Here Comes The Flood Live 1978 Peter Gabriel

President Barack Obama Arrives in Europe

Obama arrives in London, first leg of Europe trip

5:00pm est

AP

LONDON – President Barack Obama embarked on his Europe trip Tuesday, with a hefty economic and national security agenda for his first journey across the Atlantic since taking office two months ago. The president and first lady Michelle Obama arrived in London Tuesday night local time. First up for the president was a summit of the world’s economic powers to address the global financial meltdown.

Obama planned to meet with leaders of Britain, Russia and China — major players in the U.S. financial system. He also scheduled meetings with leaders of India and South Korea while in London.

During his eight-day, five-country trip, Obama is scheduled to meet with European leaders who split with the United States over the war in Iraq and the treatment of suspected terrorists held at Guantanamo Bay, Cuba, under President George W. Bush.

He also will participate in a NATO summit marking the 60 years since the alliance was founded to blunt Soviet aggression in Europe.

Obama plans to attend international summits on urgent topics, including the downward-spiraling fight against terrorists in Afghanistan and Pakistan. He also will make his first stop in a Muslim nation, Turkey.

Wildly popular around the globe but relatively inexperienced in foreign affairs, Obama and the first lady also will squeeze in a Buckingham Palace audience with Queen Elizabeth II. He will deliver a speech in France on the trans-Atlantic relationship and an address in Prague on weapons proliferation. And he will host a round-table session with students in Turkey.

What He Just Said: The Brilliant Bob Somerby on the Madness of Maureen Dowd

March 30, 2009 9:46 est.

BS was the second guy I ever read on the tubes…-JT

Feel free to focus for five…you little freaks…

STILL DUMBING US DOWN! A former sports guy—and a former Rhodes Scholar—continue to dumb liberals down: // link // print // previous // next //

MONDAY, MARCH 30, 2009

Since we asked: On Friday, we asked a question (see THE DAILY HOWLER, 3/27/09): Now that the Washington Post had semi-corrected its bungled report about the weakling Obama Admin, would Rachel Maddow follow suit? Last Tuesday night, Maddow’s report had been even more wrong than the Post’s efforts had been.

Did Maddow correct? We’d have to say no. She did devote a lengthy segment to the topic in question—a segment we thought was quite remarkable for the ways it seemed to pretend that Maddow was brilliantly right all along. To see Friday’s segment, just click here (it runs more than seven minutes). We’ll discuss this topic later this week.

By the way, do you want to see Maddow’s original segment? It seems to have disappeared.

The emperor’s favorite columnist: Sadly for you and your whole family, “The Emperor’s New Clothes” may be Hans Christian Andersen’s most contemporary fable. Quite frequently, people simply can’t see lunacy, even as it stands before them—if the lunacy in question involves a famous authority figure.

We thought of Andersen when we read Maureen Dowd’s Sunday column. Dowd is the most famous columnist at our most influential newspaper—and she’s been visibly crazy for years.

Beautiful, But It Helps…

Mos Def, Salman Rushdie and Chris Hitchens on RealTime with Bill Maher

Dollar Bill Bradley on RealTime With Bill Maher

Bill Maher’s Real Time | March 27, 2009

Dylan Ratigan is Out at CNBC’s Fast Money

Tully

March 30, 2009

Guy Adami just said : “Wait, Wait, Let’s Officially welcome Melissa to the center chair…” (unofficial transcript)

Media outlets have been reporting for the past few days that Dylan Ratigan’s March 31 contract would not be renewed.

As Broadcatching mentioned earlier , we met Mr. Ratigan last fall outside NASDAQ HQ and he was a swell chap.

He was cruising for a bruising talking all that truth and ABC is going to give him a fat payday.

Uh oh….

The World is Pissed

March 29, 2009

NEW YORK TIMES

Obama Will Face a Defiant World on Foreign Visit

By HELENE COOPER

WASHINGTON — President Obama is facing challenges to American power on multiple fronts as he prepares for his first trip overseas since taking office, with the nation’s economic woes emboldening allies and adversaries alike.

Despite his immense popularity around the world, Mr. Obama will confront resentment over American-style capitalism and resistance to his economic prescriptions when he lands in London on Tuesday for the Group of 20 summit meeting of industrial and emerging market nations plus the European Union.

The president will not even try to overcome NATO’s unwillingness to provide more troops in Afghanistan when he goes on later in the week to meet with the military alliance.

He seems unlikely to return home with any more to show for his attempts to open a dialogue with Iran’s leaders, who have, so far, responded with tough words, albeit not tough enough to persuade Russia to support the United States in tougher sanctions against Tehran. And he will be tested in face-to-face meetings by the leaders of China and Russia, who have been pondering the degree to which the power of the United States to dominate global affairs may be ebbing.

Mr. Obama is unlikely to push for specific commitments from other countries on stimulus spending to bolster their own economies, White House officials acknowledged Saturday in a teleconference call, despite the fact that administration officials would like to see European countries, in particular, increase their spending to try to prompt a global economic recovery.

“Nobody is asking any country to come to London to commit to do more right now,” said Michael Froman, deputy national security adviser for international economic affairs. Instead, world leaders at the meeting will try to “do whatever is necessary to restore global growth,” Mr. Froman said.

The challenges stem in part from lingering unhappiness around the world at the way the Bush administration used American power. But they have been made more intense by the sense in many capitals that the United States is no longer in any position to dictate to other nations what types of economic policies to pursue — or to impose its will more generally as it intensifies the war in Afghanistan and extracts itself from Iraq.

“There is a direct challenge under way to the paradigms that America has been trying to sell to the rest of the world,” said Eswar S. Prasad, a former China division chief at the International Monetary Fund. The American banking collapse, which precipitated the global meltdown, has led to a fundamental rethinking of the American way as a model for the rest of the world. Yet even as his presence stirs opposition to particular American policies, Mr. Obama is being welcomed by many Europeans as an embodiment of American ideals.

In Prague, where Mr. Obama will stop later in the week, local officials are installing a hot line for residents to find out about street closings. In Strasbourg, France, site of a NATO meeting, protesters are planning an “international resistance camp” with antiwar actions designed to press Mr. Obama to get American troops out of Afghanistan. In Istanbul, his last stop, workers are polishing up the Hagia Sophia basilica-cum-mosque-cum-museum for the expected visit.

“The rest of the world is yearning for him,” said Kenneth Rogoff, a Harvard economist. “On the one hand, they’ll all be criticizing him, and criticizing the American model. But they all want to hear that he does have a miracle to deliver.”

The quandary has left senior advisers to Mr. Obama scrambling to come up with a way for him to project both American power and the new cooperative international model that his aides have been promising.

Mr. Obama will try to show confidence that his stimulus and economic program will work, administration officials said, while conceding that it may take time. He will say that he has put all the pieces in place to fix the American economy, while acknowledging that in a global system nations cannot put up walls to protect their individual economies.

Robert D. Hormats, vice chairman of Goldman Sachs International, said the president “must demonstrate to the world that he understands that it’s not just about saving ourselves.”

And Mr. Obama must try to do all of that in the middle of a global recession for which most of the world blames the United States. “The U.S. brand name has clearly suffered from this crisis, and the rest of the world is no longer willing to sit quietly and be lectured by the United States on how they should conduct economic policy,” Mr. Rogoff said.

A senior Obama administration official acknowledged that it would be harder for Mr. Obama to exhort other countries to adopt the American model. But Robert Gibbs, the White House spokesman, said Saturday in the conference call that Mr. Obama “is going to listen in London, as well as to lead.”

“Many of the things we’ve done in the past week demonstrate that America is leading by example,” he said.

In the past, American officials traveled to India, Brazil, China and South Africa and lectured government officials on the need for open markets, free trade and deregulation. But now some of those very policies — particularly deregulation — are viewed as the culprits for the recent economic collapse.

“Emerging markets now think they can do what they want without hectoring from the United States,” said Mr. merging Markets, Prasad, the former monetary fund official.

Compounding the problem for Mr. Obama is that the route that he has chosen to lead the United States out of the mess — heavy government spending — is not available to many other countries. European governments, for instance, are far more lukewarm about enormous stimulus programs because they already have strong social safety nets, and more fears of inflation, than does the United States.

So when Mr. Obama meets with other world leaders in London, he will be confronting a philosophical divide, with the United States on the defensive not just on economic issues like trade and financial regulation but also on a variety of national security and diplomatic matters.

After he leaves London, Mr. Obama will go to the French-German border for a NATO meeting at a time when European governments, under pressure from their populations, are looking for the exit doors in Afghanistan even as the United States sends more troops and money.

Administration officials had initially said they hoped to get more troop contributions at the NATO meeting; now they do not even talk about securing more troops from the Europeans, in a tacit acknowledgment that the forces will not be coming.

“I hope that Afghanistan will not be Obama’s war, because it should be owned by all of us,” said NATO’s secretary general, Jaap de Hoop Scheffer.

But there are already twice as many American troops as NATO troops in Afghanistan, and “Europe will never be able to match the numbers of the Americans in Afghanistan,” Mr. de Hoop Scheffer said. The NATO summit meeting, he said, “will not be about troop contributions.”

In Prague, Mr. Obama will confront an Eastern Europe nervous about Russian attempts to reassert itself in an area that Moscow views as its backyard. Mr. Obama has taken pains to reassure Russia that his administration will tread carefully regarding Bush administration plans to locate a missile defense system in Poland and the Czech Republic.

Yet in placating Russia, Mr. Obama has raised hackles in Poland, where officials seek closer ties to the United States.

George Soros Calls G20: “Make or Break”

BBC NEWS

By Joe Lynam

Billionaire investor Gorge Soros has said the G20 summit will be a “make or break” event for the world’s economy.

In a BBC interview, Mr Soros said the international financial system had collapsed because it was flawed and it had to be restructured.

Mr Soros say it may be the last chance to prevent a full-scale depression.

He said the G20 meeting had to come up with concrete solutions to help the developing world in particular, which had been been worst hit.

‘Depression’

Mr Soros warned that any attempt to pull economies out of recession had to be done co-operatively.

He said: “The G20 meeting is make or break because unless they do something for developing world there will be serious collapse in that part of the world.

“I’m using phrase depression because unless we take the right measures we’re liable to end up there.

If countries start doing it [engineering a new financial world order] bilaterally instead of multilaterally, the system will fall apart and we’ll end up in depression.”

He also said the rebuilding meant the previous economic system had to be scrapped.

“ The International financial system has collapsed and cannot be restored in its current form ”
George Soros

“I don’t think we’ll ever be back to where we came from. It should be recognised that the last 25 years were an aberration and we cannot go back there. We have to reconstruct the financial system from its foundations up.”

Mr Soros said regulators and the financial sector shared the blame for the meltdown, as they “participated in this crazy boom built on false premises on the belief that markets are self-regulating and should be left alone”.

Mr Soros also warned the UK economy was in a deep recession “which is going to be a lasting one”.

He added: “The International financial system has collapsed and cannot be restored in its current form. It will have to be restructured because it was flawed and collapsed under its own weight.”

In May last year, Mr Soros was interviewed by the BBC’s business editor Robert Peston and said he was worried about the US and UK’s ability to deal with the downturn because of their reliance on credit.

Mr Soros urged wealthy nations to give their allocations of the IMF’s internal currency, called Special Drawing Rights, to poorer ones because developing countries were not in a position to bail out their own failing banks.

George Soros famously made his name – and $1bn – when he bet that sterling would have to withdraw from the European Exchange Rate Mechanism in 1992. He’s also said to have accurately predicted and profited from the Asian financial crisis in 1997.

The 78-year-old Hungarian is one of the largest aid donors in Africa, having donated around $6bn to his favourite causes.

Run Like Hell

America The Tarnished | Paul Krugman

March 30, 2009

Op-Ed Columnist

NEW YORK TIMES

America the Tarnished

By PAUL KRUGMAN

Ten years ago the cover of Time magazine featured Robert Rubin, then Treasury secretary, Alan Greenspan, then chairman of the Federal Reserve, and Lawrence Summers, then deputy Treasury secretary. Time dubbed the three “the committee to save the world,” crediting them with leading the global financial system through a crisis that seemed terrifying at the time, although it was a small blip compared with what we’re going through now.

All the men on that cover were Americans, but nobody considered that odd. After all, in 1999 the United States was the unquestioned leader of the global crisis response. That leadership role was only partly based on American wealth; it also, to an important degree, reflected America’s stature as a role model. The United States, everyone thought, was the country that knew how to do finance right.

How times have changed.

Never mind the fact that two members of the committee have since succumbed to the magazine cover curse, the plunge in reputation that so often follows lionization in the media. (Mr. Summers, now the head of the National Economic Council, is still going strong.) Far more important is the extent to which our claims of financial soundness — claims often invoked as we lectured other countries on the need to change their ways — have proved hollow.

Indeed, these days America is looking like the Bernie Madoff of economies: for many years it was held in respect, even awe, but it turns out to have been a fraud all along.

It’s painful now to read a lecture that Mr. Summers gave in early 2000, as the economic crisis of the 1990s was winding down. Discussing the causes of that crisis, Mr. Summers pointed to things that the crisis countries lacked — and that, by implication, the United States had. These things included “well-capitalized and supervised banks” and reliable, transparent corporate accounting. Oh well.

One of the analysts Mr. Summers cited in that lecture, by the way, was the economist Simon Johnson. In an article in the current issue of The Atlantic, Mr. Johnson, who served as the chief economist at the I.M.F. and is now a professor at M.I.T., declares that America’s current difficulties are “shockingly reminiscent” of crises in places like Russia and Argentina — including the key role played by crony capitalists.

In America as in the third world, he writes, “elite business interests — financiers, in the case of the U.S. — played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive.”

It’s no wonder, then, that an article in yesterday’s Times about the response President Obama will receive in Europe was titled “English-Speaking Capitalism on Trial.”

Now, in fairness we have to say that the United States was far from being the only nation in which banks ran wild. Many European leaders are still in denial about the continent’s economic and financial troubles, which arguably run as deep as our own — although their nations’ much stronger social safety nets mean that we’re likely to experience far more human suffering. Still, it’s a fact that the crisis has cost America much of its credibility, and with it much of its ability to lead.

And that’s a very bad thing.

Like many other economists, I’ve been revisiting the Great Depression, looking for lessons that might help us avoid a repeat performance. And one thing that stands out from the history of the early 1930s is the extent to which the world’s response to crisis was crippled by the inability of the world’s major economies to cooperate.

The details of our current crisis are very different, but the need for cooperation is no less. President Obama got it exactly right last week when he declared: “All of us are going to have to take steps in order to lift the economy. We don’t want a situation in which some countries are making extraordinary efforts and other countries aren’t.”

Yet that is exactly the situation we’re in. I don’t believe that even America’s economic efforts are adequate, but they’re far more than most other wealthy countries have been willing to undertake. And by rights this week’s G-20 summit ought to be an occasion for Mr. Obama to chide and chivy European leaders, in particular, into pulling their weight.

But these days foreign leaders are in no mood to be lectured by American officials, even when — as in this case — the Americans are right.

The financial crisis has had many costs. And one of those costs is the damage to America’s reputation, an asset we’ve lost just when we, and the world, need it most.

Bill Maher With Madeline Albright | March 20, 2009

Bill Maher | March 20, 2009 | Opening Monologue

Bill Maher | March 20, 2009 | Opening Monologue

TULLYCAST Abides…

C’Mon, C’Mon Listen To The Money Talk

It’s Been a Long Time Coming

National Dept Hits 11 Trillion; Sucker

CBS NEWS

The Federal Government’s flood of red ink hit another high-water mark as the Treasury Department quietly reported today that the National Debt hit $11-trillion for the first time ever.

To be exact, the Debt now stands at $11,033,157,578,669.78. Divide it by the U.S. population and it comes up to over $36,000 in debt for every man, woman and child among us.

And the government is running up mountains of debt with increasing speed. It took just over 5 ½ months for Uncle Sam to go another trillion dollars deeper in debt since hitting $10-trillion last September 30th. It’s the fastest jump in U.S. history.

