, Citigroup, Bank of America, Goldman Sachs and Morgan Stanley –spent a combined $6.9 million lobbying Congress in the first quarter of 2010 alone. In 2009, the finance, insurance and real estate lobbies spent a total of $467 million lobbying Congress. By comparison, labor unions spent less than one-tenth that amount.
2. As the New York Times reported this year, there are now 125 former Congressional aids and lawmakers working for the finance lobby to either kill or water down the financial reform package. Included among those lobbyists are two former House majority leaders, Dick Gephardt and Dick Armey.
3. Despite the banks’ destroyed reputations, heads of major banks still feel emboldened to issued veiled threats against the government if it goes too far in reforming Wall Street. JPMorgan CEO Jamie Dimon – himself a longtime pal and consultant to President Obama – recently argued that if the government were to make banking rules too strict, then “capital will move somewhere else, where there is more money to be earned, for example non-regulated markets… is that what regulators want?”
The Kaufman-Brown legislation is the only way to break up this hold that the financial industry has on Washington. The proposed legislation has even received surprising bipartisan support, as Republican Senator Jim “I Drink Your Unemployment Benefits” Bunning has signed on for the time being. Bunning, in his endorsement for Johnson and Kwak’s book, said that ending “too big to fail” banks and reforming the Federal Reserve were “essential for our nation’s future economic prosperity and, more fundamentally, our democratic system.”
And while I don’t agree with Jim Bunning on very much, he’s absolutely right that leaving these gigantic financial institutions in their current state imperils our economy. To borrow a metaphor from Matt Taibbi: when you have a vampire squid wrapped around the face of humanity, the solution isn’t to feed it some cupcakes and hope it stops jamming its blood funnel at you. The solution is to get the damn squid off your face – and the only way to do that is to chainsaw the sucker into pieces.
Friday, April 30, 2010
The Poverty Trap
Is Corruption the Cause?
By WALDEN BELLO
The issue of corruption resonates in developing countries. In the Philippines, for instance, the slogan of the coalition that is likely to win the 2010 presidential elections is "Without corrupt officials, there are no poor people."
By WALDEN BELLO
The issue of corruption resonates in developing countries. In the Philippines, for instance, the slogan of the coalition that is likely to win the 2010 presidential elections is "Without corrupt officials, there are no poor people."
Not surprisingly, the international financial institutions have weighed in. The World Bank has made "good governance" a major thrust of its work, asserting that the "World Bank Group focus on governance and anticorruption (GAC) follows from its mandate to reduce poverty — a capable and accountable state creates opportunities for poor people, provides better services, and improves development outcomes."
Because it erodes trust in government, corruption must certainly be condemned and corrupt officials resolutely prosecuted. Corruption also weakens the moral bonds of civil society on which democratic practices and processes rest. But although research suggests it has some bearing on the spread of poverty, corruption is not the principal cause of poverty and economic stagnation, popular opinion notwithstanding.
World Bank and Transparency International data show that the Philippines and China exhibit the same level of corruption, yet China grew by 10.3 percent per year between 1990 and 2000, while the Philippines grew by only 3.3 percent. Moreover, as a recent study by Shaomin Lee and Judy Wu shows, "China is not alone; there are other countries that have relatively high corruption and high growth rates."
Limits of a Hegemonic Narrative
The "corruption-causes-poverty narrative" has become so hegemonic that it has often marginalized policy issues from political discourse. This narrative appeals to the elite and middle class, which dominate the shaping of public opinion. It's also a safe language of political competition among politicians. Political leaders can deploy accusations of corruption against one another for electoral effect without resorting to the destabilizing discourse of class.
Yet this narrative of corruption has increasingly less appeal for the poorer classes. Despite the corruption that marked his reign, Joseph Estrada is running a respectable third in the presidential contest in the Philippines, with solid support among many urban poor communities. But it is perhaps in Thailand where lower classes have most decisively rejected the corruption discourse, which the elites and Bangkok-based middle class deployed to oust Thaksin Shinawatra from the premiership in 2006.
While in power, Thaksin brazenly used his office to enlarge his corporate empire. But the rural masses and urban lower classes — the base of the so-called "Red Shirts" — have ignored this corruption and are fighting to restore his coalition to power. They remember the Thaksin period from 2001 to 2006 as a golden time. Thailand recovered from the Asian financial crisis after Thaksin kicked out the International Monetary Fund (IMF), and the Thai leader promoted expansionary policies with a redistributive dimension, such as cheap universal health care, a one-million-baht development fund for each town, and a moratorium on farmers' servicing of their debt. These policies made a difference in their lives.
Thaksin's Red Shirts are probably right in their implicit assessment that pro-people policies are more decisive than corruption when it comes to addressing poverty. Indeed, in Thailand and elsewhere, clean-cut technocrats have probably been responsible for greater poverty than the most corrupt politicians. The corruption-causes-poverty discourse is no doubt popular with elites and international financial institutions because it serves as a smokescreen for the structural causes of poverty, and stagnation and wrong policy choices of the more transparent technocrats.
The Philippine Case
The case of the Philippines since 1986 illustrates the greater explanatory power of the "wrong-policy narrative" than the corruption narrative. According to an ahistorical narrative, massive corruption suffocated the promise of the post-Marcos democratic republic. In contrast, the wrong-policy narrative locates the key causes of Philippine underdevelopment and poverty in historical events and developments.
The complex of policies that pushed the Philippines into the economic quagmire over the last 30 years can be summed up by a formidable term: structural adjustment. Also known as neoliberal restructuring, it involves prioritizing debt repayment, conservative macroeconomic management, huge cutbacks in government
spending, trade and financial liberalization, privatization and deregulation, and export-oriented production. Structural adjustment came to the Philippines courtesy of the World Bank, the IMF, and the World Trade Organization (WTO), but local technocrats and economists internalized and disseminated the doctrine.
Corazon Aquino was personally honest — indeed the epitome of non-corruption — and her contribution to the reestablishment of democracy was indispensable. But her acceptance of the IMF's demand to prioritize debt repayment over development brought about a decade of stagnation and continuing poverty. Interest payments as a percentage of total government expenditures went from 7 percent in 1980 to 28 percent in 1994. Capital expenditures, on the other hand, plunged from 26 percent to 16 percent. Since government is the biggest investor in the Philippines — indeed in any economy — the radical stripping away of capital expenditures helps explain the stagnant 1 percent average yearly growth in gross domestic product in the 1980s, and the 2.3 percent rate in the first half of the 1990s.
In contrast, the Philippines' Southeast Asian neighbors ignored the IMF's prescriptions. They limited debt servicing while ramping up government capital expenditures in support of growth. Not surprisingly, they grew by 6 to 10 percent from 1985 to 1995, attracting massive Japanese investment, while the Philippines barely grew and gained the reputation of a depressed market that repelled investors.
