The three major Democratic contenders for the nomination are all unalluring. John Edwards is offering us a populist package, with homilies on fair trade, gaps between rich and poor, corporate greed and so forth. Decent people including many labor organizers are working for him. I don’t believe a word he says. His substantive record on war and empire is bad. He has poor judgment. Why spend $400 to have a hairdo that makes you look like a slick lawyer with a fancy haircut?
Barack Obama? I can’t remember a single substantive statement he’s made. In terms of political philosophy and pragmatic intention his platform is like the Anglican clergyman’s answer, when asked for his conception of God: an oblong blur. When pressed, Obama’s positions on war and empire are usually very bad. Talk about “moving beyond partisan differences” invariably ends with the Establishment’s long-term goal of abolishing Social Security.
Hillary Clinton is the candidate for corporate power at home, and empire abroad. She argued passionately in the White House for the NATO bombing of Belgrade. Five days after September 11, 2001, she was calling for a broad war on terror. She voted for the Patriot Act. When it came time for Mrs. Clinton to deliver her speech in support of the war, she reiterated some of the most outlandish claims made by Dick Cheney.
On the Republican side I’ve liked Mike Huckabee. He had a decent record as governor of Arkansas and deserves support if only for his moral and political courage in his pardoning or sentence commutations of some 1,200 convicted criminals. These acts of mercy and faith in rehabilitation have been predictably attacked by many liberals because one of those he released may well have subsequently killed someone. This is an unavoidable risk unless you achieve certainty by execution or a sentence of life without the possibility of parole—which will be the trend if states continue to abandon the death penalty. The release on New Year’s Eve of the seventy-seven-year-old Sara Jane Moore after thirty-two years prison for trying to kill our greatest President since Warren Harding is, alas, scarcely a precedent.
But Huckabee, particularly since he took on board a big-name political strategist, Ed Rollins, has made bad mistakes, flip-flopping on his enlightened position on immigration and taking on the awful John Bolton as a foreign policy counselor. Nonetheless I have a soft spot for the guy, if only because he has real populist character and has panicked the Establishment into regrouping round John McCain as the Republican match to HRC, as the bipartisan candidate of choice.
But my favorite remains Ron Paul, rock solid against war and empire and the neoliberal corporate state. He’s a principled fellow who’s won passionate support (and millions in modest cash contributions) from ordinary Americans. I recently drove down I-5 from Washington through Oregon to northern California and “Ron Paul” signs were almost the only ones I saw. I like the look of the people behind them.
All great seasons in politics begin with excitement. Right now there’s none.
January 3
For the party establishments—Democratic and Republican—it was a bad night, as their favored candidates went down to severe defeat.
With Barack Obama’s crushing victory over Hillary Clinton, the campaign scenario of the Democratic elite is now in the trash bin. Their calculation had been that Obama would never be able to match the Clintons’ fund-raising. Wrong. Obama raised huge sums from small contributors, who can continue their support. A lot of Hillary’s big financial backers have already reached their legal limits.
They thought Obama was another Howard Dean, headed for deflation as soon as the voters faced the moment of decision. Wrong again.
Mrs. Clinton had the big feminist organizations in her corner and a good chunk of organized labor. They didn’t deliver, any more than the Democratic machine supervised by campaign chairman Terry McAuliffe and superpollster Mark Penn. They thought they could sink Obama with December’s slurs about drug use, Islamic heritage, and color. They backfired.
The only age bracket Hillary scored well in was that of women sixty-five and up. However, Obama was able to expand the electorate, an unprecedented feat in the history of Iowa caucuses. Students currently on winter break went back to Ames, Iowa City and Des Moines to vote for him.
The three main issues on voters’ minds were, in descending order, the war, the economy, and health care. Obama led in all three. Overall, he beat Hillary among both men and women. He took the five biggest cities and most of the counties in every quarter of the state. Young people simply don’t care for Hillary. Young voters see Obama as a break with the past, and he skillfully manages to avoid any substantive positioning that might disabuse them of this belief. As much as the press tried to say that the war is no longer an issue, it turned out to be the top concern of the voters, and Obama’s record features opposition to the war in his Senate campaign in 2004. Clinton and Edwards both voted for the war. Edwards apologized for that vote. Clinton never did.