The hundreds of billions of dollars being spent as part of the federal bailout of the financial markets is a leading factor in the rapid increase. Over $400-billion in debt has been accrued in the 57 days since President Obama took office.

And the federal budget he unveiled last month projects even faster increases in the National Debt. It’ll hit $12.7-trillion by the end of the fiscal year on September 30th. The Administration’s four year estimate shows that by the end of September 2012, the Debt will have soared to $16.2-trillion – which amounts to nearly 100% of the projected Gross Domestic Product that year.

The U.S. is running up so much debt so quickly, some investors are worried. Over the weekend, Chinese Premier Wen Jiabao, who says his country has about a trillion dollars invested in U.S. Treasury notes, said he wanted a guarantee.

President Obama said Wen’s got nothing to worry about.

“Not just the Chinese government, but every investor, can have absolute confidence in the soundness of investments in the United States,” he said on Saturday.

That’s because the U.S. government’s power to tax stands behind all of its debt. If Uncle Sam ever needs a bailout, then as now, taxpayers get nailed.

It took the U.S. government 191 years – from 1791 until 1982 – to run up its first trillion dollars in debt. The second and third trillions got on the scoreboard much more quickly – each in just four years.

By the time George W. Bush was inaugurated in 2001, the National Debt stood at $5.7-trillion. He ran up more debt faster than nearly all of his predecessors combined: just under $4.9-trillion.

The National Debt stood at $10.6-trillon on the day Barack Obama took office. But if his budget projections are accurate, he’ll run up nearly as much government debt in four years as President Bush did in eight.

Karl Rove Discusses His Second Subpoena From House Judiciary Committee

Karl Rove Discusses His Second Subpoena From House Judiciary Committee

Fairness Doctrine or Media Control Doctrine? | An In-Depth Discussion

Fairness Doctrine or Media Control Doctrine? | An In-Depth Discussion

Inside the Mind of the G.O.P. | J.D. Hayworth Blames Soros and Schumer For Financial Meltdown

Inside the Mind of the G.O.P. | J.D. Hayworth Blames Soros and Schumer For Financial Meltdown

Bizarre Rick Sanchez + Nutty Amy Holmes = Delicious George W. Bush Legacy Project

Bizarre Rick Sanchez + Nutty Amy Holmes = Delicious George W. Bush Legacy Project

Former AIG Head Hank Greenberg on CNBC With Maria Bartiromo

Former AIG Head Hank Greenberg on CNBC With Maria Bartiromo

Rick Santelli Subtly Schooled By Dylan Ratigan

Rick Santelli Subtly Schooled By Dylan Ratigan

Politico’s Mike Allen is Panicking at Rush Limbaugh’s Antics…

Politico’s Mike Allen is Panicking at Rush Limbaugh’s Antics…

The Madness of Jim Cramer – Day After Pathetic Evisceration by “Comedian”

The Madness of Jim Cramer – Day After Pathetic Evisceration by “Comedian”

Patrick Byrne Discusses Naked Short-Selling on The Daily Show

Patrick Byrne on The Daily Show

Colin Powell’s Chief of Staff Lawrence Wilkerson Reveals the Truth About Gitmo and Graib

Time Out New York Initially Declares: “R.I.P. Natasha Richardson”

TIME OUT NEW YORK

Posted in Upstaged by Adam Feldman on March 17th, 2009 at 2:00 pm

[UPDATE 1:58 p.m.: The following post appeared earlier this afternoon with the headline "RIP Natasha Richardson 1963–2009." Since that time, TONY's sources have clarified the situation: Richardson is brain dead but has not passed away. Sources close to the family indicate that they are treating it as a death. We will update you on this sad story as circumstances warrant. We apologize to the family and to our readers.]

Last night it was reported that the actor Natasha Richardson had critically injured her head in a skiing accident at the Mont Tremblant resort outside of Montreal, Canada. Although public reports have not yet confirmed it, sources close to Richardson’s family and friends say they have already been told the awful news: She will not survive the accident, and is currently brain dead.

This precipitate loss is a terrible one. Richardson was only 45 and had two adolescent sons; our thoughts go to them and to her husband, the actor Liam Neeson. The theater world, too, is bereft by her departure. Richardson has been the most verdant new branch of one of the great English theatrical family trees: the child of Vanessa Redgrave and the late Tony Richardson, the niece of Lynn Redgrave and Corin Redgrave, the granddaughter of Michael Redgrave. She has pursued the family business with uncommon class and distinction. On Broadway—in Anna Christie, Closer, A Streetcar Named Desire and especially in her Tony-winning turn as Sally Bowles in Cabaret—her work has been elegant, smart and forceful. She is all too suddenly missed.

Shakespeare’s words from Cymbeline cascade to mind:

Fear no more the heat o’ the sun

Nor the furious winter’s rages;

Thou thy worldly task hast done

Home art gone, and ta’en thy wages;

Golden lads and girls all must

As chimney-sweepers, come to dust.

via Sympathies for Natasha Richardson | Upstaged | Time Out New York.

Dick Cheney is a man of principles. Disastrous principles

VICE GRIP

THE WASHINGTON MONTHLY :: FEB/MARCH 2003

JOSHUA MICAH MARSHALL

Early last December, Vice President Dick Cheney was dispatched to inform his old friend, Treasury Secretary Paul O’Neill, that he was being let go. O’Neill, the president’s advisers felt, had made too many missteps, given too much bad advice, uttered too many gaffes. He had become a liability to the administration. As Cheney himself once said in a different context, it was time for him to go. It couldn’t have been a fun conversation–especially since it was Cheney who had picked O’Neill two years earlier.
O’Neill stormed off to Pittsburgh and within days the White House had announced his replacement. Yet the new treasury secretary nominee turned out not to be much of an improvement. Like O’Neill, John Snow was a veteran of the Ford administration who ran an old-economy titan (the railroad firm CSX) and seemed to lack the global market financial experience demanded of modern day treasury secretaries. Like other Bush appointees, Snow came from a business that traded heavily on the Washington influence game. And–again typical of the president and his men–the size of Snow’s compensation package seemed inversely proportional to the returns he made for his shareholders. Of the three new members of the president’s economic team nominated in early December, Snow was the only one to get almost universally poor reviews. He was also Dick Cheney’s pick.

Week after week, one need only read the front page of The Washington Post to find similar Cheney lapses. Indeed, just a few days after Cheney hand-picked Snow, Newsweek magazine featured a glowing profile of National Security Adviser Condoleezza Rice that began with an anecdote detailing her deft efforts to clean up another Cheney mess. In a July speech, the vice president had argued that weapons inspections in Iraq were useless and shouldn’t even be tried. That speech nearly upended the administration’s careful late-summer repositioning in favor of a new United Nations-backed inspections program. As the article explained, Rice–the relatively junior member of the president’s inner circle of foreign policy advisers–had to take the vice president aside and walk him through how to repair the damage he’d done, with a new statement implicitly retracting his earlier gaffe. Such mistakes–on energy policy, homeland security, corporate reform–abound. Indeed, on almost any issue, it’s usually a sure bet that if Cheney has lined up on one side, the opposite course will turn out to be the wiser.

Yet somehow, in Washington’s collective mind, Cheney’s numerous stumbles and missteps have not displaced the reputation he enjoys as a sober, reliable, skilled inside player. Even the Newsweek article, so eager to convey Rice’s competence, seemed never to explicitly note the obvious subtext: Cheney’s evident incompetence. If there were any justice or logic in this administration as to who should or shouldn’t keep their job, there’d be another high-ranking official in line for one of those awkward conversations: Dick Cheney.

Overruling Dick

Consider the evidence. Last year, Cheney’s White House energy task force produced an all-drilling-and-no-conservation plan that failed not just on policy grounds but as a political matter as well, saddling the administration with a year-long public relations headache after Cheney insisted on running his outfit with a near-Nixonian level of secrecy. (To this day, Cheney and his aides have refused to provide the names of most of those industry executives who “advised” him on the task force’s recommendations, though a federal judge has now rejected the Government Accounting Office’s effort to make them do so.) During the spring of 2001, rather than back congressional efforts to implement the findings of the Hart-Rudman commission that called for forceful action to combat terrorism (including the creation of a department of homeland security), Cheney opted to spearhead his own group–not because he disagreed with the commission’s proposals, but to put the administration’s stamp on whatever anti-terrorism reforms did get adopted. Cheney’s security task force did nothing for four months, lurching into action only after terrorists actually attacked America on September 11. In the months that followed, Cheney was one of several key advisers arguing that the White House should keep Tom Ridge’s Office of Homeland Security within the White House rather than upgrade it to a cabinet department and thus open it to congressional scrutiny. Cheney’s obstinacy ensured that the administration’s efforts were stuck in neutral for nearly eight months.

Cheney has not fared much better in the diplomatic arena. Last March, he went on a tour of Middle Eastern capitals to line up America’s allies for our war against Saddam. He returned a week later with the Arabs lining up behind Saddam and against us–a major embarrassment for the White House. Much of the success of the administration’s Iraq policy came only after it abandoned the strategy of unilateral action against Saddam, the strategy Cheney championed, to one of supporting a U.N. inspections regime–a necessary and successful course correction that Cheney resisted and almost halted. Indeed, broadly speaking, the evolution of White House Iraq policy might be described fairly as a slow process of overruling Dick Cheney.

And there’s more. Remember those corporate scandals that came close to crippling Bush? Last summer, White House advisers were pondering whether to back the sort of tough corporate accountability measures that Democrats and the press were demanding. The president was scheduled to deliver a big speech on Wall Street in early July. His advisers were divided. Some argued that strong reforms were at the least a political necessity. But Cheney, along with National Economic Council chair Larry Lindsey, opposed the idea, arguing that new restrictions on corporations would further weaken the economy. The president took Cheney’s advice, and gave a speech on Wall Street that recommended only mild and unspecific reforms. “He mentioned a lot of things in the speech that the Securities and Exchange Commission already does,” one non-plussed Wall Streeter told The Washington Post with a yawn. The day after the president’s speech, the Dow shed 282 points, the biggest single-day drop since the post-terrorist tailspin of Sept. 20. Within days the president was backpedaling and supporting what Cheney had said he shouldn’t. Lindsey got the boot later in the year. Cheney is still in the West Wing shaping economic policy.

Cartel Capitalists

Much of the reason Cheney so often calls things wrong–even on those business issues that would seem his area of expertise–can be traced to the culture in which he’s spent most of his professional life. Despite his CEO credentials and government experience, Dick Cheney has been surprisingly insulated from the political and financial marketplace. He began his career as a Nixon-administration functionary under Donald Rumsfeld. Later, he joined the Ford administration as a deputy assistant to the president before becoming White House chief of staff. From there he moved into elective office, but to the ultra-safe House seat from Wyoming, a post only slightly less shielded from the tides of American politics than were his posts in the Ford administration.

Cheney resigned his House seat in 1989 and moved back to the executive branch where he belonged, serving–with distinction–as defense secretary under the first President Bush. From there he moved to the corporate suite at Halliburton, where he eventually earned tens of millions of dollars. But Halliburton is a peculiar kind of enterprise. It doesn’t market shoes or design software. Rather, its business–providing various products and services to the oil industry and the military–is based on securing lucrative contracts and concessions from a handful of big customers, primarily energy companies and the U.S. and foreign governments. Success in that business comes not by understanding and meeting the demands of millions of finicky customers, but by cementing relationships with and winning the support of a handful of powerful decision-makers.

Indeed, that’s why Halliburton came to Cheney in the first place. His ties with the Bush family, his post-Gulf War friendships with Arab emirs, and the Rolodex he’d compiled from a quarter century in Washington made him a perfect rainmaker. And though he did rather poorly on the management side–he shepherded Halliburton’s disastrous merger with Dresser Industries, which saddled the new company with massive asbestos liabilities–he handled the schmoozing part of the enterprise well.

Cheney is conservative, of course, but beneath his conservatism is something more important: a mindset rooted in his peculiar corporate-Washington-insider class. It is a world of men–very few women–who have been at the apex of both business and government, and who feel that they are unique in their mastery of both. Consequently, they have an extreme assurance in their own judgment about what is best for the country and how to achieve it. They see themselves as men of action. But their style of action is shaped by the government bureaucracies and cartel-like industries in which they have operated. In these institutions, a handful of top officials make the plans, and then the plans are carried out. Ba-da-bing. Ba-da-boom.

In such a framework all information is controlled tightly by the principals, who have “maximum flexibility” to carry out the plan. Because success is measured by securing the deal rather than by, say, pleasing millions of customers, there’s no need to open up the decision-making process. To do so, in fact, is seen as governing by committee. If there are other groups (shareholders, voters, congressional committees) who agree with you, fine, you use them. But anyone who doesn’t agree gets ignored or, if need be, crushed. Muscle it through and when the results are in, people will realize we were right is the underlying attitude.

The danger of this mindset is obvious. No single group of people has a monopoly on the truth. Whether it be plumbers, homemakers, or lobbyist bureaucrats, any group will inevitably see the world through its own narrow, mostly self-interested, prism. But few groups are so accustomed to self-dealing and self-aggrandizement as the cartel-capitalist class. And few are more used to equating their own self-interest with the interests of the country as a whole.

Not since the Whiz Kids of the Kennedy-Johnson years has Washington been led by men of such insular self-assurance. Their hierarchical, old economy style of management couldn’t be more different from the loose, non-hierarchical style of, say, high-tech corpor-ations or the Clinton White House, with all their open debate, concern with the interests of “stake-holders,” manic focus on pleasing customers (or voters), and constant reassessment of plans and principles. The latter style, while often sloppy and seemingly juvenile, tends to produce pretty smart policy. The former style, while appearing so adult and competent, often produces stupid policy.

Over time, people in the White House have certainly had to deal with enough examples of Cheney’s poor judgment. It’s fallen to the White House’s political arm, led by the poll-conscious Karl Rove, to rein in or overrule him. Yet the vice president has apparently lost little stature within the White House. That may be because his get-it-done-and-ignore-the-nay-sayers attitude is one that others in the administration share. Cheney stands up for the cartel-capitalist principles they admire. He is right, in a sense, even when he’s wrong.

Why, though, has the press failed to grasp Cheney’s ineptitude? The answer seems to lie in the power of political assumptions. The historian of science Thomas Kuhn famously observed that scientific theories or “paradigms”–Newtonian physics, for instance–could accommodate vast amounts of contradictory evidence while still maintaining a grip on intelligent people’s minds. Such theories tend to give way not incrementally, as new and conflicting data slowly accumulates, but in sudden crashes, when a better theory comes along that explains the anomalous facts. Washington conventional wisdom works in a similar way. It doesn’t take long for a given politician to get pegged with his or her own brief story line. And those facts and stories that get attention tend to be those that conform to the established narrative. In much the same way, Cheney’s reputation as the steady hand at the helm of the Bush administration–the CEO to Bush’s chairman–is so potent as to blind Beltway commentators to the examples of vice presidential incompetence accumulating, literally, under their noses. Though far less egregious, Cheney’s bad judgment is akin to Trent Lott’s ugly history on race: Everyone sort of knew it was there, only no one ever really took notice until it was pointed out in a way that was difficult to ignore. Cheney is lucky; as vice president, he can’t be fired. But his terrible judgment will, at some point, become impossible even for the Beltway crowd not to see.

Joshua Micah Marshall, author of the Talking Points Memo, is a Washington Monthly contributing writer.

Ben Bernanke on A.I.G. March 15, 2009 [video]

The White Van: Were Israelis Detained on Sept. 11 Spies?

The White Van

Were Israelis Detained on Sept. 11 Spies?

ABC NEWS

June 21 —2002

Millions saw the horrific images of the World Trade Center attacks, and those who saw them won’t forget them. But a New Jersey homemaker saw something that morning that prompted an investigation into five young Israelis and their possible connection to Israeli intelligence.

Maria, who asked us not to use her last name, had a view of the World Trade Center from her New Jersey apartment building. She remembers a neighbor calling her shortly after the first plane hit the towers.

She grabbed her binoculars and watched the destruction unfolding in lower Manhattan. But as she watched the disaster, something else caught her eye.