When Aquino's successor, Fidel Ramos, came to power in 1992, the main agenda of his technocrats was to bring down all tariffs to 0–5 percent and bring the Philippines into the WTO and the ASEAN Free Trade Area (AFTA), moves intended to make trade liberalization irreversible. A pick-up in the growth rate in the early years of Ramos sparked hope, but the green shoots were short-lived. Another neoliberal policy, financial liberalization, crushed this early promise. The elimination of foreign exchange controls and speculative investment restrictions attracted billions of dollars from 1993-1997. But this also meant that when panic hit Asian foreign investors in summer 1997, the same lack of capital controls facilitated the stampede of billions of dollars from the country in a few short weeks. This capital flight pushed the economy into recession and stagnation in the next few years.
The administration of the next president, Joseph Estrada, did not reverse course, and under the presidency of Gloria Macapagal Arroyo, neoliberal policies continued to reign. Over the next few years, the Philippine government instituted new liberalization measures on the trade front, entering into free-trade agreements with Japan and China despite clear evidence that trade liberalization was destroying the two pillars of the economy: industry and agriculture. Radical unilateral trade liberalization severely destabilized the Philippine manufacturing sector. The number of textile and garments firms, for instance, drastically reduced from 200 in 1970 to 10 in recent years. As one of Arroyo's finance secretaries admitted, "There's an uneven implementation of trade liberalization, which was to our disadvantage." While he speculated that consumers might have benefited from the tariff liberalization, he acknowledged that "it has killed so many local industries."
As for agriculture, the liberalization of the country's agricultural trade after the country joined the WTO in 1995 transformed the Philippines from a net food-exporting country into a net food-importing country after the mid-1990s. This year the China ASEAN Trade Agreement (CAFTA), negotiated by the Arroyo administration, goes into effect, and the prospect of cheap Chinese produce flooding the Philippines has made Filipino vegetable farmers fatalistic about their survival.
During the long Arroyo reign, the debt-repayment-oriented macroeconomic management policy that came with structural adjustment stifled the economy. With 20-25 percent of the national budget reserved for debt service payments because of the draconian Automatic Appropriations Law, government finances were in a state of permanent and widening deficit, which the administration tried to solve by contracting more loans. Indeed, the Arroyo administration contracted more loans than the previous three administrations combined.
When the deficit reached gargantuan proportions, the government refused to declare a debt moratorium or at least renegotiate debt repayment terms to make them less punitive. At the same time, the administration did not have the political will to force the rich to take the brunt of bridging the deficit, by increasing taxes on their income and improving revenue collection. Under pressure from the IMF, the government levied this burden on the poor and the middle class by adopting an expanded value added tax (EVAT) of 12 percent on purchases. Commercial establishments passed on this tax to poor and middle-class consumers, forcing them to cut back on consumption. This then boomeranged back on small merchants and entrepreneurs in the form of reduced profits, forcing many out of business.
The straitjacket of conservative macroeconomic management, trade and financial liberalization, as well as a subservient debt policy, kept the economy from expanding significantly. As a result, the percentage of the population living in poverty increased from 30 to 33 percent between 2003 and 2006, according to World Bank figures. By 2006, there were more poor people in the Philippines than at any other time in the country's history.
Policy and Poverty in the Third World
The Philippine story is paradigmatic. Many countries in Latin America, Africa, and Asia saw the same story unfold. Taking advantage of the Third World debt crisis, the IMF and the World Bank imposed structural adjustment in over 70 developing countries in the course of the 1980s. Trade liberalization followed adjustment in the 1990s as the WTO, and later rich countries, dragooned developing countries into free-trade agreements.
Because of this trade liberalization, gains in economic growth and poverty reduction posted by developing countries in the 1960s and 1970s had disappeared by the 1980s and 1990s. In practically all structurally adjusted countries, trade liberalization wiped out huge swathes of industry, and countries enjoying a surplus in agricultural trade became deficit countries. By the beginning of the millennium, the number of people living in extreme poverty had increased globally by 28 million from the decade before. The number of poor increased in Latin America and the Caribbean, Central and Eastern Europe, the Arab states, and sub-Saharan Africa. The reduction in the number of the world's poor mainly occurred in China and countries in East Asia, which spurned structural readjustment policies and trade liberalization multilateral institutions and local neoliberal technocrats imposed other developing economies.
China and the rapidly growing newly industrializing countries of East and Southeast Asia, where most of the global reduction in poverty took place, were marked by high degrees of corruption. The decisive difference between their performance and that of countries subjected to structural adjustment was not corruption but economic policy.
Despite its malign effect on democracy and civil society, corruption is not the main cause of poverty. The "anti poverty, anti-corruption" crusades that so enamor the middle classes and the World Bank will not meet the challenge of poverty. Bad economic policies create and entrench poverty. Unless and until we reverse the policies of structural adjustment, trade liberalization, and conservative macroeconomic management, we will not escape the poverty trap.
Goldman in the Dock
Making a Killing
By MIKE WHITNEY
Just two days after a marathon 10-hour hearing before the Senate Permanent Subcommittee on Investigations, Goldman Sachs learned that it is the target in a criminal investigation conducted by the U.S. attorney in Manhattan. Goldman has been accused of fraud by the SEC (in a civil suit) in connection to the sale of complex securities (CDOs) tied to subprime mortgages. Allegedly, the CDOs were designed to fail. The charges have raised Goldman's public profile and caused severe damage to its image as a company that serves the interests of its clients. The news of a federal probe could be a major hit to the bank's short-term prospects and profitability. According to Friday's Wall Street Journal:
The public is paying close attention to developments in the case and video clips from the senate subcommittee hearings have been widely circulated on the Internet and used as fodder by late-night comedians. The depth and severity of the ongoing recession has created a need to find a scapegoat, one company who more than any other embodies the recklessness and voracity which led to the biggest financial crisis since the Great Depression. Goldman Sachs is that company.
News of the investigation has already roused Wall Street and put fear in the hearts of hedge fund managers and investment bankers who wonder if they'll be next in line. The public is likely to support aggressive action by the Department of Justice to hold the fraudsters accountable and to ensure that investors and homeowners are protected in the future. The question is whether the investigation is an honest attempt to reign in Wall Street or a political stunt to build support for President Obama's financial reforms that are stuck in the senate?
On Thursday, Reuters reported that Goldman planned to settle its fraud case with the SEC. Apparently, CEO Lloyd Blankfein decided that it would be wiser to pay a hefty fine and put the matter behind him than risk another drubbing like he suffered earlier in the week before the senate subcommittee. Now that option has been taken off the table. A full-blown criminal investigation means that Blankfein will be spending his days trying to explain why misleading his clients is a laudable business practice and not a felony. And, for Goldman shareholders, the news is even worse. With the country already in a lather over Wall Street's transgressions, the case could snowball into a reputation-busting main event. If the case goes to court, the networks will be stumbling over themselves to cover every lurid minute of the trial while deploying their footsoldiers to go through Blankfein's personal file with a fine-tooth comb.