It’s hard to see any future for the Edwards campaign, unless as some kind of Hillary surrogate to siphon votes away from Obama in New Hampshire and South Carolina. There’s no evidence that economic populism doesn’t sell in Iowa. It’s simply that this time around Democrats and Independents didn’t see Edwards as a persuasive salesman.
January 16
Terrorism flourishes brazenly at Ground Zero in the new 7 World Trade Center building. Here can be found a secretive entity of fabulous wealth and power. Kingdoms and corporations alike tremble at its shadow and make haste to pay it tribute. I refer to Moody’s Investor Services, wholly owned subsidiary of Moody’s Corporation, which reported $2.3 billion in revenues in 2006.
On January 10 Moody’s, in concert with the other main bondrating firm, Standard and Poor’s, gave the United States its top AAA credit rating. The terrorist blackmail threat came in the form of a demand by Moody’s that the US government “reform” Social Security and Medicare. “In the very long term, the rating could come under pressure if reform of Medicare and Social Security is not carried out as these two programs are the largest threats to the long-term financial health of the United States and to the government’s AAA rating.”
Steven Hess, Moody’s top analyst for the US economy, spelled it out more explicitly to the London Financial Times: “If no policy changes are made, in 10 years from now we would have to look very seriously at whether the US is still a triple-A credit … The US rating is the anchor of the world’s financial system. If you have a downgrade, you have a problem.” Thus does Moody’s man calmly threaten to plant the financial equivalent of a thermonuclear device under the Statue of Liberty.
Right now the US deficit is around $200 billion, 1.5 percent of GDP, which is not large by recent historical measure and which presents no danger in itself to US financial soundness. But as Professor Robert Pollin of U Mass/Amherst adds, if Moody’s analysts want to discuss the causes of fiscal laxity, “Why not look at the Iraq war? The defense budget for 2006 was $617 billion. That is 4.8 percent of a $13 trillion GDP. Before the Iraq war, the defense budget was about 3.0 percent of GDP. So Iraq alone is costing about $150 billion annually, about 1.1 percent of GDP. And what has it accomplished? Social Security and Medicare combined were about $900 billion in 2006. Why assume we first have to attack our minimal welfare state, and leave the imperial budget intact?”
In fact, it’s almost entirely Medicare, not Social Security, that accounts for the projected rising costs in our shriveled welfare state. The culprit here is not the swelling ranks of older people but the insurance and drug companies’ grip on our health system. Conversion to single payer would mean huge savings.
The US pays around 15 percent of its gross domestic product for health care, about 70 percent more than the outlay of other advanced industrial countries. Shift to single payer and quit shoving money—4.8 percent of GDP—down the imperial sinkhole and there’s no fiscal crisis of any sort, short or long term, for Moody’s or anyone else to fret about. And in the even shorter term, if Moody’s sees a fiscal crisis looming, why don’t its overpaid executives for once
put the national interest first and call for a tax hike on the rich? Pollin tells me that just going back to Clinton, as opposed to Bush 2, on taxes for those making over $200,000 a year would generate $60 billion a year. Do this and end the war in Iraq and you wipe out almost the whole deficit at a stroke.
Let a real war on terror commence.
March 1
Was there a medium-size right-wing conspiracy to nail Gov. Eliot Spitzer, above and beyond Governor Spitzer’s own diligent efforts in the same cause? It certainly looks like it. It’s clear that the Feds started with Spitzer whose wire transfers led them to the Emperors Club, a prostitution business efficiently administered by a twenty-three-year-old Blair Academy grad, Cecil Suwal, on behalf of her sixty-two-year-old boyfriend, Mark Brener, from the high rise in Cliffside Park, NJ, with fine views of Manhattan.