Maria says she saw three young men kneeling on the roof of a white van in the parking lot of her apartment building. “They seemed to be taking a movie,” Maria said.

The men were taking video or photos of themselves with the World Trade Center burning in the background, she said. What struck Maria were the expressions on the men’s faces. “They were like happy, you know … They didn’t look shocked to me. I thought it was very strange,” she said.

She found the behavior so suspicious that she wrote down the license plate number of the van and called the police. Before long, the FBI was also on the scene, and a statewide bulletin was issued on the van.

The plate number was traced to a van owned by a company called Urban Moving. Around 4 p.m. on Sept. 11, the van was spotted on a service road off Route 3, near New Jersey’s Giants Stadium. A police officer pulled the van over, finding five men, between 22 and 27 years old, in the vehicle. The men were taken out of the van at gunpoint and handcuffed by police.

The arresting officers said they saw a lot that aroused their suspicion about the men. One of the passengers had $4,700 in cash hidden in his sock. Another was carrying two foreign passports. A box cutter was found in the van. But perhaps the biggest surprise for the officers came when the five men identified themselves as Israeli citizens.

‘We Are Not Your Problem’

According to the police report, one of the passengers told the officers they had been on the West Side Highway in Manhattan “during the incident” — referring to the World Trade Center attack. The driver of the van, Sivan Kurzberg, told the officers, “We are Israeli. We are not your problem. Your problems are our problems. The Palestinians are the problem.” The other passengers were his brother Paul Kurzberg, Yaron Shmuel, Oded Ellner and Omer Marmari.

When the men were transferred to jail, the case was transferred out of the FBI’s Criminal Division, and into the bureau’s Foreign Counterintelligence Section, which is responsible for espionage cases, ABCNEWS has learned.

One reason for the shift, sources told ABCNEWS, was that the FBI believed Urban Moving may have been providing cover for an Israeli intelligence operation.

After the five men were arrested, the FBI got a warrant and searched Urban Moving’s Weehawken, N.J., offices.

The FBI searched Urban Moving’s offices for several hours, removing boxes of documents and a dozen computer hard drives. The FBI also questioned Urban Moving’s owner. His attorney insists that his client answered all of the FBI’s questions. But when FBI agents tried to interview him again a few days later, he was gone.

Three months later 2020’s cameras photographed the inside of Urban Moving, and it looked as if the business had been shut down in a big hurry. Cell phones were lying around; office phones were still connected; and the property of dozens of clients remained in the warehouse.

The owner had also cleared out of his New Jersey home, put it up for sale and returned with his family to Israel.

‘A Scary Situation’

Steven Gordon, the attorney for the five Israeli detainees, acknowledged that his clients’ actions on Sept. 11 would easily have aroused suspicions. “You got a group of guys that are taking pictures, on top of a roof, of the World Trade Center. They’re speaking in a foreign language. They got two passports on ‘em. One’s got a wad of cash on him, and they got box cutters. Now that’s a scary situation.”

But Gordon insisted that his clients were just five young men who had come to America for a vacation, ended up working for a moving company, and were taking pictures of the event.

The five Israelis were held at the Metropolitan Detention Center in Brooklyn, ostensibly for overstaying their tourist visas and working in the United States illegally. Two weeks after their arrest, an immigration judge ordered them to be deported. But sources told ABCNEWS that FBI and CIA officials in Washington put a hold on the case.

The five men were held in detention for more than two months. Some of them were placed in solitary confinement for 40 days, and some of them were given as many as seven lie-detector tests.

Plenty of Speculation

Since their arrest, plenty of speculation has swirled about the case, and what the five men were doing that morning. Eventually, The Forward, a respected Jewish newspaper in New York, reported the FBI concluded that two of the men were Israeli intelligence operatives.

Vince Cannistraro, a former chief of operations for counterterrorism with the CIA who is now a consultant for ABCNEWS, said federal authorities’ interest in the case was heightened when some of the men’s names were found in a search of a national intelligence database.

Israeli Intelligence Connection?

According to Cannistraro, many people in the U.S. intelligence community believed that some of the men arrested were working for Israeli intelligence. Cannistraro said there was speculation as to whether Urban Moving had been “set up or exploited for the purpose of launching an intelligence operation against radical Islamists in the area, particularly in the New Jersey-New York area.”

Under this scenario, the alleged spying operation was not aimed against the United States, but at penetrating or monitoring radical fund-raising and support networks in Muslim communities like Paterson, N.J., which was one of the places where several of the hijackers lived in the months prior to Sept. 11.

For the FBI, deciphering the truth from the five Israelis proved to be difficult. One of them, Paul Kurzberg, refused to take a lie-detector test for 10 weeks — then failed it, according to his lawyer. Another of his lawyers told us Kurzberg had been reluctant to take the test because he had once worked for Israeli intelligence in another country.

Sources say the Israelis were targeting these fund-raising networks because they were thought to be channeling money to Hamas and Islamic Jihad, groups that are responsible for most of the suicide bombings in Israel. “[The] Israeli government has been very concerned about the activity of radical Islamic groups in the United States that could be a support apparatus to Hamas and Islamic Jihad,” Cannistraro said.

The men denied that they had been working for Israeli intelligence out of the New Jersey moving company, and Ram Horvitz, their Israeli attorney, dismissed the allegations as “stupid and ridiculous.”

Mark Regev, the spokesman for the Israeli Embassy in Washington, goes even further, asserting the issue was never even discussed with U.S. officials.

“These five men were not involved in any intelligence operation in the United States, and the American intelligence authorities have never raised this issue with us,” Regev said. “The story is simply false.”

No ‘Pre-Knowledge’

Despite the denials, sources tell ABCNEWS there is still debate within the FBI over whether or not the young men were spies. Many U.S. government officials still believe that some of them were on a mission for Israeli intelligence. But the FBI told ABCNEWS, “To date, this investigation has not identified anybody who in this country had pre-knowledge of the events of 9/11.”

Sources also said that even if the men were spies, there is no evidence to conclude they had advance knowledge of the terrorist attacks on Sept. 11. The investigation, at the end of the day, after all the polygraphs, all of the field work, all the cross-checking, the intelligence work, concluded that they probably did not have advance knowledge of 9/11,” Cannistraro noted.

As to what they were doing on the van, they say they read about the attack on the Internet, couldn’t see it from their offices and went to the parking lot for a better view. But no one has been able to find a good explanation for why they may have been smiling with the towers of the World Trade Center burning in the background. Both the lawyers for the young men and the Israeli Embassy chalk it up to immature conduct.

According to ABCNEWS sources, Israeli and U.S. government officials worked out a deal — and after 71 days, the five Israelis were taken out of jail, put on a plane, and deported back home.

While the former detainees refused to answer ABCNEWS’ questions about their detention and what they were doing on Sept. 11, several of the detainees discussed their experience in America on an Israeli talk show after their return home.

Said one of the men, denying that they were laughing or happy on the morning of Sept. 11, “The fact of the matter is we are coming from a country that experiences terror daily. Our purpose was to document the event.”

ABCNEWS’ Chris Isham, John Miller, Glenn Silber and Chris Vlasto contributed to this report.

What Exactly is the Problem Over at EBAY?

Fixing eBay

Salon Dot Com

The answer to fixing eBay is easy: fire John Donahoe and get somebody in there who understands what eBay founder Pierre Omidyar understand in the 1990s – EBAY IS A COMMUNITY AND 90% OF ITS USERS ARE HONEST.

EBay has made it impossible for members to be part of a community by its rigging of the contact system. Meg Whitman and John Donahoe’s Ebay had this fear of losing money if it let sellers and buyers actually communicate with each other easily. And don’t tell me Big Brother eBay doesn’t monitor what emails it allows.

The company has raised selling fees to the point of insanity. It has zero telephone support. It’s support emails are worthless and are written by robots. Nobody can get an honest answer and, sorry Mr. Donahoe, but SKYPE was one of the stupidest endeavors ever. 100% of eBay users already had phone service of some kind or another. Who the heck wants to switch to an Internet provider when there’s always a good chance your Internet connection is going to conk out? Does anybody really want Skype to replace their cell phone? Why does anybody need two phone service providers?

The new rule wherein Sellers can’t leave negatives for Buyers is as dumb as dumb gets, which makes Mr. Donahoe a very stupid man. He’s a total failure as a chief executive. He’s wimpy and wishy washy and clueless. He’s also idealess, unless it’s a bad idea.

The other new rule wherein PayPal is the only thing that can be mentioned as payment is another dumb idea. The raise in fees, the no-negatives-to-Buyers dictate, and the PayPal only declaration has done what nothing else could. IT SENT SELLERS AWAY FROM EBAY IN DROVES.

The company knows it. It knows sales are down. It knows why. No one at eBay has the guts or the backbone to admit the truth.

Donahoe has failed the company. It has made eBay a nasty, suspicious, demeaning place on which to do business – at least for Sellers – and, what? It wants to blame the economy for its problems? Baloney.

EBay dug its own hole by the way it treated Sellers and now it’s paying the price. Almost everyone who posted on eBay’s chat rooms and boards the past two years predicted that eBay would eventually kill its Golden Goose. Well, it has.

To succeed, eBay needs to go back to basics. GO BACK TO THE BEGINNING. It needs to poll EVERY SINGLE SELLER and ask what’s wrong. EBay has the email capacity for that. But, I think they’re terrified of the negative response it will receive.

Once again, the technocrats destroyed a good websites. Techies who think they know better. Techies who think that because they can think it up, it’s going to work and help. Once again, these techies learned the hard truth. You can’t cock up a site with tech features and expect people to be happy or to keep caring. Everything became too complex. SIMPLICITY SHOUTS.

And when you’re nasty to the people that made you rich, the people that made you rich will tell you to kiss-off.

I used to sell thousands upon thousands of dollars of product each year on eBay. I don’t sell there anymore, and I hardly bother to buy. EBay doesn’t even advertise anymore. It’s a wounded company, limping towards irrelevance because of what it did to its Sellers.

I now pay $40 a month to a local antique mall for a showcase in which I put my items to sell. I do very well. I no longer need, want, or care about eBay. You know why? Because eBay hurt my feelings. It made my feel unwanted. That’s why.

– Jude Estlin

It’s Your Day, A Woman’s Day

What We Should Learn from Jim Cramer vs. The Daily Show’s Jon Stewart

::What We Should Learn from Jim Cramer vs. the Daily Show’s Jon Stewart::

March 12th, 2009 by Patrick Byrne

What should we learn from the fact that “The Daily Show’s” Jon Stewart has in four evenings (1 2 3 and 4) exposed Jim Cramer in a way that, in any sane world, he would have been exposed a decade ago? To answer that, consider these associated facts: while the Jim Cramer constellation of journalists (Mitchell’s Media Mob) backed each other up while covering-up the subject of criminally abusive short selling by hedge funds to whom they were close, four channels of the media broke rank:

1. Two years ago Bloomberg did a half-hour documentary that broke away from the Party Line;
2. Liz Moyer at Forbes has covered the real issues fairly and diligently, and another Forbes reporter named Nathan Vardi took a good swipe at the story (”Sewer Pipes“);
3. Rolling Out Magazine (”an UrbanStyle Weekly serving the African American community”) called me up a couple years ago and did precisely the fair, non-disorted interview of which the remainder of the New York financial media was entirely incapable;
4. Now, “The Daily Show” has broken ranks by stating the obvious: there are journalists shilling for favored hedge funds.

Could the lesson be that the first news organizations that can break ranks with the Party Line are either fringe (”Rolling Out Magazine” and “The Daily Show”) or the properties of billionaires (Bloomberg and Forbes) who cannot be intimidated?

Perhaps someday, a journalist will look into the pressures that were brought on news organizations (e.g., on Bloomberg leading up to their running “Phantom Shares”). Just a few weeks ago I got the  story, again, from a journalist: “I was working on a story about naked short selling and Deep Capture. Then, suddenly I was stopped. It’s weird because I have been a journalist here for 9 years. I have built a great reputation with my editor, and have never had a story interfered with. But I got a couple months into this story, and suddenly I was stopped from above. I’ve never seen that happen before.” I replied, If you only knew how many times a journalist has said that to me in the last couple years….

Link

The Real Scandal That Will Bring Jim Cramer Down: The Story of Deep Capture

The Columbia School of Journalism is our nation’s finest. They grant the Pulitzer Prize, and their journal, The Columbia Journalism Review, is the profession’s gold standard. CJR reporters are high priests of a decaying temple, tending a flame in a land going dark.

In 2006 a CJR editor (a seasoned journalist formerly with Time magazine in Asia, The Wall Street Journal Europe, and The Far Eastern Economic Review) called me to discuss suspicions he was forming about the US financial media. I gave him leads but warned, “Chasing this will take you down a rabbit hole with no bottom.” For months he pursued his story against pressure and threats he once described as, “something out of a Hollywood B movie, but unlike the movies, the evil corporations fighting the journalist are not thugs burying toxic waste, they are Wall Street and the financial media itself.”

His exposé reveals a circle of corruption enclosing venerable Wall Street banks, shady offshore financiers, and suspiciously compliant reporters at The Wall Street Journal, Fortune, CNBC, and The New York Times. If you ever wonder how reporters react when a journalist investigates them (answer: like white-collar crooks they dodge interviews, lie, and hide behind lawyers), or if financial corruption interests you, then this is for you. It makes Grisham read like a book of bedtime stories, and exposes a scandal that may make Enron look like an afternoon tea.

By Patrick M. Byrne

Deep Capture Reporter

Make a pot of strong coffee and read this incredible story

Unedited | Cramer Vs. Stewart | Part Three

Unedited | Cramer Vs. Stewart | Part Three

Part Two | Cramer Vs. Stewart | Unedited

Part Two | Cramer Vs. Stewart | Unedited

Part One | Cramer Vs. Stewart | Unedited

Part One | Cramer Vs. Stewart | Unedited

Intro | Cramer Vs. Stewart | Unedited

Intro | Cramer Vs. Stewart | The Complete Interview -Unedited

R.I.P. Richard Wright | Pink Floyd | Run Like Hell – Live 1980

New Rules | March 13 2009 | Bill Maher’s Real Time

Bill Maher With Sarah Silverman | March 13 2009 | We’re F#cked Edition

Bill Maher Real Time | March 13 2009 | Andrew Breitbart and Michael Eric Dyson 3

Bill Maher Real Time | March 13 2009 | Andrew Breitbart and Michael Eric Dyson 2

Bill Maher Real Time | March 13 2009 | Andrew Breitbart and Michael Eric Dyson

Bill Maher With Steven Pearlstein | March 13 2009 | Real Time

Bill Maher | March 13 2009 | Opening Monologue

Live Blogging the Madoff Hearing: The Victims Speak

Live Blogging the Madoff Hearing: The Victims Speak

Posted by Brian Baxter

AM LAW DAILY

The first Madoff victim–a Mr. Nuremberg–has approached the court to speak. He begins by challenging Madoff to look him in the eye. Madoff started to turn towards Nuremberg before Judge Chin ordered Nuremberg to return to the podium.

Nuremberg did as instructed and stated that a conspiracy count should be included in the plea. He said other individuals were undoubtedly involved in pulling together “the reams of data” that Madoff used to

build his fraudulent business.

Nuremberg urged Chin to reject the plea. Another victim has approached the podium and urged more of the same.

A third victim, who the audio dipped out on and we couldn’t get her name, says that Chin should push for a trial for Madoff that will show the true extent of his crimes and others allegedly involved

“We are a country that learns from our mistakes,” she said. “And then we can reexamine and improve the mechanisms that have failed us so completely here…with this horrendous crime. Mr. Madoff has

inflicted so much pain on the young, the old, and the infirm. No man is above the law.”

At this point, Chin says there will be no more statements from victims.

via Live Blogging the Madoff Hearing: The Victims Speak.

Phish Rocks Hampton Likes It’s 1989….

March 10, 2009

Phish Returns to Feed Its Hungry Fan

The New York Times

By SETH SCHIESEL

HAMPTON, Va. — Every crowd makes its own tune. Massed sports fans burst to celebration and shrink to groans in a rhythm punctuated by a certain detachment. Political rallies mix earnest approval with dutiful laughs inspired by jibes and cynical self-deprecation.