Wall Street Journal:
As the WSJ points out, the stakes couldn't be higher. But is the SEC serious or is this just carefully choreographed political theater? No one knows for sure, but the markets aren't going to like it, especially if their Golden boys start blabbering about where all the bodies are buried. That's the nightmare scenario--"contagion"-- one criminal investigation after another spreading through Wall Street like a virus. But it could happen. The word is out that the SEC's new Director of Enforcement Robert Khuzami is eager to prove he's got the sinew to take down the biggest firm on the street. There's nothing that would make John Q. Public happier than seeing a phalanx of SEC regulators in full police regalia goosestepping through lower Manhattan. People are tired reading about bankers pulling in billions, and being fleeced by them.
The SEC wouldn't make a move like this unless they had a pretty solid case. That means that Khuzami may be getting information from a disgruntled former employee, someone who knows how Goldman works from the inside. A criminal case means documentation, hard evidence, and proof of intent. That's a tall order, and not one that the SEC would take lightly. After all, Khuzami vs. Goldman will be "winner take all" contest ; the 52 year old attorney will either be heaped with praise or face a career flame-out.
But Khuzami has his work cut out for him. Goldman will enlist every lawyer from Orlando to Portland to plead its case. And crossing swords with Blankfein will be the easy part. The hard part will be the rearguard action from the Geithner/Summers block within the administration. An attack on Goldman is an attack on Obama's financial braintrust, and it's bound to trigger a split within the White House. Remember how Geithner stuck his neck out to make sure that Goldman got 100 cents on the dollar for its credit default swaps (CDS) with AIG? Government officials don't do that unless they're working for the other side. Geithner is a Goldman loyalist, just like many other of Obama's lieutenants.
What people want is justice. And revenge.
By MIKE WHITNEY
Just two days after a marathon 10-hour hearing before the Senate Permanent Subcommittee on Investigations, Goldman Sachs learned that it is the target in a criminal investigation conducted by the U.S. attorney in Manhattan. Goldman has been accused of fraud by the SEC (in a civil suit) in connection to the sale of complex securities (CDOs) tied to subprime mortgages. Allegedly, the CDOs were designed to fail. The charges have raised Goldman's public profile and caused severe damage to its image as a company that serves the interests of its clients. The news of a federal probe could be a major hit to the bank's short-term prospects and profitability. According to Friday's Wall Street Journal:
"Federal prosecutors are conducting a criminal investigation into whether Goldman Sachs Group Inc. or its employees committed securities fraud in connection with its mortgage trading, people familiar with the probe say.
“The investigation from the Manhattan U.S. Attorney's Office, which is at a preliminary stage, stemmed from a referral from the Securities and Exchange Commission... The SEC recently filed civil securities-fraud charges against the big Wall Street firm and a trader in its mortgage group....The criminal probe raises the stakes for Goldman, Wall Street's most powerful firm." ("Criminal Probe Looks Into Goldman Trading" Wall Street Journal)
The public is paying close attention to developments in the case and video clips from the senate subcommittee hearings have been widely circulated on the Internet and used as fodder by late-night comedians. The depth and severity of the ongoing recession has created a need to find a scapegoat, one company who more than any other embodies the recklessness and voracity which led to the biggest financial crisis since the Great Depression. Goldman Sachs is that company.
News of the investigation has already roused Wall Street and put fear in the hearts of hedge fund managers and investment bankers who wonder if they'll be next in line. The public is likely to support aggressive action by the Department of Justice to hold the fraudsters accountable and to ensure that investors and homeowners are protected in the future. The question is whether the investigation is an honest attempt to reign in Wall Street or a political stunt to build support for President Obama's financial reforms that are stuck in the senate?
On Thursday, Reuters reported that Goldman planned to settle its fraud case with the SEC. Apparently, CEO Lloyd Blankfein decided that it would be wiser to pay a hefty fine and put the matter behind him than risk another drubbing like he suffered earlier in the week before the senate subcommittee. Now that option has been taken off the table. A full-blown criminal investigation means that Blankfein will be spending his days trying to explain why misleading his clients is a laudable business practice and not a felony. And, for Goldman shareholders, the news is even worse. With the country already in a lather over Wall Street's transgressions, the case could snowball into a reputation-busting main event. If the case goes to court, the networks will be stumbling over themselves to cover every lurid minute of the trial while deploying their footsoldiers to go through Blankfein's personal file with a fine-tooth comb.
Wall Street Journal:
"Over the years, the government has been reluctant to criminally charge financial firms with wrongdoing because the charge itself can cause a business to implode. Some investing clients can't or won't trade with a firm facing such a taint.
Indeed, in the more than two-century history of the U.S. financial markets, no major financial firm has survived criminal charges. Securities firms E.F. Hutton & Co. and Drexel Burnham Lambert Inc. crumbled after being indicted in the 1980s. In 2002 Arthur Andersen LLP went bankrupt after it was convicted of obstruction of justice for its role in covering up an investigation into Enron Corp. The conviction was later overturned by the Supreme Court."("Criminal Probe Looks Into Goldman Trading" Wall Street Journal)
As the WSJ points out, the stakes couldn't be higher. But is the SEC serious or is this just carefully choreographed political theater? No one knows for sure, but the markets aren't going to like it, especially if their Golden boys start blabbering about where all the bodies are buried. That's the nightmare scenario--"contagion"-- one criminal investigation after another spreading through Wall Street like a virus. But it could happen. The word is out that the SEC's new Director of Enforcement Robert Khuzami is eager to prove he's got the sinew to take down the biggest firm on the street. There's nothing that would make John Q. Public happier than seeing a phalanx of SEC regulators in full police regalia goosestepping through lower Manhattan. People are tired reading about bankers pulling in billions, and being fleeced by them.
The SEC wouldn't make a move like this unless they had a pretty solid case. That means that Khuzami may be getting information from a disgruntled former employee, someone who knows how Goldman works from the inside. A criminal case means documentation, hard evidence, and proof of intent. That's a tall order, and not one that the SEC would take lightly. After all, Khuzami vs. Goldman will be "winner take all" contest ; the 52 year old attorney will either be heaped with praise or face a career flame-out.
But Khuzami has his work cut out for him. Goldman will enlist every lawyer from Orlando to Portland to plead its case. And crossing swords with Blankfein will be the easy part. The hard part will be the rearguard action from the Geithner/Summers block within the administration. An attack on Goldman is an attack on Obama's financial braintrust, and it's bound to trigger a split within the White House. Remember how Geithner stuck his neck out to make sure that Goldman got 100 cents on the dollar for its credit default swaps (CDS) with AIG? Government officials don't do that unless they're working for the other side. Geithner is a Goldman loyalist, just like many other of Obama's lieutenants.
What people want is justice. And revenge.