The official story is that it was Spitzer’s efforts to break down a $10,000 transfer to an account fronting for Emperors Club that alerted clerks at his Manhattan branch of Capital One’s North Fork bank. A similar transaction at another bank where Spitzer had an account also supposedly twitched a red flag. Banks have to report deposits of $10,000 and up to the Treasury Department. People not wanting to have their bank snitch to the Feds about their transactions routinely keep the sums below the red-light figure, and the Feds have told the banks to adjust their mandatory snooping to report $8,000-plus sums, or sums that add up to $10,000.
Like innumerable other affronts to privacy, this reporting requirement began as a tool in the “war on drugs,” and now is part of the furniture of our lives. All the same, it strains credulity to believe that North Fork’s “suspicious activity report” on a well-known and presumably valued client immediately aroused the interest of the IRS employee scrutinizing the hundreds of thousands of SARs churning through his computer in the IRS watchpost in Long Island. The official version has the IRS man noting Spitzer’s name, then passing the information up the food chain to the Justice Department, and the US Attorney’s office in Manhattan.
Instead of the banks being curious on their own, what if the Feds told the banks to report all of Spitzer’s wire transfers to them? It seems likely, and if so, we have here in outline a sting operation which raises another pressing question: who exactly was it that put Spitzer in touch with Emperors Club in the first place?
Once the wheels were set in motion we had the unedifying spectacle of the full resources of the state devoted to exposing Spitzer’s various rendezvous with consenting adults, primarily the comely twenty-two-year-old “Kristen.” Spitzer’s role as the sole target in this recruitment of investigative and prosecutorial manpower since July 2007 is evidenced by the malicious insertion in the prosecutor’s indictment of a quote from the phone taps about his sexual preferences (reminiscent of Kenneth Starr’s detailed disclosures about the minutiae of physical transactions between Bill Clinton and Monica Lewinsky), which Heidi Fliess, the Hollywood madam, insisted was most certainly a demand for unprotected anal sex.
It’s hard to root for Spitzer with much enthusiasm, beyond mandatory support for anyone facing political ruin and possible criminal charges for having sex with a consenting adult. It was extraordinary to hear the Mann Act, ancient weapon of racist bigotry against blacks, being brandished as a possible sanction against Spitzer for having paid for a prostitute to travel from New York to Washington, DC.
Obviously a stewpot of psychic contradictions, Spitzer was brimful of prosecutorial zeal himself, against prostitutes as well as convicted sex offenders. It was Gov. Spitzer who pushed civil commitment into law in March 2007, legalizing possible lifetime incarceration for sex offenders, no matter what their original prison sentences may have been. But Spitzer also frightened Wall Street. There were plenty of very powerful financial institutions that craved his downfall and whose employees cheered wildly when that downfall appeared imminent.
Powerful people on Wall Street didn’t like Gov. Eliot Spitzer, and Wall Street plays dirty. Relevant here are remarks on the evening of Spitzer’s resignation by Ken Langone. The billionaire venture capitalist was a New York Stock Exchange board member whom Spitzer had gone after when he was Attorney General. Langone was an ally of Richard Grasso, chairman and CEO of the New York Stock Exchange. Attorney General Spitzer sued Grasso in 2004, seeking repayment of most of a $140 million pay package. According to the suit, Grasso, along with former NYSE Director Kenneth Langone, misled the NYSE board about the details of his pay package, beyond that of comparable chief executives. Langone later proclaimed he was launching “a holy war” against Spitzer, when the latter ran for governor.
CNBC: Would you say that you were surprised by this news?
LANGONE: Not at all. I had no doubt about his lack of character and integrity. It would only be a matter of time, I didn’t think he would do it this soon or the way he did it. But I know for sure he went himself to a post office and bought $2,800 worth of mail orders to send to the hooker.
CNBC: How do you know that?
LANGONE: I know it. I know somebody who was standing in back of him in line … We all have our own private hells. I hope his private hell is hotter than anybody else’s.
In other words, the vindictive billionaire Langone heard about the $2,800 in money orders from a private investigator he or his associates had retained to follow Spitzer. As one Wall Street veteran remarked, “I know this to be standard operating procedure against Wall Street enemies.”