And then there was the noise, the great rising roar that swelled from 13,800 throats here at 7:59 on Friday evening: the unfettered, triumphant cascade of joy heard only at a major rock concert. As the house lights dimmed at the Hampton Coliseum, the four members of Phish officially took the stage for the first time since August 2004. And as the opening passage of the anthem “Fluffhead” enveloped the room, the eruption of exultation was not merely for the band itself but also for the millions in the Phish diaspora who make up perhaps the most fervent fandom in pop music.

“It’s like our family hasn’t been able to be together for four and a half years,” Lauren Knyper, 33, a teacher from Babylon, N.Y., said near the front of the admission line that snaked hundreds of yards behind her before Friday’s show. Ms. Knyper wore a black T-shirt that read “This is my 100th show,” then pointed to her pregnant midsection, “and his first.” Ms. Knyper’s husband, who declined to give his name “because I’m not supposed to be here,” said it was his 217th Phish concert.

“We’re here with at least 20-some-odd friends,” Ms. Knyper said. “For the last four years we’ve been missing that connection because this really is a family, and this is our community. It’s been years since we could be together, so it just has this incredible emotional meaning. My mother died just last month, and this is like my music therapy. ”

When Phish announced in September that it would reunite and play three concerts here, the news instantly rekindled the Internet-fueled Phish fan network. Within days of the announcement, even before tickets went on sale, every hotel within at least 20 miles was booked solid.

Local officials estimated that as many as 75,000 people might have descended on the area for the shows, according to The Associated Press. In the parking lots were license plates from just about every state east of the Mississippi and quite a few west of it. At Kelly’s Tavern just down the street, Nora Brendel, 59, a waitress, heralded the bumper business on Saturday afternoon. “Last night they told us, ‘Get on your roller skates, girls,’ ” she said. “ ‘Better get some good sleep tonight.’ ”

It appeared that almost no one at the shows over the weekend paid the face price of $49.50 for each night’s tickets, and that most fans had ended up paying at least several hundred dollars each. In the parking lot, amid the more whimsical offers of snowboards and mud from the band’s 2004 “farewell” festival in Coventry, Vt., cash offers of $500 for one night’s ticket were being routinely ignored by sellers on Friday. By Saturday, the going rate seemed to be around $1,000.

“You could offer me $20,000, and I wouldn’t walk away from these shows,” Olen Green, a 38-year-old truck driver from Pittsburgh, said as he sat in the first row of the balcony on Friday night. Mr. Green said he had paid $1,265 for his three nights’ tickets. “People say, ‘Oh, why are you going to all three shows?’ But it’s really just like one event.”

And those prices weren’t for luxury box seats. No such thing here. In an era of high-tech stadiums and fancy amenities, Hampton Coliseum is among the great old-school rock arenas. One of the few halls of its size still to offer full general-admission seating with an open floor, Hampton is known to rock fans as crowded, sweaty, stinky, smoky, loud and in every respect intense. Leave your seat without a friend to watch it? It’s gone.

Next to Mr. Green, Dave Yanaitis, 32, manager of a service station down the road in Virginia Beach, Va., was jostling for position at the front edge of the balcony.

“Hey this is Hampton,” Mr. Yanaitis said. “There is no way this crowd can be stopped. I wouldn’t call it violent or rough, but it is very energetic, especially with the rush tonight of being the first shows back. It can be a little aggressive just because the energy is so high. People aren’t going to just take your space, but if you’re not here to hold it …” He shrugged, grinned and gestured at the teeming crowd stretching out before him. “Look at this sea of people.”

During its shows the band engages in almost none of the between-song banter common to other acts. As the musicians progress through intricately scripted passages and wide-ranging improvisations, the audience generally maintains an intense, attentive, swaying silence.

The sound quality at Hampton is renowned, and the room has long inspired major rock bands to some of their finest concerts. By opening its comeback with “Fluffhead,” a beloved song that the band had not played since 2000, Phish inspired comparisons among the cognoscenti to a legendary Hampton performance by the Grateful Dead on Oct. 9, 1989, when that band performed “Dark Star” for the first time in five years.

With its devoted fans and improvisational ambition, Phish has long been bound in the popular imagination with the Grateful Dead, and there is no question that the two bands and their fans share a musical and cultural lineage. Yet Phish fans are generally of a distinctly younger generation. Though there were very few people who appeared to be over 40 at the shows here, there was a huge bubble of fans in their late 30s, which makes perfect sense, given that Phish (formed at the University of Vermont) first came to prominence on the college and prep school campuses of the Northeast in the late 1980s.

“I would go to Dead shows, and there would be all these 50-year-olds there, which was fine, but I was like 17, 18 at the time,” said Brett Fairbrother, 37, a fan who works at the Portsmouth Brewery in Kittery, Me. “Then I saw Phish, and it was all of these people my own age, so that was where I was meant to be.”

There also weren’t many fans under 25, probably because of the cost, but there were a few young fans lucky enough to make the Hampton shows their first.

“I was 5 years old when Jerry Garcia died, and 13 when Coventry happened, so I’ve been waiting all my life to come to a show like this,” Ben Cooper, 18, a high school senior from Knoxville, Tenn., said on Saturday night. Mr. Cooper said his family had pooled $900 to buy him tickets as a combined graduation and birthday present.

Among the fans interviewed, the Hampton shows won rave reviews, with the near-universal opinion that Phish now is far tighter and more energetic than the band that toured five or six years ago. The group played for about 3.5 hours each night, and all of the sets are available as free downloads at livephish.com.

An hour after the last concert ended early on Monday morning, with the final notes of “Tweezer Reprise,” hundreds of fans lingered in the atrium bar of a nearby hotel, holding onto the weekend as if it were the last night of camp, when no one wants to go home.

“They exceeded my expectations from the very first song of the very first show,” said Erik Rankin, 27, an ad salesman from Great Neck, N.Y. “The first night was like a recital. The second night was more ambient, darker. And then tonight they just brought the funk. Phish is back.”

George W. Bush and His White House Stoked the Mortgage Poop Fire

White House philosophy stoked mortgage bonfire

By Jo Becker, Sheryl Gay Stolberg and Stephen Labaton

Sunday, December 21, 2008

WASHINGTON : “We can put light where there’s darkness, and hope where there’s despondency in this country. And part of it is working together as a nation to encourage folks to own their own home.” — President George W. Bush, Oct. 15, 2002

It was Sept. 18. Lehman Brothers had just gone belly-up, overwhelmed by toxic mortgages. Bank of America had swallowed Merrill Lynch in a hastily arranged sale. Two days earlier, Bush had agreed to pump $85 billion into the failing insurance giant American International Group.

The president listened as Ben Bernanke, chairman of the Federal Reserve, laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money.

Then his Treasury secretary, Henry Paulson Jr., told him that to stave off disaster, he would have to sign off on the biggest government bailout in history.

Bush, according to several people in the room, paused for a single, stunned moment to take it all in.

“How,” he wondered aloud, “did we get here?”

Eight years after arriving in Washington vowing to spread the dream of homeownership, Bush is leaving office, as he himself said recently, “faced with the prospect of a global meltdown” with roots in the housing sector he so ardently championed.

There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk.

But the story of how we got here is partly one of Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials.

From his earliest days in office, Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

Bush did foresee the danger posed by Fannie Mae and Freddie Mac, the government-sponsored mortgage finance giants. The president spent years pushing a recalcitrant Congress to toughen regulation of the companies, but was unwilling to compromise when his former Treasury secretary wanted to cut a deal. And the regulator Bush chose to oversee them — an old prep school buddy — pronounced the companies sound even as they headed toward insolvency.

As early as 2006, top advisers to Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Bush and his team misdiagnosed the reasons and scope of the downturn; as recently as February, for example, Bush was still calling it a “rough patch.”

The result was a series of piecemeal policy prescriptions that lagged behind the escalating crisis.

“There is no question we did not recognize the severity of the problems,” said Al Hubbard, Bush’s former chief economics adviser, who left the White House in December 2007. “Had we, we would have attacked them.”

Looking back, Keith Hennessey, Bush’s current chief economics adviser, says he and his colleagues did the best they could “with the information we had at the time.” But Hennessey did say he regretted that the administration did not pay more heed to the dangers of easy lending practices. And both Paulson and his predecessor, John Snow, say the housing push went too far.

“The Bush administration took a lot of pride that homeownership had reached historic highs,” Snow said in an interview. “But what we forgot in the process was that it has to be done in the context of people being able to afford their house. We now realize there was a high cost.”

For much of the Bush presidency, the White House was preoccupied by terrorism and war; on the economic front, its pressing concerns were cutting taxes and privatizing Social Security. The housing market was a bright spot: ever-rising home values kept the economy humming, as owners drew down on their equity to buy consumer goods and pack their children off to college.

Lawrence Lindsay, Bush’s first chief economics adviser, said there was little impetus to raise alarms about the proliferation of easy credit that was helping Bush meet housing goals.

“No one wanted to stop that bubble,” Lindsay said. “It would have conflicted with the president’s own policies.”

Today, millions of Americans are facing foreclosure, homeownership rates are virtually no higher than when Bush took office, Fannie and Freddie are in a government conservatorship, and the bailout cost to taxpayers could run in the trillions.

As the economy has shed jobs — 533,000 last month alone — and his party has been punished by irate voters, the weakened president has granted his Treasury secretary extraordinary leeway in managing the crisis.

Never once, Paulson said in a recent interview, has Bush overruled him. “I’ve got a boss,” he explained, who “understands that when you’re dealing with something as unprecedented and fast-moving as this we need to have a different operating style.”

Paulson and other senior advisers to Bush say the administration has responded well to the turmoil, demonstrating flexibility under difficult circumstances. “There is not any playbook,” Paulson said.

The president declined to be interviewed for this article. But in recent weeks Bush has shared his views of how the nation came to the brink of economic disaster. He cites corporate greed and market excesses fueled by a flood of foreign cash — “Wall Street got drunk,” he has said — and the policies of past administrations. He blames Congress for failing to reform Fannie and Freddie. Last week, Fox News asked Bush if he was worried about being the Herbert Hoover of the 21st century.

“No,” Bush replied. “I will be known as somebody who saw a problem and put the chips on the table to prevent the economy from collapsing.”

But in private moments, aides say, the president is looking inward. During a recent ride aboard Marine One, the presidential helicopter, Bush sounded a reflective note.

“We absolutely wanted to increase homeownership,” Tony Fratto, his deputy press secretary, recalled him saying. “But we never wanted lenders to make bad decisions.”

A policy gone awry

Darrin West could not believe it. The president of the United States was standing in his living room.

It was June 17, 2002, a day West recalls as “the highlight of my life.” Bush, in Atlanta to unveil a plan to increase the number of minority homeowners by 5.5 million, was touring Park Place South, a development of starter homes in a neighborhood once marked by blight and crime.

West had patrolled there as a police officer, and now he was the proud owner of a $130,000 town house, bought with an adjustable-rate mortgage and a $20,000 government loan as his down payment — just the sort of creative public-private financing Bush was promoting.

“Part of economic security,” Bush declared that day, “is owning your own home.”

A lot has changed since then. West, beset by personal problems, left Atlanta. Unable to sell his home for what he owed, he said, he gave it back to the bank last year. Like other communities across America, Park Place South has been hit with a foreclosure crisis affecting at least 10 percent of its 232 homes, according to Masharn Wilson, a developer who led Bush’s tour.

“I just don’t think what he envisioned was actually carried out,” she said.

Park Place South is, in microcosm, the story of a well-intentioned policy gone awry. Advocating homeownership is hardly novel; the Clinton administration did it, too. For Bush, it was part of his vision of an “ownership society,” in which Americans would rely less on the government for health care, retirement and shelter. It was also good politics, a way to court black and Hispanic voters.

But for much of Bush’s tenure, government statistics show, incomes for most families remained relatively stagnant while housing prices skyrocketed. That put homeownership increasingly out of reach for first-time buyers like West.

So Bush had to, in his words, “use the mighty muscle of the federal government” to meet his goal. He proposed affordable housing tax incentives. He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.

Concerned that down payments were a barrier, Bush persuaded Congress to spend up to $200 million a year to help first-time buyers with down payments and closing costs.

And he pushed to allow first-time buyers to qualify for federally insured mortgages with no money down. Republican congressional leaders and some housing advocates balked, arguing that homeowners with no stake in their investments would be more prone to walk away, as West did. Many economic experts, including some in the White House, now share that view.

The president also leaned on mortgage brokers and lenders to devise their own innovations. “Corporate America,” he said, “has a responsibility to work to make America a compassionate place.”

And corporate America, eyeing a lucrative market, delivered in ways Bush might not have expected, with a proliferation of too-good-to-be-true teaser rates and interest-only loans that were sold to investors in a loosely regulated environment.

“This administration made decisions that allowed the free market to operate as a barroom brawl instead of a prize fight,” said L. William Seidman, who advised Republican presidents and led the savings and loan bailout in the 1990s. “To make the market work well, you have to have a lot of rules.”

But Bush populated the financial system’s alphabet soup of oversight agencies with people who, like him, wanted fewer rules, not more.

Like minds on laissez-faire

The president’s first chairman of the Securities and Exchange Commission promised a “kinder, gentler” agency. The second was pushed out amid industry complaints that he was too aggressive. Under its current leader, the agency failed to police the catastrophic decisions that toppled the investment bank Bear Stearns and contributed to the current crisis, according to a recent inspector general’s report.

As for Bush’s banking regulators, they once brandished a chain saw over a 9,000-page pile of regulations as they promised to ease burdens on the industry. When states tried to use consumer protection laws to crack down on predatory lending, the comptroller of the currency blocked the effort, asserting that states had no authority over national banks.

The administration won that fight at the Supreme Court. But Roy Cooper, North Carolina’s attorney general, said, “They took 50 sheriffs off the beat at a time when lending was becoming the Wild West.”

The president did push rules aimed at forcing lenders to more clearly explain loan terms. But the White House shelved them in 2004, after industry-friendly members of Congress threatened to block confirmation of his new housing secretary.

In the 2004 election cycle, mortgage bankers and brokers poured nearly $847,000 into Bush’s re-election campaign, more than triple their contributions in 2000, according to the nonpartisan Center for Responsive Politics. The administration did not finalize the new rules until last month.

Among the Republican Party’s top 10 donors in 2004 was Roland Arnall. He founded Ameriquest, then the nation’s largest lender in the subprime market, which focuses on less creditworthy borrowers. In July 2005, the company agreed to set aside $325 million to settle allegations in 30 states that it had preyed on borrowers with hidden fees and ballooning payments. It was an early signal that deceptive lending practices, which would later set off a wave of foreclosures, were widespread.

Andrew Card Jr., Bush’s former chief of staff, said White House aides discussed Ameriquest’s troubles, though not what they might portend for the economy. Bush had just nominated Arnall as his ambassador to the Netherlands, and the White House was primarily concerned with making sure he would be confirmed.

“Maybe I was asleep at the switch,” Card said in an interview.

Brian Montgomery, the Federal Housing Administration commissioner, understood the significance. His agency insures home loans, traditionally for the same low-income minority borrowers Bush wanted to help. When he arrived in June 2005, he was shocked to find those customers had been lured away by the “fool’s gold” of subprime loans. The Ameriquest settlement, he said, reinforced his concern that the industry was exploiting borrowers.

In December 2005, Montgomery drafted a memo and brought it to the White House. “I don’t think this is what the president had in mind here,” he recalled telling Ryan Streeter, then the president’s chief housing policy analyst.

It was an opportunity to address the risky subprime lending practices head on. But that was never seriously discussed. More senior aides, like Karl Rove, Bush’s chief political strategist, were wary of overly regulating an industry that, Rove said in an interview, provided “a valuable service to people who could not otherwise get credit.” While he had some concerns about the industry’s practices, he said, “it did provide an opportunity for people, a lot of whom are still in their houses today.”