Talking to Elizabeth Warren
"Bankruptcy is a Case in Which Literally, the Lobbyists Wrote the Bill"
By HARRY KREISLER
Elizabeth Warren was born in Oklahoma in 1949, professes law at Harvard Law School and is currently chair of the Congressional Oversight Panel to investigate the banking bailout, formally known as the Troubled Assets Relief Program. She’s also the prime advocate for the creation of a new Consumer Financial Protection Agency, which Congress is now considering, but which may well be suffocated in the embrace of the Federal Reserve. Warren's has been cited as among names being considered as Supreme Court nominees to replace retiring Justice John Paul Stevens.and in the opinion of the editors of CounterPunch would be the best choice. AC/JSC
By HARRY KREISLER
Elizabeth Warren was born in Oklahoma in 1949, professes law at Harvard Law School and is currently chair of the Congressional Oversight Panel to investigate the banking bailout, formally known as the Troubled Assets Relief Program. She’s also the prime advocate for the creation of a new Consumer Financial Protection Agency, which Congress is now considering, but which may well be suffocated in the embrace of the Federal Reserve. Warren's has been cited as among names being considered as Supreme Court nominees to replace retiring Justice John Paul Stevens.and in the opinion of the editors of CounterPunch would be the best choice. AC/JSC
Kreisler: Where were you born and raised?
Elizabeth Warren: Born and raised in Oklahoma.
Looking back, how do you think your parents shaped your thinking about the world?
Well, my parents were from Depression-era, dust-bowl Oklahoma, and that shapes your life growing up. I was the last of four children—I have three much older brothers—and by the time I came along I was really kind of the second family for my parents. They hadn’t recovered from the Depression, and I guess in many ways they never did. Those were the stories that permeated my childhood: what it was like to have seven years of drought, what it was like when nobody had any money, what it was like when all your neighbors left to go to California or someplace where they thought there might be jobs. My parents hung on, they stayed, and my father worked a series of different jobs. He was a maintenance man in an apartment house—it was his last job—but they always saw themselves as middle-class people. For them the distinction was that they used good English and they didn’t say “ain’t.” Those were important indicia of middle-classness for my folks. They believed in education and were very proud of this lit-tle daughter they had.
Around the dinner table was there a discussion of politics, of law, or did that all come to you later?
Oh, no. Not around the dinner table. Mostly around the dinner table it was discussion of cars, or rodeos and dogs and cows and horses, and a little discussion of worry about others in the family. There was always a big sense of trying to look out for each other, but nobody in the family really had much of anything.
A theme that you pursue in your work is what’s happening to the family. From what you’re saying now I get the sense that the family was very important as a last resort for survival in the context of those very harsh times.
That’s exactly right. People who didn’t have family or people who broke from their family—they were the true poor, they were the ones with nothing. As long as you had family, you had people who would make sure that you got fed one way or another. Family was about canning peaches, and canning peaches was about making sure that there’d at least be something come next November, when it was cold outside and there were no more crops coming in. Family is the heart of what it’s about.
When you were young, did you have any teachers as a young person who shaped your thinking about the kind of career you might take?
I’m of that generation where there were only two things that a woman could do, if she wanted to do something other than stay home: she could become a nurse, or she could become a teacher. And so, there were some amazing women who taught me from grade school on, and what they opened me up to was the possibility that I, too, could be a teacher. When I went off to college, that’s what I wanted to do. I just didn’t quite know what kind of teacher I would end up becoming.
At college what did you major in, and what was the focus of your interest?
I was sixteen years old when I graduated from high school, and I got a full scholarship in debate that was room, board, tuition, books, and a little spending money. It was a fabulous scholarship at George Washington University, if I would debate for them. It was sort of the equivalent of an athletic scholarship, only this was one that actually a girl could get, even though there weren’t very many girls in debate either. I got my degree in speech pathology and audiology, which meant that I would be able to work with children who had head trauma and other kinds of brain injuries. And that’s what I did.
I was married at nineteen while I was still in college. My first year post-graduation I worked in a public school system with children with disabilities. I didn’t have the education courses and was on an “emergency certificate,” so I went back to graduate school and took a couple of courses in education and said, “I don’t think this is going to work out for me.” I was pregnant with my first baby, so I had a baby and stayed home for a couple of years, and I was really casting about, thinking, “What am I going to do?” My husband’s view of it was, “Stay home. We have children, we’ll have more children, you’ll love this.” And I was very restless about it.
By this point we were living in New Jersey because of his job, so I went back home to Oklahoma for Christmas and saw a bunch of the boys from high school debate. They’d all gone on to law school, and they said, “You should go to law school. You’ll love it.” I said, “You really think so?” And they said, “Of all of us, you should have gone to law school. You’re the one who should’ve gone to law school.” So, I took the tests, applied to law school, and the day my daughter, who later became my co-author, turned two, I started law school at Rutgers Law School in New Jersey.
At that point, I’d never met a lawyer. I mean, I’d never—I didn’t travel in those circles, but I took to law school like a pig takes to mud. I loved law school. And then in my third, final year in law school, I got pregnant again, and I didn’t take a job. Alex was born about three weeks after I graduated, and it was the hardest moment in my life, because I thought, this world that had opened up to me, this world of ideas, and law was a tool you could use to make things happen—and I thought, because I didn’t take a job right out of law school, it was all over. I just kissed it all good-bye. I’d stepped off the train and would never have a chance to get back on it. But I took the bar, hung out a shingle in northern Jersey, did real estate closings and little incorporations and law-suits, all on the civil side, and raised my two babies.
And then Rutgers called and said, “Somebody didn’t show up to teach a class. Would you like to come and teach it, and start Thursday?” And I said, “Sure! How hard could it be?” And so, I started teaching.
What do you see in your background that made you able to seize these opportunities?
Partly my mother always said that I was just contrary, that some kids are just born that way. Families tell stories, and those stories both reflect what the children are and shape what the children become. The story that was always told is that when I was about two and a half I would be allowed to play in the front yard but my mother would tell me, “Don’t go into the street.” And I would look at her and wait until she turned her back and step right on the street, and I would just stand in the street, just a little bit, just near the curb, but I would stand in the street. And my mother was big on switches. She’d pull a switch off a tree and just switch the backs of my legs. And I’d cry, but I’d step right back in the street. Finally my mother realized I was going to go in the street anyway, so she said, “Okay, here are the rules. You look this way and you look that way, and this is how you safely go in the street.” She gave me all the rules for the street, and I was perfectly happy.
I think partly that I always had my neck bowed, I was always going to do something else. When we were able to pick an elective in junior high school and all the girls picked drama, I, of course, had to pick debate. I said I was going to take physics, you know, just because. So, there was a little bit of the “just because,” and it was a moment when Gloria Steinem was out there talking. Did I think I was going to be one of those “women’s libbers”? Heavens, no. I wanted children, I wanted a family, and I some-how thought those were either/or choices. And yet, I also wanted to do things.