How is this not selective prosecution when the members of law enforcement are trying the case in the media? Furthermore, how is this a matter for the Department of Justice’s Public Integrity office? Spitzer has income of over a million a year. That would put his assets in the tens of millions. It’s not as though he couldn’t afford to pay for the prostitutes out of his own pocket. And it’s also not like he was guarding the location of nuclear subs.
Now consider the larger context of Wall Street’s apprehensions about Governor Spitzer. Pam Martens outlined them eloquently as she described the motivations big Wall Street players had for pumping money into Barack Obama’s campaign:
In March of 2000, the Nasdaq stock market, hyped with spurious claims for startup tech and dot.com companies, reached a peak of over 5,000. Eight years later, it’s trading in the 2,300 range and most of those companies no longer exist. From peak to trough, Nasdaq transferred over $4 trillion from the pockets of small mania-gripped investors to the wealthy and elite market manipulators …
Mr. Greenspan was the wind beneath the wings of a carefully orchestrated wealth transfer system known as “pump and dump” on Wall Street. As hundreds of court cases, internal emails, and insider testimony now confirm, this bubble was no naturally occurring phenomenon any more than the Obama bubble is …
The current housing bubble bust is just a freshly minted version of Wall Street’s real estate limited partnership frauds of the ’80s, but on a grander scale … Wall Street created an artificial demand for housing (a bubble) by soliciting high interest rate mortgages (subprime) because they could be bundled and quickly resold for big fees to yield-hungry hedge funds and institutions. A major underpinning of this scheme was that Wall Street secured an artificial rating of AAA from rating agencies that were paid by Wall Street to provide the rating. When demand from institutions was saturated, Wall Street kept the scheme going by hiding the debt off its balance sheets and stuffed this long-term product into mom-and-pop money markets, notwithstanding that money markets are required by law to hold only short-term investments. To further perpetuate the bubble as long as possible, Wall Street prevented pricing transparency by keeping the trading off regulated exchanges and used unregulated over-the-counter contracts instead. (All of this required lots of lobbyist hours in Washington.)
Wall Street has nothing to fear for its subprime frauds from the SEC. The Commission cannot initiate criminal prosecutions. But New York State has the Martin Act, the most powerful criminal enforcement weapon in the country. Now look at why Wall Street was extremely nervous o
f what New York Attorney General Andrew Cuomo, backed by Gov. Spitzer, might have been planning to do with the Martin Act. News reports in January said Cuomo was preparing such suits.
Later the NAACP and lead counsel Brian Kabateck filed papers seeking to fast track their federal class-action lawsuit against Washington Mutual, Citi, GMAC, and fifteen other mortgage firms who systematically steered African-American borrowers into predatory loans.
The defendants in this case are CitiMortgage, Suntrust Mortgage, GMAC Rescap, JP Morgan, National City, First Horizon, Ameriquest Mortgage Company, Fremont Investment & Loan, Option One Mortgage Corporation, WMC Mortgage Corporation, Long Beach Mortgage Company, BNC Mortgage, Accredited Home Lenders, Bear Stearns Residential Mortgage Corporation, Encore Credit, First Franklin Financial Corporation, HSBC Finance Corporation, and Washington Mutual, Inc. This suit is the first to have ever charged so many major mortgage lenders with racial discrimination.
The suit is supported by a wealth of government and other research: a 2008 study by United for a Fair Economy cites federal data showing people of color are more than three times more likely to have subprime loans. The study estimated losses of between $164 billion and $213 billion for subprime loans taken by people of color during the past eight years. This is thought to be “the greatest loss of wealth for people of color in modern US history.” A July 2007 report by Freddie Mac showed that minority borrowers pay higher annual percentage rates on mortgage loans than non-minorities with equal income and credit risk.
There are reasons not to be entirely confident of the defense team retained by Spitzer. The former governor has retained three lawyers from the law firm Paul, Weiss, Rifkind, Wharton and Garrison. This is, according to one seasoned observer, “one of the dirtiest law firms and a huge part of its income comes from Wall Street. It’s known as the place that both the US government and Wall Street hire to cover up big crimes.” The way things usually work is that Paul Weiss is on board to make sure Wall Street’s and the government’s dirty secrets remain secret.
A Colossal Wreck Page 43