The White House pursued a narrower plan offered by Montgomery that would have allowed the FHA to loosen standards so it could lure back subprime borrowers by insuring similar, but safer, loans. It passed the House but died in the Senate, where Republican senators feared that the agency would merely be mimicking the private sector’s risky practices — a view Rove said he shared.

Looking back at the episode, Montgomery broke down in tears. While he acknowledged that the bill did not get to the root of the problem, he said he would “go to my grave believing” that at least some homeowners might have been spared foreclosure.

Today, administration officials say it is fair to ask whether Bush’s ownership push backfired. Paulson said the administration, like others before it, “over-incented housing.” Hennessey put it this way: “I would not say too much emphasis on expanding homeownership. I would say not enough early focus on easy lending practices.”

‘We told you so’

Armando Falcon Jr. was preparing to take on a couple of giants.

A soft-spoken Texan, Falcon ran the Office of Federal Housing Enterprise Oversight, a tiny government agency that oversaw Fannie Mae and Freddie Mac, two pillars of the American housing industry. In February 2003, he was finishing a blockbuster report that warned the pillars could crumble.

Created by Congress, Fannie and Freddie — called GSE’s, for government-sponsored entities — bought trillions of dollars’ worth of mortgages to hold or sell to investors as guaranteed securities. The companies were also Washington powerhouses, stuffing lawmakers’ campaign coffers and hiring bare-knuckled lobbyists.

Falcon’s report outlined a worst-case situation in which Fannie and Freddie could default on debt, setting off “contagious illiquidity in the market” — in other words, a financial meltdown. He also raised red flags about the companies’ soaring use of derivatives, the complex financial instruments that economic experts now blame for spreading the housing collapse.

Today, the White House cites that report — and its subsequent effort to better regulate Fannie and Freddie — as evidence that it foresaw the crisis and tried to avert it. Bush officials recently wrote up a talking points memo headlined “GSE’s — We Told You So.”

But the back story is more complicated. To begin with, on the day Falcon issued his report, the White House tried to fire him.

At the time, Fannie and Freddie were allies in the president’s quest to drive up homeownership rates; Franklin Raines, then Fannie’s chief executive, has fond memories of visiting Bush in the Oval Office and flying aboard Air Force One to a housing event. “They loved us,” he said.

So when Falcon refused to deep-six his report, Raines took his complaints to top Treasury officials and the White House. “I’m going to do what I need to do to defend my company and my position,” Raines told Falcon.

Days later, as Falcon was in New York preparing to deliver a speech about his findings, his cellphone rang. It was the White House personnel office, he said, telling him he was about to be unemployed.

His warnings were buried in the next day’s news coverage, trumped by the White House announcement that Bush would replace Falcon, a Democrat appointed by Bill Clinton, with Mark Brickell, a leader in the derivatives industry that Falcon’s report had flagged.

It was not until 2003, when Freddie became embroiled in an accounting scandal, that the White House took on the companies in earnest. Bush decided to quit the long-standing practice of rewarding supporters with high-paying appointments to the companies’ boards — “political plums,” in Rove’s words. He also withdrew Brickell’s nomination and threw his support behind Falcon, beginning an intense effort to give his little regulatory agency more power.

Falcon lacked explicit authority to limit the size of the companies’ mammoth investment portfolios, or tell them how much capital they needed to guard against losses. White House officials wanted that to change. They also wanted the power to put the companies into receivership, hoping that would end what Card, the former chief of staff, called “the myth of government backing,” which gave the companies a competitive edge because investors assumed the government would not let them fail.

By the spring of 2005 a deal with Congress seemed within reach, Snow, the former Treasury secretary, said in an interview.

Michael Oxley, an Ohio Republican and then-chairman of the House Financial Services Committee, had produced what Snow viewed as “a pretty darned good bill,” a watered-down version of what the president sought. But at the urging of Card and the White House economics team, the president decided to hold out for a tougher bill in the Senate.

Card said he feared that Snow was “more interested in the deal than the result.” When the bill passed the House, the president issued a statement opposing it, effectively killing any chance of compromise. Oxley was furious.

“The problem with those guys at the White House, they had all the answers and they didn’t think they had to listen to anyone, including the Treasury secretary,” Oxley said in a recent interview. “They were driving the ideological train. He was in the caboose, and they were in the engine room.”

Card and Hennessey said they had no regrets. They are convinced, Hennessey said, that the Oxley bill would have produced “the worst of all possible outcomes,” the illusion of reform without the substance.

Still, some former White House and Treasury officials continue to debate whether Bush’s all-or-nothing approach scuttled a measure that, while imperfect, might have given an aggressive regulator enough power to keep the companies from failing.

Snow, for one, calls Oxley “a hero,” adding, “He saw the need to move. It didn’t get done. And it’s too bad, because I think if it had, I think we could well have avoided a big contributor to the current crisis.”

Unheeded warnings

Jason Thomas had a nagging feeling.

The New Century Financial Corp., a huge subprime lender whose mortgages were bundled into securities sold around the world, was headed for bankruptcy in March 2007. Thomas, an economic analyst for Bush, was responsible for determining whether it was a hint of things to come.

At 29, Thomas had followed a fast-track career path that took him from a Buffalo meatpacking plant, where he worked as a statistician, to the White House. He was seen as a whiz kid, “a brilliant guy,” his former boss, Hubbard, says.

As Thomas began digging into New Century’s failure that spring, he became fixated on a particular statistic, the rent-to-own ratio.

Typically, as home prices increase, rental costs rise proportionally. But Thomas sent charts to top White House and Treasury officials showing that the monthly cost of owning far outpaced the cost to rent. To Thomas, it was a sign that housing prices were wildly inflated and bound to plunge, a condition that could set off a foreclosure crisis as conventional and subprime borrowers with little equity found they owed more than their houses were worth.

It was not the Bush team’s first warning. The previous year, Lindsay, the former chief economics adviser, returned to the White House to tell his old colleagues that housing prices were headed for a crash. But housing values are hard to evaluate, and Lindsay had a reputation as a market pessimist, said Hubbard, adding, “I thought, ‘He’s always a bear.’ “

In retrospect, Hubbard said, Lindsay was “absolutely right,” and Thomas’s charts “should have been a signal.”

Instead, the prevailing view at the White House was that the problems in the housing market were limited to subprime borrowers unable to make their payments as their adjustable mortgages reset to higher rates. That belief was shared by Bush’s new Treasury secretary, Paulson.

Paulson, a former chairman of the Wall Street firm Goldman Sachs, had been given unusual power; he had accepted the job only after the president guaranteed him that Treasury, not the White House, would have the dominant role in shaping economic policy. That shift merely continued an imbalance of power that stifled robust policy debate, several former Bush aides say.

Throughout the spring of 2007, Paulson declared that “the housing market is at or near the bottom,” with the problem “largely contained.” That position underscored nearly every action the Bush administration took in the ensuing months as it offered one limited response after another.

By that August, the problems had spread beyond New Century. Credit was tightening, amid questions about how heavily banks were invested in securities linked to mortgages. Still, Bush predicted that the turmoil would resolve itself with a “soft landing.”

The plan Bush announced on Aug. 31 reflected that belief. Called “FHA Secure,” it aimed to help about 80,000 homeowners refinance their loans. Montgomery, the housing commissioner, said that he knew the modest program was not enough — the White House later expanded the agency’s rescue role — and that he would be “flying the plane and fixing it at the same time.”

That fall, Representative Rahm Emanuel, a leading Democrat, former investment banker and now the incoming chief of staff to President-elect Barack Obama, warned the White House it was not doing enough. He said he told Joshua Bolten, Bush’s chief of staff, and Paulson in a series of phone calls that the credit crisis would get “deep and serious” and that the only answer was big, internationally coordinated government intervention.

“You got to strangle this thing and suffocate it,” he recalled saying.

Instead, Bush developed Hope Now, a voluntary public-private partnership to help struggling homeowners refinance loans. And he worked with Congress to pass a stimulus package that sent taxpayers $150 billion in tax rebates.

In a speech to the Economic Club of New York in March 2008, he cautioned against Washington’s temptation “to say that anything short of a massive government intervention in the housing market amounts to inaction,” adding that government action could make it harder for the markets to recover.

Dominoes Start to Fall

Within days, Bear Sterns collapsed, prompting the Federal Reserve to engineer a hasty sale. Some economic experts, including Timothy Geithner, the president of the New York Federal Reserve Bank (and Obama’s choice for Treasury secretary) feared that Fannie Mae and Freddie Mac could be the next to fall.

Bush was still leaning on Congress to revamp the tiny agency that oversaw the two companies, and had acceded to Paulson’s request for the negotiating room that he had denied Snow. Still, there was no deal.

Over the previous two years, the White House had effectively set the agency adrift. Falcon left in 2005 and was replaced by a temporary director, who was in turn replaced by James Lockhart, a friend of Bush from their days at Andover, and a former deputy commissioner of the Social Security Administration who had once run a software company.

On Lockhart’s watch, both Freddie and Fannie had plunged into the riskiest part of the market, gobbling up more than $400 billion in subprime and other alternative mortgages. With the companies on precarious footing, Geithner had been advocating that the administration seize them or take other steps to reassure the market that the government would back their debt, according to two people with direct knowledge of his views.

In an Oval Office meeting on March 17, however, Paulson barely mentioned the idea, according to several people present. He wanted to use the troubled companies to unlock the frozen credit market by allowing Fannie and Freddie to buy more mortgage-backed securities from overburdened banks. To that end, Lockhart’s office planned to lift restraints on the companies’ huge portfolios — a decision derided by former White House and Treasury officials who had worked so hard to limit them.

But Paulson told Bush the companies would shore themselves up later by raising more capital.

“Can they?” Bush asked.

“We’re hoping so,” the Treasury secretary replied.

That turned out to be incorrect, and did not surprise Thomas, the Bush economic adviser. Throughout that spring and summer, he warned the White House and Treasury that, in the stark words of one e-mail message, “Freddie Mac is in trouble.” And Lockhart, he charged, was allowing the company to cover up its insolvency with dubious accounting maneuvers.

But Lockhart continued to offer reassurances. In a July appearance on CNBC, he declared that the companies were well managed and “worsts were not coming to worst.” An infuriated Thomas sent a fresh round of e-mail messages accusing Lockhart of “pimping for the stock prices of the undercapitalized firms he regulates.”

Lockhart defended himself, insisting in an interview that he was aware of the companies’ vulnerabilities, but did not want to rattle markets.

“A regulator,” he said, “does not air dirty laundry in public.”

Soon afterward, the companies’ stocks lost half their value in a single day, prompting Congress to quickly give Paulson the power to spend $200 billion to prop them up and to finally pass Bush’s long-sought reform bill, but it was too late. In September, the government seized control of Freddie Mac and Fannie Mae.

In an interview, Paulson said the administration had no justification to take over the companies any sooner. But Falcon disagreed: “They absolutely could have if they had thought there was a real danger.”

By Sept. 18, when Bush and his team had their fateful meeting in the Roosevelt Room after the failure of Lehman Brothers and the emergency rescue of AIG, Paulson was warning of an economic calamity greater than the Great Depression. Suddenly, historic government intervention seemed the only option. When Paulson spelled out what would become a $700 billion plan to rescue the nation’s banking system, the president did not hesitate.

“Is that enough?” Bush asked.

“It’s a lot,” the Treasury secretary recalled replying. “It will make a difference.” And in any event, he told Bush, “I don’t think we can get more.”

As the meeting wrapped up, a handful of aides retreated to the White House Situation Room to call Vice President Dick Cheney in Florida, where he was attending a fund-raiser. Cheney had long played a leading role in economic policy, though housing was not a primary interest, and like Bush he had a deep aversion to government intervention in the market. Nonetheless, he backed the bailout, convinced that too many Americans would suffer if Washington did nothing.

Bush typically darts out of such meetings quickly. But this time, he lingered, patting people on the back and trying to soothe his downcast staff. “During times of adversity, he bucks everybody up,” Paulson said.

It was not the end of the failures or government interventions; the administration has since stepped in to rescue Citigroup and, just last week, the Detroit automakers. With 31 days left in office, Bush says he will leave it to historians to analyze “what went right and what went wrong,” as he put it in a speech last week to the American Enterprise Institute.

Bush said he was too focused on the present to do much looking back.

“It turns out,” he said, “this isn’t one of the presidencies where you ride off into the sunset, you know, kind of waving goodbye.”

The global financial system was teetering on the edge of collapse when President George W. Bush and his economics team huddled in the Roosevelt Room of the White House for a briefing that, in the words of one participant, “scared the hell out of everybody.”

Karl Rove Had an IT Guy and He Just Died in a Plane Crash

UPDATE AT THIS LINK: GOP consultant killed in plane crash was warned of sabotage

RAW STORY

A top level Republican IT consultant who was set to testify in a case alleging GOP election tampering in Ohio died in a plane crash late Friday night.

Michael Connell — founder of Ohio-based New Media Communications, which created campaign Web sites for George W. Bush and John McCain — died instantly after his single-prop, private aircraft smashed into a vacant home in suburban Lake Township, Ohio.

“The plane was attempting to land around 6 p.m. Friday at Akron-Canton Airport when it crashed about three miles short of the runway,” reports the Akron Beacon Journal.

Connell’s exploits as a top GOP IT ‘guru’ have been well documented by RAW STORY’s investigative team.

The interest in Mike Connell stems from his association with a firm called GovTech, which he had spun off from his own New Media Communications under his wife Heather Connell’s name. GovTech was hired by Ohio Secretary of State Kenneth Blackwell to set up an official election website at election.sos.state.oh.us to presented the 2004 presidential returns as they came in.

Connell is a long-time GOP operative, whose New Media Communications provided web services for the Bush-Cheney ’04 campaign, the US Chamber of Commerce, the Republican National Committee and many Republican candidates. This in itself might have raised questions about his involvement in creating Ohio’s official state election website.

However, the alternative media group ePlubibus Media further discovered in November 2006 that election.sos.state.oh.us was hosted on the servers of a company in Chattanooga, TN called SmarTech, which also provided hosting for a long list of Republican Internet domains.

“Since early this decade, top Internet ‘gurus’ in Ohio have been coordinating web services with their GOP counterparts in Chattanooga, wiring up a major hub that in 2004, first served as a conduit for Ohio’s live election night results,” researchers at ePluribus Media wrote.

A few months after this revelation, when a scandal erupted surrounding the firing of US Attorneys for reasons of White House policy, other researchers found that the gwb43 domain used by members of the White House staff to evade freedom of information laws by sending emails outside of official White House channels was hosted on those same SmarTech servers.

Given that the Bush White House used SmarTech servers to send and receive email, the use of one of those servers in tabulating Ohio’s election returns has raised eyebrows. Ohio gave Bush the decisive margin in the Electoral College to secure his reelection in 2004.

IT expert Stephen Spoonamore says the SmartTech server could have functioned as a routing point for malicious activity and remains a weakness in electronic voting tabulation.

“…I have reason to believe that the alternate accounts were used to communicate with US Attorneys involved in political prosecutions, like that of Don Siegelman,” said RAW STORY’s Investigative News Editor, Larisa Alexandrovna, on her personal blog Saturday morning. “This is what I have been working on to prove for over a year. In fact, it was through following the Siegelman-Rove trail that I found evidence leading to Connell. That is how I became aware of him. Mike was getting ready to talk. He was frightened.

“He has flown his private plane for years without incident. I know he was going to DC last night, but I don’t know why. He apparently ran out of gas, something I find hard to believe. I am not saying that this was a hit nor am I resigned to this being simply an accident either. I am no expert on aviation and cannot provide an opinion on the matter. What I am saying, however, is that given the context, this event needs to be examined carefully.”

“Mr. Connell has confided that he was being threatened, something that his attorneys also told the judge in the Ohio election fraud case,” concluded Alexandrovna.

An FAA investigation into the causes of Connell’s plane crash is underway, but no results are expected for several weeks.

UPDATE AT THIS LINK: GOP consultant killed in plane crash was warned of sabotage

Follow Me on Grunter, Twit

A Bunch of  Twits

Side With The Seeds | Wilco | Austin City Limits

Side With The Seeds | Wilco | Austin City Limits

Hate it Here | Wilco | Austin City Limits

Hate it Here | Wilco | Austin City Limits 2007

Wilco | Austin City Limits

I was chewing gum -something to do….