I once was at a friend’s house and I saw that they had wallpaper in their bathroom, and I thought it was the coolest thing I’d ever seen. So, I went to Sears and saw this brochure on how to do wallpaper, and I took my babysitting money and bought enough to wallpaper our bathroom. Two weeks later when it came, I announced at the dinner table, “I’ve bought wallpaper so we can wallpaper the bathroom.” And my daddy said—because it was always a family thing—“Nobody in our family knows how to wallpaper. What are you doing?” I said, “How hard could it be? People dumber than us do it every day.” So, I’ve thought that way—you know, you get out there and try it. The worst that hap-pens is you make a mess out of it and have to throw it away.
You started in commercial law, but then you moved to the public realm. How did that transition come about?
I did my very first empirical study looking at the families who were going into bankruptcy back in the early ’80s, and I’ll tell you, I set out to prove they were all a bunch of cheaters. I was going to expose these people who were taking advantage of the rest of us by hauling off to bankruptcy and just charging off debts that they really could repay, or who’d been irresponsible in run-ning up debts.
I did the research, and the data took me to a totally different place. These were hardworking middle-class families who by and large had lost jobs, gotten sick, had family breakups, and that’s what was driving them over the edge financially. Most of them were in complete economic collapse when they filed for bankruptcy. They would never pay these debts off. Realizing this changed my vision. But it certainly didn’t make me want to talk about it in any public sense, until, in 1994, Congress passed a law saying they were going to have a commission on bankruptcy, and I was recruited to work on it. And that’s when I waded into the thick of it and started taking much of my research and translating it much more into public policy.
Without this public policy component, the work would have been so sterile by comparison with what it turned out to be. Oh, yeah, I’d have had great ideas for how 11 USC 1326(b)(2) should be modified in order to achieve a more harmonious result, but, oddly enough, the political part ultimately enriched my understanding of the scope of the problems. It took me far beyond bankruptcy and much more into questions about what’s happening to the middle class. Often, it was other people who would ask me the big questions. “Why are families in so much debt?” “Who are these people who are filing for bankruptcy?” Or sometimes it would simply be their allegations of fact. “Well, we know it’s just the poor and the profligate.” That would cause me to say, “Oh, I’ve got to go back and study this some more.” And so, it enriched and in many ways transformed the work that interested me as a scholar.
You mentioned that your initial attitude about these people who had gone bankrupt was that it was their fault, that they had failed, that they had been spenders, that they had been whatever negative values we associate with them. Do you think it serves a political purpose to believe those kinds of statements?
Absolutely. I began to see that there were a lot of people who really just didn’t care one way or another who was in bankruptcy. The banks and credit card companies wanted this new legislation. In a democratically elected Congress how on earth are you going to pass legislation to benefit two dozen already powerful multibillion-dollar corporations at the expense of all the families filing for bankruptcy every year? This was straight wealth transfer.
So, policy makers and the media would make assertions about who these people were, and at first I believed these were assertions made out of ignorance. And so, I’d come in with the data and say, “Well, actually, let me show you how this works,” and, “Here’s a random sample of 1,250 families and here’s how they were chosen and here’s what we know about them, and look at what happened to them.” And people just didn’t want to hear it.
Finally, it was senators themselves who said, “Professor, you don’t understand. So-and-so over here has taken $300,000 from credit card companies over the last so many years and this is something that industry wants; I see two lobbyists in here a day from the financial services industry to make this happen.” The credit card companies wanted a piece of legislation to cut their losses and boost their profits. And so, the reality of these families’ lives had to be reshaped to tell a politically acceptable story: that this is the fault of these families who are in financial trouble. But you know, the data are just overwhelming on this question, and that is just simply not the truth.
This is part of a larger story. For example, “We don’t have to provide health insurance for folks, because decent people who worked hard and got an education and therefore got good jobs already have health insurance.” There’s an undertone that those who don’t have it have made other bad life choices that caused them to be in a place where they don’t get it.
Bankruptcy is a case in which literally, the lobbyists wrote the bill. I’m not being metaphoric here. The lobbyists wrote the bill, the credit industry paid for it, the campaign contributions then paved the highway for the bill to get passed, and ordinary families just lost out.
We reached a point in America a few years ago where more people went through bankruptcy than graduated from college in a single year! More people filed for bankruptcy than had a heart attack. More children lived in homes that were filing for bankruptcy than in homes that were filing for divorce.
To step beyond bankruptcy, we’re on target now to see 1.4 million families thrown out of their houses this year [2007] in mortgage foreclosures. One in every seven Americans, right now, is dealing with a debt collector. We hear the word from [the Bush administration], “Oh, it’s all about personal responsibility,” over and over and over, but at some point the families themselves start to say, “Uh-uh, no good. This answer doesn’t work.” Indeed, I should point out, some of the family-oriented groups that have aligned themselves politically with conservatives have backed off and said on bankruptcy issues, on credit card issues, on payday loan issues, on home mortgage issues, Congress has got to go a different way. The cracks in the dominant story are starting to appear.
Let’s go back and talk about this bigger picture where the middle class finds itself, both from your own personal experience and from what you were experiencing as a lawyer/aca demic studying these issues. What we’re witnessing beginning in the seventies is a major economic transition in this country affecting the family, and everybody’s running to catch up. Talk a little about it. Give us that big picture.
Starting in about 1970 a fully employed male’s wages completely flattened out, and in fact, a fully employed male today, on average, earns about $800 less than his dad earned a generation ago. Unlike the first seventy years of the twentieth century when wages grew as the economy grew, now the family does better only if they can put two people in the workforce. Millions of mothers poured back into the workforce, and the norm switched from a one-earner family to a two-earner family, for those who are lucky enough to have it. Expenses in the same thirty-year period far outstripped what families were spending, and I’m not talking about consumer price index.
Start with the consumption. This is what everyone in the popular media [supposes] is the reason for people getting in trouble: too many GameBoys, too many iPods, too many $200 sneakers. In fact, families today, adjusted for inflation, spend less on clothing, less on food (including eating out), less on furniture, and less on appliances than they spent a generation ago. Where they spend more is for the three-bedroom, one-bath house. The median family is spending 80 percent more on mortgage payments, adjusted for inflation, than they spent a generation ago. They’re spending about 75 percent more for health insurance than they spent a generation ago. Because today they need two cars instead of one, they’re spending about 60 percent more on cars. They’re paying for child care, which, of course, they didn’t a generation ago, because the mother was home.
Today the median two-income family is spending 75 percent of their income on those five basic expenses, and with two people in the workforce they actually have fewer dollars left over than their one-income parents had a generation ago to cover everything. So, what we have today is two people working full-time, flat-out, hard-bore, and they actually have less money to spend than one person working full-time just one generation ago.
Today’s family is already running full out. They’ve got both people in the workforce full-time, and that creates its own vulnerabilities. They have double the risk someone will get laid off or that somebody will get too sick to go to work. Today if a child gets sick, or if Grandma falls and breaks a hip, someone’s got to take off work to be with them. A generation ago, you already had someone at home to be able to fill that other role. Today someone’s got to take off, and for most jobs that means they lose income.
People are more likely to lose jobs than they were before; jobs are going abroad. When they lose jobs, statistically the odds that they’ll get a new one that pays as well as the job they lost has gone down, compared with a generation ago. These are families that are losing health insurance, losing retirement, so what we’re really watching here is a family unit that’s getting more and more economically vulnerable. They’re working harder than ever, they’ve got two people in the workforce, they’re trying to do homework at night with the kids and hold it all together, and yet economically every part of the game is loaded against them.
You point out in your book -- The Two-Income Trap -- and in your writings that the focus on the family, the concern about education of one’s children, impacts this very vulnerable situation to a greater extent over time, and it’s all about “I want my kids to have the best education.”
“I want my kids to have a shot of making it in the middle class.” This is what it’s about for parents. And so, what does that mean in America today, because of our peculiar way of fi nancing education? It means you’ve got to get to the right zip code, because the right zip code will determine the school assignment for your child. But the prices have shifted upward for those zip codes.
Families with children have seen a 100 per cent increase in housing costs since 1983. Why? Not because families with children have a bigger need for granite countertops or spa bath-rooms, but because housing is the substitute way to buy into a decent school system. This is white families, African American families, Hispanic families, Asian families, it’s across every spectrum. Families with children are tightening the belt one more notch, are working extra hours, are sending both people into the workforce, to try to get into the best possible school district for their children. Families are in financial trouble not because they’re irresponsible but because they’re too responsible. They’re trying to do it for the kids.
All the literature in comparative politics, writings about democracy, democratization, point to the importance of the middle class as the foundation of a working democratic system. What are the long-term implications of what you’re saying?
A strong middle class gives us a strong democracy and a strong economy; it’s what makes us flexible and able to compete in the world; it’s what makes us who we are. Here’s what I fear. I think these data point toward a somewhat larger upper class, with the rest as just one big underclass. The old middle class is now comprised of families who are living paycheck to paycheck, who are dealing this week with debt collectors and next week with late fees and 29 per cent interest on the credit card, who are on a treadmill that they can never get out of debt, never put anything aside in the way of savings. They have better moments and worse moments, but the differentiation between the poor and the middle class is no longer so clear. Now the differentiation is between the upper class and everybody else, because everybody else lives on a financial cliff. Some are getting pushed off, and some are just going to hang on the edge of the cliff. I fear we are moving toward a two-tier society and that government policies have pushed us in that direction, encouraged that division, and made it more comfortable for those who are well-to-do and much more dangerous for those who are part of the growing underclass in America.
Thursday, April 29, 2010
Oil Spill Reaches Mississippi River; White House defends offshore drilling plan
Federal Funds Freed as Cabinet Officials Announce Plans to Travel to Gulf Coast Friday
(CBS/AP) Updated at 9:21 p.m. ET
Faint fingers of oily sheen have reached the mouth of Mississippi River, the vanguard of a massive spill in the Gulf of Mexico.
The slick is making its way toward a delicate environment of birds, marine life and some of the nation's richest seafood grounds.
By sunset Thursday, the oil had creeped into South Pass of the river and was lapping at the shoreline in long, thin lines.
Booms in place to protect grasslands and sandy beaches are being over topped by 5-foot waves of oily water in choppy seas.
In the distance, the lights of the fleet of boats working to keep more of the crude oil away from the coast were outlined in the dying twilight.
BP operated the rig that exploded and sank 50 miles offshore last week and is directing the cleanup and trying to stop the leak from a blown-out underwater well.
The oil spill threatens Louisiana's barrier islands - a buffer against hurricanes - its marshlands and more than 400 species of wildlife, including whales, dolphins and the brown pelican - the state bird - CBS News Correspondent Mark Strassmann reports from Empire, La.
As the oil nears shore, environmental experts say the damage may equal or even eclipse the 1989 Exxon Valdez spill off the southern coast of Alaska, the worst oil spill in U.S. history and one of the worst environmental disasters in decades.
It remains unclear how much oil will flow into the Gulf before the flow can be cut off. The teams of state, federal and company officials charged with the cleanup have tried unsuccessfully to activate an underwater cutoff valve and now say they plan to dig a relief well half a mile away - a process that could take weeks or months. (BP, the company that leased the sunken rig, is currently leading the cleanup effort but has asked the military for assistance.)
According to the latest estimates, oil is flowing into the Gulf at the rate of 5,000 barrels - or 210,000 gallons - a day. At that rate, it would take nearly two months to equal the 11 million gallons unleashed by the Valdez, a 1,000-foot tanker that breached after crashing into a reef in Alaska's Prince William Sound.
But experts say that even if the current spill doesn’t match the Valdez in terms of pure numbers, it could be more damaging because the marshlands of the Mississippi delta are home to numerous species of threatened and endangered birds and other animals.
"It’s quite possible this will end up being worse than the Valdez in terms of environmental impact since it seems like BP will be unable to cap the spill for months. In terms of total quantity of oil released, it seems this will probably fall short of Exxon Valdez. But because of the habitat, the environmental impact will be worse," John Hocevar, oceans campaign director for Greenpeace USA, told MSNBC Thursday.
From Texas to Louisiana, environmentalists are preparing for the worst. Volunteers are already being drafted to wash oil off animals.
Louisiana shrimp season was opened early Thursday to allow shrimpers to try to salvage what they can of the catch. Fishermen are worried.
"This is the time of year they all come in," one fisherman said. "With the oil slick out there, it can kill all the shrimp that's coming in, so we're worried serious about this. It could be devastating to our industry."
Some experts say the oil rig explosion should never have led to a disaster of this magnitude, and they're blaming the federal government for lax safety standards, CBS News Correspondent Ben Tracy reports.
Sen. Bill Nelson, D-Fla., sent President Obama a letter Thursday reminding him that in 2000 the Interior Department insisted "oil companies have 'reliable backup systems' in the event of a rig blowout."
By 2003, the plan was scrapped.
"This could be one of the world's greatest nightmare scenarios of an oil gusher," Nelson said.
The backup systems are supposed to act when an oil rig fails and starts leaking. Then, a valve deep under the water where the drill pipe meets the ocean floor is supposed to choke off the flow of oil. In the case of BP's platform, either the valve wasn't activated or didn't work, possibly because of the explosion.
But there is another line of defense this oil platform did not have, a so-called acoustic switch. It can be activated by remote control sending acoustic pulses through the water to trigger the blowout preventer even if the rig is damaged or evacuated.
Acoustic switches are used in Norway and Brazil after those oil producing countries suffered spills. The U.S. considered requiring them, but drilling companies questioned the $500,000 cost and whether the devices even work.
"There are multiple safety devices which should have brought the flow to a cease when the event happened, so we shouldn't actually assume that this acoustic switch would have also caused it to stop," BP PLC chief operating officer Doug Suttles said.
The spill in the Gulf comes at a time when Mr. Obama has called for a major expansion of offshore drilling. Nelson said not so fast Thursday and proposed a bill to temporarily halt the president's plans. The administration says everything is back on the table.