Bill Maher Has Some New Rules | March 6, 2009

Bill Maher’s Real Time | March 6, 2009 | Cory Booker and Erin Burnett Panel 4

Bill Maher With Peter Singer | March 6, 2009 | Panel 3

Bill Maher’s Real Time | March 6, 2009 | Cory Booker and Erin Burnett – Part Two

Bill Maher’s RealTime | March 6, 2009 | Cory Booker and Erin Burnett

Bill Maher and T. Boone Pickens | March 6, 2009

Bill Maher’s Opening Monologue | March 6, 2009

How Hardball Resembles Laurel and Hardy

Bob Somerby-The Daily Howler

The loud dumb fellow got it wrong. His pals were too timid to tell him:

THURSDAY, MARCH 5, 2009

How Hardball’s like Laurel and Hardy: On Monday, ABC News had no idea how marginal tax rates actually work (see THE DAILY HOWLER, 3/4/09).

Last night, Chris Matthews loudly ran off the rails concerning those troubling “earmarks.”

The excitable host conducted his chat with pundits Heileman and Cillizza. Before we see what Matthews said, let’s review the basic facts: The federal spending bill in question totals $410 billion. Of that, the “earmarks” total $7.7 billion. The “earmarks” thus comprise less than 1.9 percent of the total package. (Beyond that, we’ve seen no one try to explain why these provisions are “wasteful.”)

The guest pundits did make several attempts to calm Matthews as he thundered about all the “pork” and “crap” in the bill. But as usual, his thunder about Obama’s failure to deal with this “pork-barrel spending” prevailed. By the way: How well did Matthews know his facts? Eventually, it came to this. We use the Nexis transcript:

HEILEMANN (3/4/09): Well, look, but, Chris, this is, this is—this stuff is such small potatoes compared to the stuff that is on the president’s agenda to actually—

(CROSSTALK)

MATTHEWS: More than—

(CROSSTALK)

MATTHEWS: —410 billion dollars!

HEILEMANN: —to actually fix the economy.

MATTHEWS: Four hundred and 10 billion dollars!

HEILEMANN: That’s, that’s—that’s half of the original TARP, as you know, and probably about a third or a quarter of what we’re eventually going to put in—

MATTHEWS: This is actually government spending, by the way. This isn’t loan guarantees.

Trust us. Anyone who watched this segment would have thought that the bill in question involved $410 billion in “earmarks.” And of course, no one clarified what Matthews said. The actual worth of the “earmarks—$7.7 billion—was never mentioned. No one made the slightest attempt to state the basic facts. (To find the full transcript, click here.)

We’ll guess that Heileman and/or Cillizza knew the actual figures involved here. But uh-oh! From watching Matthews through the years, we’ll guess that he probably didn’t. At any rate, one thing is certain: Citizens who watched this program were never exposed to the actual facts. The guest pundits could have corrected or clarified what Matthews said. But darlings! It just isn’t done!

Hardball viewers came away with bogus facts in their noggins again.

But then, Hardball is often like Laurel and Hardy. The loud dumb one is always in charge. The others know that their pal has it wrong—but they’re too timid to tell him.

Laurel and Hardy played this for laughs, comically sketching the human condition. The loud dumb one was always in charge! Today, it’s the shape of your “press corps.”

Foo Fighters – Times Like These (Acoustic)

Time, time again…..

Give a Little Bit | 1978 | Supertramp Live [video]

The Dead’s First Week of Rehearsal For Spring Tour [video]

Jokerman | Bob Dylan

Bad Idea Jeans

Plan to Destroy Dozens of Palestinian Homes: “Not Helpful” Says Sec. of State Clinton

In “an unusual public criticism of Israel,” Secretary of State Hillary Clinton said yesterday that the country’s “plan to destroy dozens of Palestinian homes in Arab East Jerusalem was ‘unhelpful’ and contrary to Israel’s obligations under a U.S.-backed peace plan.” She added she would raise the issue, along with “concern over the growth of Israeli settlements in the West Bank, with Israeli officials.”

Think Progress

Chris Matthews: “Everybody Sort of Likes the President [GW Bush], Except For the Real Whack-Jobs, Maybe on the Left,” Adding, “I Mean, I Like Him Personally.”

Mon, Nov 28, 2005

Chris Matthews: “Everybody Sort “Everybody Sort of Likes the President [GW Bush], Except For the Real Whack-Jobs, Maybe on the Left,” Adding, “I Mean, Like Him Personally.”

MEDIA MATTERS:

On the November 28 edition of MSNBC’s Hardball, host Chris Matthews said: “Everybody sort of likes the president, except for the real whack-jobs, maybe on the left,” adding, “I mean, I like him personally.” In fact, polling data reveals that a majority of Americans have an unfavorable view of President Bush, and his overall approval ratings hover from the high 30-percent range to the low 40s.

From the November 28 edition of MSNBC’s Hardball:

MATTHEWS: I like him. Everybody sort of likes the president, except for the real whack-jobs, maybe on the left — I mean — I like him personally.

As Media Matters for America previously reported, MSNBC chief White House correspondent Norah O’Donnell made a similarly unsupported statement on the November 27 broadcast of MSNBC’s The Chris Matthews Show, claiming that Bush has retained his “authenticity” with the public.

—S.G.

Answers About New York Weather

March 4, 2009 T I M E S B L O G

Answers About the Weather

By The New York Times

Taking Questions Ask the Meterologist

I. Ross Dickman is answering City Room readers’ questions.

• Biography »
• Ask a question »

Following is the first set of responses from I. Ross Dickman, meteorologist in charge of the National Weather Service team serving New York City and the metropolitan region. This week, he is answering City Room readers’ questions about his experience and observations working with weather, community planners and emergency managers in the region. Post a question for Mr. Dickman in the comments box below. Please note that this Q. and A. was scheduled before Monday’s snowstorm.

Maybe you could describe the chain of events leading up to the forecasts for this particular storm. When is a decision made to put out an alert or a warning? How did it play out in this case? How precise can you be about the timing of a storm, when it will hit? What data goes into that prediction?

— Posted by Weatherman

For the March 2, 2009, snowstorm, the forecasts were right on target. The local National Weather Service forecast office here in Upton, N.Y. on eastern Long Island issued winter storm watches and warnings with more than 24 hours of lead time as well as heightened awareness of the event that occurred several days in advance. As you might imagine, timely and reliable dissemination of forecasts and warnings is critical to the protection of life and property. When forecast confidence increases to at least 50 percent based on the interpretation of forecast model output, a watch is issued. When forecast confidence increases to at least 80 percent, a warning is issued. Our goal is to issue watches with lead times of 24 to 36 hours and warnings 12 to 18 hours in advance of the storm. For this storm, we provided longer lead times than our goals.

The National Weather Service follows a specific forecast process for all weather situations before putting out a forecast or warning. The process goes something like this: Observations including satellites, upper air data and radar are collected by the local forecast office and then checked for quality, analyzed, and then infused into a suite of computer models at the National Centers for Environmental Prediction. Millions of calculations occur with these models to generate predictions of storm behavior and the general conditions of the atmosphere. The model results are then evaluated and used in the National Weather Service forecast and warning process.

Unfortunately, these models cannot account for all of the short-term changes in the atmosphere, resulting in forecast error or uncertainty. Interpretations of the model guidance are then translated into forecasts and warnings that are coordinated between the national centers and surrounding local forecast offices to ensure consistency. Once completed, the issuing office generates forecast and warning products for release to the public and emergency management groups.

Somehow it seems that New York City is becoming windier. What is causing this, and where do these strong winds we’ve been having recently come from? Thank you.

— Posted by Darinka Zaharieff

Winds in New York City are greatly affected by the buildings, which can greatly increase speeds. We do not have any indication that winds have been on the increase in recent years. Statistically, February and March are the windiest months for New York City, and August and September have the least wind. The National Oceanic and Atmospheric Administration’s National Environmental Satellite, Data and Information Service operates the National Climatic Data Center in Ashville, N.C. The Climatic Data Center is the world’s largest archive of climate data, much of which is online for researchers and the public to query.

When the water surrounding Lower Manhattan rises, what is the projected annual rate of increase? Are the rising waters expected to affect the Hudson and the East Rivers similarly, and what measure do engineers recommend to revamp the seawall?

— Posted by Rima Blair

While I can’t comment on the engineering aspects, I can affirm that rising sea levels and other phenomena like hurricanes are a real threat to the New York City region.

The Center for Climate Systems Research at Columbia University cites these threats. According to the researchers: “Regional sea level trends of the past century range between 0.08 to 0.16 inches per year (2 to 4 millimeters per year). From a suite of sea-level rise scenarios based on an extrapolation of historical trends and outputs from several global climate model simulations, the researchers projected a rise in sea level of 11.8 to 37.5 inches (30 to 95.5 centimeters) in New York City and 9.5 to 42.5 inches (24 to 108 centimeters) in the metropolitan region by the 2080s. Flooding by major storms would inundate many low-lying neighborhoods and shut down the metropolitan transportation system with much greater frequency.”

Severe hurricanes and associated storm surge have the most serious immediate threat to the coastline. The National Oceanic and Atmospheric Administration’s Sea, Lake and Overland Surges From Hurricanes model (SLOSH) shows a Category 3 hurricane on the worst-case track projection has the potential to bring nearly 25 feet of water into Lower Manhattan and surrounding areas.

Is it likely that we will have another big snow event during the rest of the season (winter-spring 2009)? Statistically speaking, where is the coolest place in Brooklyn to chill out during the dog days of summer?

— Posted by Brooklynite

While we could have another significant snowstorm (six inches or greater) this month, it is not likely. Typically, New York has one big snow a year, most commonly in February. On average, March has only a 1 in 5 chance of a significant snowstorm. Interestingly, we have to go all the way back to March 13-14, 1993, to the last time that we had a snowfall of six inches or more, though we came close on March 16, 2007, with 5.5 inches.

As for where to cool off in summer in Brooklyn — Coney Island is the place. The daily sea breeze keeps temperatures the coolest around during a hot summer afternoon.

How can I be a Weather Service storm spotter?

— Posted by David

Your National Weather Service offers the Skywarn Spotter Program to volunteers who are willing to assist Weather Service meteorologists in making warning decisions. A free three-hour spotter training class will be offered this spring, which will be posted to our Skywarn Web site by April 3. You will have to register for a class. You will be trained to recognize and report features associated with rapidly developing, mature, and dissipating thunderstorms that cause hazardous weather. For further information on our Skywarn program, please contact Brian Ciemnecki.

Taking Stock Of The Claims Against Michael Steele

Steele Trap? Taking Stock Of The Claims Against The New RNC Chief

TALKING POINTS MEMO M U C K R A K E R

By Zachary Roth

February 9, 2009,

So what to make of the allegation against newly elected GOP chairman Michael Steele, that his 2006 Senate campaign made payments to a company run by his sister, for work that was never performed?

It’s not yet clear. The claim comes from a court filing made last March by Alan Fabian — Steele’s finance chair during that campaign — who was facing unrelated fraud charges and hoped, in vain, to get credit for cooperation. In the end, Fabian was sentenced to nine years in jail for swindling millions from businesses and banks.

So there’s reason to be skeptical.

But there isn’t reason to dismiss the claim out of hand. For one thing, the Feds appear to be taking it seriously: Agents have spoken to Steele’s sister about the issue, according to a Steele spokesman.

Steele told ABC’s This Week that the FBI is “winding this thing down” but didn’t explain how he knew that. And although Steele added that the payments were for legitimate work, the explanations from his camp don’t yet add up.

At issue is a February 2007 payment of more than $37,000 made by Steele’s unsuccessful Senate campaign to Brown Sugar Unlimited, a company run by Monica Turner, Steele’s sister (and also the former Mrs. Mike Tyson, incidentally).

According to campaign finance records, reports the Post, the payments were for “catering/web services.” But a Steele spokesman told the paper that Turner “did a lot of media stuff” for the campaign. The spokesman then showed the paper an invoice for catering services for two events. But the invoice was dated December 2006, although the events occurred in October 2006 and July 2007. The spokesman attributed this to a typo.

So, was it media, web services, or catering? How many companies do all three?

There’s also the fact that, as the Post reports, “Turner filed papers to dissolve the company 11 months before the payment was received”. (Steele told ABC yesterday that Turner believed the company was still in existence when the payments were made.)

The payments to Turner aren’t the only allegations Fabian is making against Steele. There are three additional — and apparently less serious — claims.

One is that Steele, who at the time was Maryland’s lieutenant-governor, used his state campaign to pay bills invoiced to his 2006 Senate campaign for printing services, totaling around $38,000 — which would violate campaign finance law. Steele’s spokesman says the printing was related to Steele’s lieutenant governor’s office.

Another claim is that Steele paid $75,000 from the state campaign to the law firm of Baker Hostetler, for work that was never performed. The payment was listed in campaign finance records as an in-kind contribution to the state GOP. And a lawyer for Baker Hostetler — who was also chief counsel for the RNC — told the Post that the payment was for legal work on challenging Maryland’s 2002 legislative redistricting.

Finally, Fabian claims that Steele or an aide transferred more than $500,000 in campaign cash from one bank to another without appropriate authorization. The bank transfer appears to have angered aides to former Maryland governor Bob Ehrlich, who had hoped to use the money for other states races, including Ehrlich’s. But there doesn’t appear to be evidence that it was illegal.

There’s also no evidence that the Feds are looking into any of these latter three claims.
So it’s those payments to Steele’s sister’s company that appear to be where the action is. And until we get a fuller explanation of what those payments were really for, this story will probably linger.

That can’t be a prospect that will please a Republican Party that just made Steele its major national spokesman

David Letterman Rips Limbicile

Letterman shreds Limbaugh, calling him ‘bonehead,’ ‘gangster

David Edwards and John Byrne
Tuesday March 3, 2009

Raw Story

In a scathing rebuke to Rush Limbaugh, CBS’ David Letterman excoriated the conservative talk show host while talking to CBS anchor Katie Couric on the network’s ‘Late Show’ Monday night.

“What about this bonehead Rush Limbaugh? Honest to God, I mean, what is going on there?” Letterman said.

“Dave, don’t do this to me, please,” Couric interjected. “Don’t do this to me.”

“He gets up in Washington and he’s the keynote speaker at some function and he comes up and he looks like an East European gangster,” Letterman continued. “He’s got the black jacket on, the black silk shirt and it’s unbuttoned like, oh yeah, when you think Rush Limbaugh, you think, ‘Ooh, let’s see a little flesh.’ Honestly. What is he doing?”

“On a serious note — although I’m thrown by the Rush Limbaugh flesh in the same sentence — I think it’s sort of indicative of the power vacuum in the Republican party right now… and there are ideological differences about role of government but I just don’t know if the country can waste time talking about different sorts of approaches and whether Keynesian economists agree with other economists about the free market.”

Remarked Letterman: “We get used to Republicans like Newt Gingrich, and Newt resembled a Newt — but a smart guy. And now you’ve got Rush Limbaugh, who says, ‘Sorry, the casino’s closed.’ Leave us alone.”

“So much for my interview with Rush,” Couric concludes.

Artie Lange on Letterman | March 3, 2009

Good stuff buddy…

Computer Video Recreation of Hudson Plane Landing

[opening] Late Night With Jimmy Fallon

U2 – BREATHE “LIVE” – 2009 David Letterman

Playboy Mysteriously Pulls Rick Santelli/Koch Industries/Tea Party Astroturfing Article

Can you say: “goddamed bloggers!”

EXILED ONLINE

Exposing The Rightwing PR Machine: Is CNBC’s Rick Santelli Sucking Koch?