Louisiana Gov. Bobby Jindal announced that BP PLC has agreed to allow local fishermen to assist in the expected cleanup. Under the agreement, shrimpers and fishermen could be contracted by BP to help.
Jindal's declaration says at least 10 wildlife management areas and refuges in his state and neighboring Mississippi are in the oil plume's path. It also notes that billions of dollars have been invested in coastal restoration projects that may be at risk.
Suttles says the company is hoping to try the unusual technique of using chemicals to break up the oil under water.
The company has been reviewing research on the technique which has been used before, but never at these depths. The well is almost a mile underwater.
Suttles says the company is bringing the chemical to the site of massive spill and already has a giant reel of tubing in place. If approved, work could start Thursday night.
U.S. Coast Guard Rear Adm. Mary Landry called it "a novel, absolutely novel idea."
The Obama administration pledged an all-out response Thursday to the massive oil spill, dispatching top officials to the region to help coordinate defenses against the potential environmental disaster.
"We are being very aggressive and we are prepared for the worst case," Coast Guard Rear Adm. Sally Brice-O'Hara said at the White House.
Mr. Obama, speaking at an event for the 2010 National Teacher of the Year, said he had been receiving frequent briefings on the situation and that he is prepared to use the resources of the Department of Defense if necessary to deal with the oil spill.
Suttles said at a news conference on Thursday that the company has asked the Department of Defense if they can help with better underwater equipment than is available commercially. The company has specifically asked for imaging techniques and remote operating vehicles, he said.
Mr. Obama said SWAT teams were being dispatched to the Gulf to investigate oil rigs and said his administration is now working to determine the cause of the disaster.
The president promised to deploy "every single available resource" to the area and ordered his disaster and environmental leaders to go. The Navy is sending 66,000 feet of inflatable boom and seven skimming systems, and using its bases in the region as staging areas for the operation.
Federal officials announced inspections would begin immediately of all oil rigs in the Gulf and subpoena powers would be used in the gathering investigation. But the priority was to support the oil company BP PLC in employing booms, skimmers, chemical dispersants and controlled burns to fight the oil surging from the seabed.
The administration rejected suggestions that the federal government was slow to act in dealing with the spill and expressed frustration with BP's inability to seal the ruptured well head. The government approved the start of drilling for a relief well and was considering approving a second one as industry and government officials worked on multiple fronts to contain the slick.
Homeland Security Secretary Janet Napolitano, Interior Secretary Ken Salazar and Lisa Jackson, the administrator of the Environmental Protection Agency are explected to visit the Gulf Coast Friday, the same day the massive oil spill is expected to hit U.S. coastline.
"This is a spill of national significance," Napolitano said during a briefing for reporters at the White House.
Classifying the spill with the phrase "national significance" allows the government to tap funds from other areas of the country's coastline to pay for efforts to clean up and monitor the spill, Napolitano said.
Napolitano pledged her department will make sure that BP will reimburse the government for any taxpayer dollars spent on the clean up.
David Hayes, a deputy secretary of the Interior, told reporters that Salazar has ordered immediate inspections of all deep water oil platforms in Gulf.
"That inspection operation is underway as we speak," Hayes said.
Salazar wasn't at the briefing because he was already at a command center in Houston, Hayes said.
Napolitano said the Homeland Security and Interior departments are conducting a joint investigation into what caused the explosion on the rig.
Brice-O'Hara described Wednesday's controlled burn of the oil spill as "very successful," but she said sea and wind conditions won't allow another such burn to be conducted Thursday.
Jackson said the EPA will assist the Coast Guard, which is the lead agency in matters involving the sea and the country's coastline. However, the EPA will monitor air conditions using aircraft and fixed monitors, she said. The EPA will release air quality data within the next few days, she said.
President Obama spoke Thursday with five Gulf state governors from Florida to Texas.
Michael Sole, chief of Florida's Environmental Protection Department, said governments are digging in for a long struggle and it's too soon to know what his state will need from Washington.
"It's only been a week now," he said. "It may be two or three months before they can stop the discharge. The magnitude of this thing gives me concerns as to whether they're going to be able to address the entire coast of the Gulf of Mexico."
So far, he said, the federal government has acted aggressively and cooperatively.
White House defends offshore drilling plan
WASHINGTON, April 29 (Reuters) - The White House defended its offshore oil drilling plan on Thursday, in the wake of the disastrous BP Plc (BP.L) oil spill in the Gulf of Mexico, and said any drilling plan would be assessed thoroughly to minimize risk before going ahead.
"The administration's offshore oil and gas plan proposes a thoughtful, scientifically grounded process for determining which new areas on the outer continental shelf are appropriate for exploration and development, and for assessing the potential risks and benefits of development in areas that are being explored," the White House said in a statement.
The White House said it would work closely with members of Congress and state governors in any process to open up a new area for offshore drilling.
(CBS/AP) Updated at 9:21 p.m. ET
Faint fingers of oily sheen have reached the mouth of Mississippi River, the vanguard of a massive spill in the Gulf of Mexico.
The slick is making its way toward a delicate environment of birds, marine life and some of the nation's richest seafood grounds.
By sunset Thursday, the oil had creeped into South Pass of the river and was lapping at the shoreline in long, thin lines.
Booms in place to protect grasslands and sandy beaches are being over topped by 5-foot waves of oily water in choppy seas.
In the distance, the lights of the fleet of boats working to keep more of the crude oil away from the coast were outlined in the dying twilight.
BP operated the rig that exploded and sank 50 miles offshore last week and is directing the cleanup and trying to stop the leak from a blown-out underwater well.
The oil spill threatens Louisiana's barrier islands - a buffer against hurricanes - its marshlands and more than 400 species of wildlife, including whales, dolphins and the brown pelican - the state bird - CBS News Correspondent Mark Strassmann reports from Empire, La.
As the oil nears shore, environmental experts say the damage may equal or even eclipse the 1989 Exxon Valdez spill off the southern coast of Alaska, the worst oil spill in U.S. history and one of the worst environmental disasters in decades.
It remains unclear how much oil will flow into the Gulf before the flow can be cut off. The teams of state, federal and company officials charged with the cleanup have tried unsuccessfully to activate an underwater cutoff valve and now say they plan to dig a relief well half a mile away - a process that could take weeks or months. (BP, the company that leased the sunken rig, is currently leading the cleanup effort but has asked the military for assistance.)
According to the latest estimates, oil is flowing into the Gulf at the rate of 5,000 barrels - or 210,000 gallons - a day. At that rate, it would take nearly two months to equal the 11 million gallons unleashed by the Valdez, a 1,000-foot tanker that breached after crashing into a reef in Alaska's Prince William Sound.
But experts say that even if the current spill doesn’t match the Valdez in terms of pure numbers, it could be more damaging because the marshlands of the Mississippi delta are home to numerous species of threatened and endangered birds and other animals.