By Mark Ames and Yasha Levine

Chris Matthews: “You’re up there with Rush Limbaugh and Sean Hannity… It’s quite a team.”
Rick Santelli (smiling and nodding): “It is quite a team!”
Hardball, MSNBC, Feb 20, 2009

Last week, CNBC correspondent Rick Santelli rocketed from being a little-known second-string correspondent to a populist hero of the disenfranchised, a 21st-century Samuel Adams, the leader and symbol of the downtrodden American masses suffering under the onslaught of 21st century socialism and big government. Santelli’s “rant” last-week calling for a “Chicago Tea Party” to protest President Obama’s plans to help distressed American homeowners rapidly spread across the blogosphere and shot right up into White House spokesman Robert Gibbs’ craw, whose smackdown during a press conference was later characterized by Santelli as “a threat” from the White House. A nationwide “tea party” grassroots Internet protest movement has sprung up seemingly spontaneously, all inspired by Santelli, with rallies planned today in cities from coast to coast to protest against Obama’s economic policies.

Canceled: Life on Mars Is Dead

Tuesday, March 3, 2009

By MICKEY O’CONNOR
TV GUIDE

ABC has canceled Life on Mars, but will allow the cop drama to complete its full one-season run. The network has opted not to extend the series beyond 17 episodes, according to Variety.

It’s not all bad news, though. Rather than wait until May when on-the-bubble shows are typically told whether or not they’ll be renewed or canceled, ABC told the producers now, so that they can plan for a proper series finale — a courtesy not extended to the recently unplugged ABC shows Pushing Daisies, Dirty Sexy Money and Eli Stone. “We felt it was the right thing to do for the producers and the fans and creatively,” ABC Entertainment Group President Steve McPherson told TelevisionWeek. Calls to ABC were not yet returned.

This is particularly important for Mars, as its mysterious premise — an NYPD cop is hit by a car and spontaneously time-travels back to 1973 — requires some explaining. Is Sam Tyler (Jason O’Mara) in a coma, at the mercy of supernatural forces or something else entirely?

For now, it seems, the fans will get that answer.

Did Life on Mars deserve the ax? Is ABC getting an itchy trigger finger on the cancellation front? And how would you like to see the series end?

Doughy Pantload Wants Obama to Fail

What a surprise…

serious douchechills….

The tired war on Rush Limbaugh

The conservative commentator said he hopes Barack Obama fails. But what’s so radical about disagreeing with an agenda he doesn’t believe in?

Jonah Goldberg

March 3, 2009

Here we go again. Rush Limbaugh is public enemy No. 1.

Liberal bloggers and media chin-strokers are aghast at Limbaugh’s statement that he hopes Barack Obama fails.

Well, given what Obama wants to do, I hope he fails too. Of course I want the financial crisis to end — who doesn’t? But Obama’s agenda is much more audacious. Pretty much every major news outlet in the country has said as a matter of objective analysis that Obama wants to repeal the legacy of Ronald Reagan and remake the country as a European welfare state. And yet people are shocked that conservatives, Limbaugh included, want Obama to fail in this effort?

What movie have they been watching? Because I could swear that conservatives opposing the expansion of big government is what conservatives do. It’s Aesopian. The scorpion must sting the frog. The conservative must object to socialized medicine.

Besides, since when did hoping for the failure of ideological agendas you disagree with become unpatriotic? Liberals were hardly treasonous when they hoped for the failure of George W. Bush’s Social Security privatization scheme.

Regardless, the war on Limbaugh from the left is a tired rehash. In 1995, Bill Clinton tried to blame the Oklahoma City bombing on Rush. In 2002, then-Sen. Tom Daschle, the leader of the Democratic opposition, claimed that Limbaugh’s listeners weren’t “satisfied just to listen.” They were a violent threat to decent public servants like him.

In just the last month, Obama suggested that Republicans were in thrall to Rush. White House Chief of Staff Rahm Emanuel has anointed him the GOP’s leader. Rep. Barney Frank complained that Republicans didn’t give Obama enough standing ovations during his address to Congress because they are afraid of Limbaugh and Sean Hannity.

Does anyone think that Republicans, absent fear of Limbaugh’s lash, would be throwing flower petals at Obama’s feet as he sells the Great Society II? If that’s true, I say thank goodness for Limbaugh’s lash.

Just because the Democrats’ shtick is old and often dishonest doesn’t mean it’s tactically dumb. Limbaugh and other right-wing talkers are popular with a third of the country. Fairly or not, they turn off moderates and self-described independents (and, for the left, conservative talk radio is the font of all evil). Most politicians would prefer to have 70% of the public on their side at the cost of losing 30%, even if that requires being less than fair to the 30%.

The more interesting war on Limbaugh comes from the right. My National Review colleague John Derbyshire has written a thoughtful article for the American Conservative disparaging the “lowbrow conservatism” of talk radio. His brush is a bit too broad at times. Some right-wing talkers, such as Bill Bennett and Dennis Prager, can be almost professorial. Michael Savage, meanwhile, sounds like the orderlies are about to break through the barricades with straitjacket in hand. Derbyshire is nonetheless right that conservatism is top-heavy with talk-radio talent, giving the impression the right is deficient in other areas and adding to the shrillness of public discourse.

Another point of attack comes from “reformist” conservative writers, such as blogger Ross Douthat of the Atlantic and former Bush speechwriter David Frum. They argue that conservatism is too attached to talk-show platitudes and Reagan kitsch. They want conservatives and Republicans to become more entrepreneurial, less reflexively opposed to government action. Hence, the New Reformers object to Limbaugh’s role as an enforcer of ideological conformity. What’s good for Limbaugh, many of them argue, guarantees that the GOP will become a powerless rump party only for conservative true believers.

I’m dubious about that, but I do have a suggestion that would help on both fronts. Bring back “Firing Line.” William F. Buckley Jr., who died almost exactly a year ago, hosted the program for PBS for 33 years. He performed an incalculable service at a time when conservatives were more associated with yahoos than they are today. He demonstrated that intellectual fluency and good manners weren’t uniquely liberal qualities. More important, the “Firing Line” debates (models of decorum) demonstrated that conservatives were unafraid to examine their own assumptions or to battle liberal ones.

As Democrats try to ram through the “remaking of America” (Obama’s words) by exploiting a financial crisis, we need those debates. PBS could actually live up to its mandate to educate and inform the public. It would be the kind of entrepreneurial government innovation even right-wingers could get behind.

jgoldberg@latimescolumnists.com

Kurt Cobain’s Smashed Guitar Sold For 100 Large

SEATTLE (AP) – A smashed guitar from the late grunge rocker Kurt Cobain has been sold to an unidentified private collector for $100,000.

Helen Hall, a broker in England, says it’s the second-highest known price for an item of Cobain memorabilia. The seller was punk rocker Sluggo of The Grannies and Hullabaloo.

The sale was confirmed Tuesday by Jacob McMurray, senior curator at the Experience Music Project in Seattle, where the taped-up Fender Mustang guitar in sunburst finish was displayed for a time.

“It’s a really cool-looking guitar because it’s smashed and held together with duct tape and Kurt Cobain wrote on it,” McMurray said.

Sluggo said he traded a working guitar for the smashed one during the first U.S. tour of Cobain’s band, Nirvana.

McMurray said Nirvana, living hand-to-mouth, was on a tour in New Jersey when Cobain smashed the guitar on stage and went looking for one to play at his next gig.

The swap was made while Cobain was staying at the apartment of Sluggo, who goes only by that name, and Sluggo’s girlfriend, McMurray said.

He said he hoped the buyer would allow the instrument to return to Seattle for a Cobain exhibit he is preparing for 2010.

“There’s not a huge amount of broken Nirvana guitars out there,” McMurray said, adding that most amount to “little slivers and fragments.”

A news release from Hall said the highest price paid for a piece of Cobain memorabilia was $131,000 at a 2006 auction for his Mosrite Gospel Mark IV guitar.

Propping Up a House of Cards

February 28, 2009

Talking Business

By JOE NOCERA

THE NEW YORK TIMES

Next week, perhaps as early as Monday, the American International Group is going to report the largest quarterly loss in history. Rumors suggest it will be around $60 billion, which will affirm, yet again, A.I.G.’s sorry status as the most crippled of all the nation’s wounded financial institutions. The recent quarterly losses suffered by Merrill Lynch and Citigroup — “only” $15.4 billion and $8.3 billion, respectively — pale by comparison.

At the same time A.I.G. reveals its loss, the federal government is also likely to announce — yet again! — a new plan to save A.I.G., the third since September. So far the government has thrown $150 billion at the company, in loans, investments and equity injections, to keep it afloat. It has softened the terms it set for the original $85 billion loan it made back in September. To ease the pressure even more, the Federal Reserve actually runs a facility that buys toxic assets that A.I.G. had insured. A.I.G. effectively has been nationalized, with the government owning a hair under 80 percent of the stock. Not that it’s worth very much; A.I.G. shares closed Friday at 42 cents.

Donn Vickrey, who runs the independent research firm Gradient Analytics, predicts that A.I.G. is going to cost taxpayers at least $100 billion more before it finally stabilizes, by which time the company will almost surely have been broken into pieces, with the government owning large chunks of it. A quarter of a trillion dollars, if it comes to that, is an astounding amount of money to hand over to one company to prevent it from going bust. Yet the government feels it has no choice: because of A.I.G.’s dubious business practices during the housing bubble it pretty much has the world’s financial system by the throat.

If we let A.I.G. fail, said Seamus P. McMahon, a banking expert at Booz & Company, other institutions, including pension funds and American and European banks “will face their own capital and liquidity crisis, and we could have a domino effect.” A bailout of A.I.G. is really a bailout of its trading partners — which essentially constitutes the entire Western banking system.

I don’t doubt this bit of conventional wisdom; after the calamity that followed the fall of Lehman Brothers, which was far less enmeshed in the global financial system than A.I.G., who would dare allow the world’s biggest insurer to fail? Who would want to take that risk? But that doesn’t mean we should feel resigned about what is happening at A.I.G. In fact, we should be furious. More than even Citi or Merrill, A.I.G. is ground zero for the practices that led the financial system to ruin.

“They were the worst of them all,” said Frank Partnoy, a law professor at the University of San Diego and a derivatives expert. Mr. Vickrey of Gradient Analytics said, “It was extreme hubris, fueled by greed.” Other firms used many of the same shady techniques as A.I.G., but none did them on such a broad scale and with such utter recklessness. And yet — and this is the part that should make your blood boil — the company is being kept alive precisely because it behaved so badly.

•

When you start asking around about how A.I.G. made money during the housing bubble, you hear the same two phrases again and again: “regulatory arbitrage” and “ratings arbitrage.” The word “arbitrage” usually means taking advantage of a price differential between two securities — a bond and stock of the same company, for instance — that are related in some way. When the word is used to describe A.I.G.’s actions, however, it means something entirely different. It means taking advantage of a loophole in the rules. A less polite but perhaps more accurate term would be “scam.”

As a huge multinational insurance company, with a storied history and a reputation for being extremely well run, A.I.G. had one of the most precious prizes in all of business: an AAA rating, held by no more than a dozen or so companies in the United States. That meant ratings agencies believed its chance of defaulting was just about zero. It also meant it could borrow more cheaply than other companies with lower ratings.

To be sure, most of A.I.G. operated the way it always had, like a normal, regulated insurance company. (Its insurance divisions remain profitable today.) But one division, its “financial practices” unit in London, was filled with go-go financial wizards who devised new and clever ways of taking advantage of Wall Street’s insatiable appetite for mortgage-backed securities. Unlike many of the Wall Street investment banks, A.I.G. didn’t specialize in pooling subprime mortgages into securities. Instead, it sold credit-default swaps.

These exotic instruments acted as a form of insurance for the securities. In effect, A.I.G. was saying if, by some remote chance (ha!) those mortgage-backed securities suffered losses, the company would be on the hook for the losses. And because A.I.G. had that AAA rating, when it sprinkled its holy water over those mortgage-backed securities, suddenly they had AAA ratings too. That was the ratings arbitrage. “It was a way to exploit the triple A rating,” said Robert J. Arvanitis, a former A.I.G. executive who has since become a leading A.I.G. critic.

Why would Wall Street and the banks go for this? Because it shifted the risk of default from themselves to A.I.G., and the AAA rating made the securities much easier to market. What was in it for A.I.G.? Lucrative fees, naturally. But it also saw the fees as risk-free money; surely it would never have to actually pay up. Like everyone else on Wall Street, A.I.G. operated on the belief that the underlying assets — housing — could only go up in price.

That foolhardy belief, in turn, led A.I.G. to commit several other stupid mistakes. When a company insures against, say, floods or earthquakes, it has to put money in reserve in case a flood happens. That’s why, as a rule, insurance companies are usually overcapitalized, with low debt ratios. But because credit-default swaps were not regulated, and were not even categorized as a traditional insurance product, A.I.G. didn’t have to put anything aside for losses. And it didn’t. Its leverage was more akin to an investment bank than an insurance company. So when housing prices started falling, and losses started piling up, it had no way to pay them off. Not understanding the real risk, the company grievously mispriced it.

Second, in many of its derivative contracts, A.I.G. included a provision that has since come back to haunt it. It agreed to something called “collateral triggers,” meaning that if certain events took place, like a ratings downgrade for either A.I.G. or the securities it was insuring, it would have to put up collateral against those securities. Again, the reasons it agreed to the collateral triggers was pure greed: it could get higher fees by including them. And again, it assumed that the triggers would never actually kick in and the provisions were therefore meaningless. Those collateral triggers have since cost A.I.G. many, many billions of dollars. Or, rather, they’ve cost American taxpayers billions.

The regulatory arbitrage was even seamier. A huge part of the company’s credit-default swap business was devised, quite simply, to allow banks to make their balance sheets look safer than they really were. Under a misguided set of international rules that took hold toward the end of the 1990s, banks were allowed use their own internal risk measurements to set their capital requirements. The less risky the assets, obviously, the lower the regulatory capital requirement.

How did banks get their risk measures low? It certainly wasn’t by owning less risky assets. Instead, they simply bought A.I.G.’s credit-default swaps. The swaps meant that the risk of loss was transferred to A.I.G., and the collateral triggers made the bank portfolios look absolutely risk-free. Which meant minimal capital requirements, which the banks all wanted so they could increase their leverage and buy yet more “risk-free” assets. This practice became especially rampant in Europe. That lack of capital is one of the reasons the European banks have been in such trouble since the crisis began.

•

At its peak, the A.I.G. credit-default business had a “notional value” of $450 billion, and as recently as September, it was still over $300 billion. (Notional value is the amount A.I.G. would owe if every one of its bets went to zero.) And unlike most Wall Street firms, it didn’t hedge its credit-default swaps; it bore the risk, which is what insurance companies do.

It’s not as if this was some Enron-esque secret, either. Everybody knew the capital requirements were being gamed, including the regulators. Indeed, A.I.G. openly labeled that part of the business as “regulatory capital.” That is how they, and their customers, thought of it.

There’s more, believe it or not. A.I.G. sold something called 2a-7 puts, which allowed money market funds to invest in risky bonds even though they are supposed to be holding only the safest commercial paper. How could they do this? A.I.G. agreed to buy back the bonds if they went bad. (Incredibly, the Securities and Exchange Commission went along with this.) A.I.G. had a securities lending program, in which it would lend securities to investors, like short-sellers, in return for cash collateral. What did it do with the money it received? Incredibly, it bought mortgage-backed securities. When the firms wanted their collateral back, it had sunk in value, thanks to A.I.G.’s foolish investment strategy. The practice has cost A.I.G. — oops, I mean American taxpayers — billions.

Here’s what is most infuriating: Here we are now, fully aware of how these scams worked. Yet for all practical purposes, the government has to keep them going. Indeed, that may be the single most important reason it can’t let A.I.G. fail. If the company defaulted, hundreds of billions of dollars’ worth of credit-default swaps would “blow up,” and all those European banks whose toxic assets are supposedly insured by A.I.G. would suddenly be sitting on immense losses. Their already shaky capital structures would be destroyed. A.I.G. helped create the illusion of regulatory capital with its swaps, and now the government has to actually back up those contracts with taxpayer money to keep the banks from collapsing. It would be funny if it weren’t so awful.

I asked Mr. Arvanitis, the former A.I.G. executive, if the company viewed what it had done during the bubble as a form of gaming the system. “Oh no,” he said, “they never thought of it as abuse. They thought of themselves as satisfying their customers.”