"It’s quite possible this will end up being worse than the Valdez in terms of environmental impact since it seems like BP will be unable to cap the spill for months. In terms of total quantity of oil released, it seems this will probably fall short of Exxon Valdez. But because of the habitat, the environmental impact will be worse," John Hocevar, oceans campaign director for Greenpeace USA, told MSNBC Thursday.
From Texas to Louisiana, environmentalists are preparing for the worst. Volunteers are already being drafted to wash oil off animals.
Louisiana shrimp season was opened early Thursday to allow shrimpers to try to salvage what they can of the catch. Fishermen are worried.
"This is the time of year they all come in," one fisherman said. "With the oil slick out there, it can kill all the shrimp that's coming in, so we're worried serious about this. It could be devastating to our industry."
Some experts say the oil rig explosion should never have led to a disaster of this magnitude, and they're blaming the federal government for lax safety standards, CBS News Correspondent Ben Tracy reports.
Sen. Bill Nelson, D-Fla., sent President Obama a letter Thursday reminding him that in 2000 the Interior Department insisted "oil companies have 'reliable backup systems' in the event of a rig blowout."
By 2003, the plan was scrapped.
"This could be one of the world's greatest nightmare scenarios of an oil gusher," Nelson said.
The backup systems are supposed to act when an oil rig fails and starts leaking. Then, a valve deep under the water where the drill pipe meets the ocean floor is supposed to choke off the flow of oil. In the case of BP's platform, either the valve wasn't activated or didn't work, possibly because of the explosion.
But there is another line of defense this oil platform did not have, a so-called acoustic switch. It can be activated by remote control sending acoustic pulses through the water to trigger the blowout preventer even if the rig is damaged or evacuated.
Acoustic switches are used in Norway and Brazil after those oil producing countries suffered spills. The U.S. considered requiring them, but drilling companies questioned the $500,000 cost and whether the devices even work.
"There are multiple safety devices which should have brought the flow to a cease when the event happened, so we shouldn't actually assume that this acoustic switch would have also caused it to stop," BP PLC chief operating officer Doug Suttles said.
The spill in the Gulf comes at a time when Mr. Obama has called for a major expansion of offshore drilling. Nelson said not so fast Thursday and proposed a bill to temporarily halt the president's plans. The administration says everything is back on the table.
Louisiana Gov. Bobby Jindal announced that BP PLC has agreed to allow local fishermen to assist in the expected cleanup. Under the agreement, shrimpers and fishermen could be contracted by BP to help.
Jindal's declaration says at least 10 wildlife management areas and refuges in his state and neighboring Mississippi are in the oil plume's path. It also notes that billions of dollars have been invested in coastal restoration projects that may be at risk.
Suttles says the company is hoping to try the unusual technique of using chemicals to break up the oil under water.
The company has been reviewing research on the technique which has been used before, but never at these depths. The well is almost a mile underwater.
Suttles says the company is bringing the chemical to the site of massive spill and already has a giant reel of tubing in place. If approved, work could start Thursday night.
U.S. Coast Guard Rear Adm. Mary Landry called it "a novel, absolutely novel idea."
The Obama administration pledged an all-out response Thursday to the massive oil spill, dispatching top officials to the region to help coordinate defenses against the potential environmental disaster.
"We are being very aggressive and we are prepared for the worst case," Coast Guard Rear Adm. Sally Brice-O'Hara said at the White House.
Mr. Obama, speaking at an event for the 2010 National Teacher of the Year, said he had been receiving frequent briefings on the situation and that he is prepared to use the resources of the Department of Defense if necessary to deal with the oil spill.
Suttles said at a news conference on Thursday that the company has asked the Department of Defense if they can help with better underwater equipment than is available commercially. The company has specifically asked for imaging techniques and remote operating vehicles, he said.
Mr. Obama said SWAT teams were being dispatched to the Gulf to investigate oil rigs and said his administration is now working to determine the cause of the disaster.
The president promised to deploy "every single available resource" to the area and ordered his disaster and environmental leaders to go. The Navy is sending 66,000 feet of inflatable boom and seven skimming systems, and using its bases in the region as staging areas for the operation.
Federal officials announced inspections would begin immediately of all oil rigs in the Gulf and subpoena powers would be used in the gathering investigation. But the priority was to support the oil company BP PLC in employing booms, skimmers, chemical dispersants and controlled burns to fight the oil surging from the seabed.
The administration rejected suggestions that the federal government was slow to act in dealing with the spill and expressed frustration with BP's inability to seal the ruptured well head. The government approved the start of drilling for a relief well and was considering approving a second one as industry and government officials worked on multiple fronts to contain the slick.
Homeland Security Secretary Janet Napolitano, Interior Secretary Ken Salazar and Lisa Jackson, the administrator of the Environmental Protection Agency are explected to visit the Gulf Coast Friday, the same day the massive oil spill is expected to hit U.S. coastline.
"This is a spill of national significance," Napolitano said during a briefing for reporters at the White House.
Classifying the spill with the phrase "national significance" allows the government to tap funds from other areas of the country's coastline to pay for efforts to clean up and monitor the spill, Napolitano said.
Napolitano pledged her department will make sure that BP will reimburse the government for any taxpayer dollars spent on the clean up.
David Hayes, a deputy secretary of the Interior, told reporters that Salazar has ordered immediate inspections of all deep water oil platforms in Gulf.
"That inspection operation is underway as we speak," Hayes said.
Salazar wasn't at the briefing because he was already at a command center in Houston, Hayes said.
Napolitano said the Homeland Security and Interior departments are conducting a joint investigation into what caused the explosion on the rig.
Brice-O'Hara described Wednesday's controlled burn of the oil spill as "very successful," but she said sea and wind conditions won't allow another such burn to be conducted Thursday.
Jackson said the EPA will assist the Coast Guard, which is the lead agency in matters involving the sea and the country's coastline. However, the EPA will monitor air conditions using aircraft and fixed monitors, she said. The EPA will release air quality data within the next few days, she said.
President Obama spoke Thursday with five Gulf state governors from Florida to Texas.
Michael Sole, chief of Florida's Environmental Protection Department, said governments are digging in for a long struggle and it's too soon to know what his state will need from Washington.
"It's only been a week now," he said. "It may be two or three months before they can stop the discharge. The magnitude of this thing gives me concerns as to whether they're going to be able to address the entire coast of the Gulf of Mexico."
So far, he said, the federal government has acted aggressively and cooperatively.
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WASHINGTON, April 29 (Reuters) - The White House defended its offshore oil drilling plan on Thursday, in the wake of the disastrous BP Plc (BP.L) oil spill in the Gulf of Mexico, and said any drilling plan would be assessed thoroughly to minimize risk before going ahead.
"The administration's offshore oil and gas plan proposes a thoughtful, scientifically grounded process for determining which new areas on the outer continental shelf are appropriate for exploration and development, and for assessing the potential risks and benefits of development in areas that are being explored," the White House said in a statement.
The White House said it would work closely with members of Congress and state governors in any process to open up a new area for offshore drilling.
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