That’s either a remarkable example of the power of rationalization, or they were lying to themselves, figuring that when the house of cards finally fell, somebody else would have to clean it up.

That would be us, the taxpayers.

AP Picks Top 10 ‘Pop Culture’ Moments of 2008

“Yes We Can”

The Associated Press

NEW YORK-

In any normal year, it would be impossible to discern a coherent theme from a year of American pop culture, try as we journalists might. This year was different.

The presidential campaign seeped into our culture everywhere it could: into our music, our television, our street art, our Internet habits. And it was a symbiotic relationship, for pop culture seeped back into our politics, too. Remember the bizarre moment Paris Hilton and Britney Spears became part of the campaign, courtesy of a John McCain ad likening Barack Obama to a vapid Hollywood celebrity?

Or try this: Tina Fey and Sarah Palin, walking by each other at a fake news conference on “Saturday Night Live,” indistinguishable from each other in matching red blazers and Palin hairdos. Even Fey’s toddler daughter had trouble telling them apart that night.

Now Palin’s back in Alaska, Fey’s back on “30 Rock” and, oh yes, Obama’s on his way to the White House. But they weren’t the only big names in the 2008 pop culture firmament. A chronological journey back:

JANUARY

How can we begin without BRITNEY SPEARS still, amazingly, the most-searched term on Yahoo. A few days into 2008, she melts down spectacularly, ending up in a hospital after locking herself in a room with her young son. We don’t need Dr. Phil to tell us this girl needs help, though he does. Celeb magazines freely diagnose her as bipolar. (But more on Britney later.)

In politics, HILLARY RODHAM CLINTON has her first real pop-culture moment of the year when she chokes up talking to voters in a New Hampshire diner, a scene to be replayed endlessly on YouTube.

And true tragedy strikes when actor HEATH LEDGER dies of an accidental prescription drug overdose in a New York apartment, cutting short a brilliant career.

FEBRUARY

The Obama slogan “Yes We Can” ricochets across the Web in rapper and songwriter WILL.I.AM’s viral video hit, starring a host of celebrities. It’s not the only good news for Obama: His campaign raises a staggering $55 million this month, a success attributed to small donations gathered on the Internet.

And “SATURDAY NIGHT LIVE” spoofs the media’s fondness for Obama later, Clinton will refer to the skit in a real debate.

HOLLYWOOD WRITERS, meanwhile, end their 100-day strike. Days later, the OSCARS air to dismal ratings.

MARCH

Politics continues to enthrall, and this time it’s New York Gov. ELIOT SPITZER who’s on everyone’s mind. The most striking visual: the ashen-faced misery of his wife, Silda, standing next to him at the podium as he resigns over a prostitution scandal. The blogosphere and the airwaves buzz with the question: Why did she stand by him? Would you?

Obama may be the Internet candidate, but here’s an Internet sensation he’d prefer disappear: video of his former pastor JEREMIAH WRIGHT, making incendiary comments that will give Obama a major political headache.

APRIL

MILEY CYRUS is a genuine superstar at age 15, a role model to countless girls. So what’s the problem? A few pesky photos shot by Annie Leibovitz for Vanity Fair. They show the Disney princess, aka Hannah Montana of course, in a come-hither pose, with a bare back and shoulders. A rare bump in the road for this teen phenom.

In one of his many pop-culture moments, OBAMA displays true hip-hop cred, channeling Jay-Z with a “Dirt Off Your Shoulders” reference at a North Carolina rally. Mashups spread across the Web.

MAY

After four years and endless buildup, the “SEX AND THE CITY” gals return in a feature-length film. Will Carrie find happiness with Mr. Big? Yes, but even happier are the producers, after a $55.7 million opening weekend unprecedented for a chick flick. And this IS a chick flick. Men flock to root canal appointments.

HARRISON FORD returns as Indiana Jones at age 65! We doubt Hollywood would be so kind to a 65-year-old actress. And speaking of older women, they’re said to be behind the “American Idol” victory of 25-year-old DAVID COOK, who beats the baby-faced 17-year-old, DAVID ARCHULETA, breaking the hearts of countless tween girls.

Los Angeles street artist SHEPARD FAIREY creates his wildly popular poster of Obama, a red-white-and-blue hued image of the candidate gazing ahead, underlined by the word “HOPE.”

JUNE

TIM RUSSERT dies at 58 of a sudden heart attack, after more than 16 years in one of the most influential jobs in TV news moderator of NBC’s “Meet The Press.” The death causes some baby boomers to start to wonder about their own health.

A computer-animated science fiction romance? Leave it to Pixar. After “The Incredibles,” “Ratatouille” and “Cars,” another triumph for the studio comes in the form of “WALL-E,” a futuristic film about love between two robots.

JULY

Bonjour to the new JOLIE-PITT twins, who emerge in France, where parents ANGELINA JOLIE and BRAD PITT are hunkered down on their enormous estate. And BATMANIA reigns, thanks to LEDGER’S stunning (and posthumous) portrayal of the Joker in “The Dark Knight.”

BRITNEY and PARIS make their unwitting entrance into the campaign, fodder for McCain’s commercial mocking Obama as “the biggest celebrity in the world.” Hilton, though, gets the last laugh: The doe-eyed hotel heiress, lounging in a leopard-print swimsuit, offers up a much cleverer video riposte.

AUGUST

Call this the anti-celebrity month: Wary after that Britney-Paris spot, the DEMOCRATIC PARTY does its very best to de-emphasize the celeb factor at its convention in Denver. Meanwhile, McCain’s anti-celebrity campaign unveils its own, well, celebrity: the telegenic PALIN, who bursts onto the scene with a speech that galvanizes the GOP convention.

MADONNA turns 50! And the chiseled superstar is hardly alone. Also hitting the half-century mark this year: MICHAEL JACKSON, PRINCE, ELLEN DEGENERES, MICHELLE PFEIFFER, VIGGO MORTENSEN. Let’s imagine an amazing party at the royal palace in Monaco, where PRINCE ALBERT also hits the big 5-0, perhaps covered for CNN by CHRISTIANE AMANPOUR (yup, 50 too.)

SEPTEMBER

“I can see Russia from my house!” FEY debuts her impersonation of PALIN on “Saturday Night Live.” Kudos to the “SNL” writers, but you can’t say Palin doesn’t give them plenty of material including verbatim chunks of her rambling exchanges with KATIE COURIC. The CBS anchor, long plagued by low ratings and high expectations, makes a welcome comeback.

Also making a comeback: the ’60s, with all that guilt-free smoking, thanks to “MAD MEN,” the evocative drama on cable’s AMC. “Mad Men” wins an Emmy this month, thrilling its small but hugely loyal audience.

OCTOBER

Shall we just call it “HSM3″? And if you don’t know what that means, you probably won’t be seeing the movie. “High School Musical 3: Senior Year,” the big-screen sequel to the two Disney TV movies, sings and dances its fresh-faced way to the top of the box office, thanks to the durable appeal of Zac Efron, Vanessa Hudgens, Ashley Tisdale and the other “HSM” alums.

“SNL” scores its highest ratings in 14 years when it snags the ultimate prize: Palin herself. The VP candidate proves a game cast member, obliging happily when Amy Poehler shouts out: “All the mavericks in the house, put your hands up!” “

And JOE THE PLUMBER makes his debut, as a constant reference in the third presidential debate. Later, Joe, aka Samuel Joseph Wurzelbacher, 34, campaigns for McCain and Palin.

NOVEMBER

Yeah yeah, Obama is elected, but we’ll reserve the pop culture prize this month for OPRAH WINFREY. Weeping on the shoulder of a stranger at Obama’s victory rally, and gushing uncontrollably on her postelection show, the talk-show queen can surely claim a little credit for the triumph of her “favorite guy.” Maybe MOST celebrity endorsements don’t mean much, but this is Oprah. Two economists even claim she brought Obama a million votes in the primaries.

DECEMBER

Any true pop culture story must end as we started: with BRITNEY for, after a year in which she seemed to reach the depths, this famously durable young woman is in the midst of an astonishing comeback, with “Circus,” her latest CD, reaching No.1 on the album charts, according to her label, Jive. At 27, she seems to be not only “the world’s pop princess,” as her manager says. She’s the world’s pop culture princess, too.

“We’ve Got a Terrible Situation With This Great Patriot, He’s Out of Control and We Must Save Him From Himself”

By Tim Shipman in Washington

The Telegraph UK

George S. Patton, America’s greatest combat general of the Second World War, was assassinated after the conflict with the connivance of US leaders, according to a new book.

“We’ve got a terrible situation with this great patriot, he’s out of control and we must save him from   himself’”

-WILD BILL DONOVAN

The newly unearthed diaries of a colourful assassin for the wartime Office of Strategic Services (OSS), the forerunner of the CIA, reveal that American spy chiefs wanted Patton dead because he was threatening to expose allied collusion with the Russians that cost American lives.

The death of General Patton in December 1945, is one of the enduring mysteries of the war era. Although he had suffered serious injuries in a car crash in Manheim, he was thought to be recovering and was on the verge of flying home.

But after a decade-long investigation, military historian Robert Wilcox claims that OSS head General “Wild Bill” Donovan ordered a highly decorated marksman called Douglas Bazata to silence Patton, who gloried in the nickname “Old Blood and Guts”.

His book, “Target Patton”, contains interviews with Mr Bazata, who died in 1999, and extracts from his diaries, detailing how he staged the car crash by getting a troop truck to plough into Patton’s Cadillac and then shot the general with a low-velocity projectile, which broke his neck while his fellow passengers escaped without a scratch.

Mr Bazata also suggested that when Patton began to recover from his injuries, US officials turned a blind eye as agents of the NKVD, the forerunner of the KGB, poisoned the general.

Mr Wilcox told The Sunday Telegraph that when he spoke to Mr Bazata: “He was struggling with himself, all these killings he had done. He confessed to me that he had caused the accident, that he was ordered to do so by Wild Bill Donovan.

“Donovan told him: ‘We’ve got a terrible situation with this great patriot, he’s out of control and we must save him from himself and from ruining everything the allies have done.’ I believe Douglas Bazata. He’s a sterling guy.”

Mr Bazata led an extraordinary life. He was a member of the Jedburghs, the elite unit who parachuted into France to help organise the Resistance in the run up to D-Day in 1944. He earned four purple hearts, a Distinguished Service Cross and the French Croix de Guerre three times over for his efforts.

After the war he became a celebrated artist who enjoyed the patronage of Princess Grace of Monaco and the Duke and Duchess of Windsor.

He was friends with Salvador Dali, who painted a portrait of Bazata as Don Quixote.

He ended his career as an aide to President Ronald Reagan’s Navy Secretary John Lehman, a member of the 9/11 Commission and adviser to John McCain’s presidential campaign.

Mr Wilcox also tracked down and interviewed Stephen Skubik, an officer in the Counter-Intelligence Corps of the US Army, who said he learnt that Patton was on Stalin’s death list. Skubik repeatedly alerted Donovan, who simply had him sent back to the US.

“You have two strong witnesses here,” Mr Wilcox said. “The evidence is that the Russians finished the job.”

The scenario sounds far fetched but Mr Wilcox has assembled a compelling case that US officials had something to hide. At least five documents relating to the car accident have been removed from US archives.

The driver of the truck was whisked away to London before he could be questioned and no autopsy was performed on Patton’s body.

With the help of a Cadillac expert from Detroit, Mr Wilcox has proved that the car on display in the Patton museum at Fort Knox is not the one Patton was driving.

“That is a cover-up,” Mr Wilcox said.

George Patton, a dynamic controversialist who wore ivory-handled revolvers on each hip and was the subject of an Oscar winning film starring George C. Scott, commanded the US 3rd Army, which cut a swathe through France after D-Day.

But his ambition to get to Berlin before Soviet forces was thwarted by supreme allied commander Dwight D. Eisenhower, who gave Patton’s petrol supplies to the more cautious British General Bernard Montgomery.

Patton, who distrusted the Russians, believed Eisenhower wrongly prevented him closing the so-called Falaise Gap in the autumn of 1944, allowing hundreds of thousands of German troops to escape to fight again,. This led to the deaths of thousands of Americans during their winter counter-offensive that became known as the Battle of the Bulge.

In order to placate Stalin, the 3rd Army was also ordered to a halt as it reached the German border and was prevented from seizing either Berlin or Prague, moves that could have prevented Soviet domination of Eastern Europe after the war.

Mr Wilcox told The Sunday Telegraph: “Patton was going to resign from the Army. He wanted to go to war with the Russians. The administration thought he was nuts.

“He also knew secrets of the war which would have ruined careers.

I don’t think Dwight Eisenhower would ever have been elected president if Patton had lived to say the things he wanted to say.” Mr Wilcox added: “I think there’s enough evidence here that if I were to go to a grand jury I could probably get an indictment, but perhaps not a conviction.”

Charles Province, President of the George S. Patton Historical Society, said he hopes the book will lead to definitive proof of the plot being uncovered. He said: “There were a lot of people who were pretty damn glad that Patton died. He was going to really open the door on a lot of things that they screwed up over there.”

Polaroid Declares Bankruptcy For Third Time

Dec. 19 (Bloomberg) — Polaroid Corp., the pioneer of instant photography, sought bankruptcy protection for the second time in seven years, blaming an alleged $2 billion fraud at its parent company Petters Group Worldwide LLC.

Petters Group, which acquired the 71-year-old company in 2005, has unsecured claims against Polaroid totaling $213.5 million, according to papers filed yesterday in U.S. Bankruptcy Court in Minneapolis. Polaroid, which is disputing the claims, didn’t estimate its total assets or debt.

The company and nine subsidiaries “entered bankruptcy with ample cash reserves, sufficient to finance the company’s reorganization under Chapter 11,” it said yesterday in a statement. “The company has not sought, nor does it expect to seek, additional debtor-in-possession financing.”

Petters Group’s founder, Thomas Petters, was arrested Oct. 3 on charges of mail fraud, wire fraud and money laundering. Prosecutors accused him of siphoning money from business ventures since 1995 to support an extravagant lifestyle.

Polaroid’s owner, based in Minnetonka, Minnesota, filed for bankruptcy in October after its assets were frozen by a judge. Petters and his firm are accused of defrauding hedge funds using fake purchase orders to secure investments. He allegedly told investors their money would be used to buy merchandise that would be resold to retailers including Costco Wholesale Corp.

Polaroid was founded in 1937 by legendary inventor Edwin Land, a Harvard University dropout.

Goggles, Instant Cameras

The company made protective glasses and goggles for the U.S. military during World War II. It sold the first instant camera in 1948, making $5 million in sales in the first year, according to the company’s Web site.

Another Petters company, Sun Country Airlines Inc., sought bankruptcy Oct. 6 when it couldn’t secure a $7 million short-term loan from its owner. The St. Paul, Minnesota-based carrier, which also had an earlier bankruptcy in 2001, has debt of $108.2 million and assets of $55.2 million, court papers show.

Polaroid has an annual profit of about $400 million through sales at retailers including Best Buy Co., Wal-Mart Stores Inc., Target Corp. and Sears Holdings Corp., it said in court papers.

“Despite having one of the most recognized brand names in the world, Polaroid has seen a decline in net sales over the past several years, coupled with increasing operational and product development costs,” the company said in bankruptcy papers.

DVD Players, TVs

Polaroid makes DVD players, TVs and other electronics, bringing in about $1 billion in annual sales. It unveiled a line of Zink printers in January that can make wallet-sized photos from digital cameras in 60 seconds.

“We expect to continue our operations as normal during the reorganization and are planning for new product launches in 2009,” Chief Executive Officer Mary Jeffries said yesterday in the company statement.

Polaroid said in February it would exit the film business and close plants in the U.S., Mexico and the Netherlands to focus on digital photography and flat-panel televisions. The company stopped making instant cameras for commercial use in 2006 and halted production of consumer models last year.

Polaroid first sought bankruptcy protection from creditors in 2001 after digital cameras rendered obsolete the instant-film technology that made the company a household name.

The company plans to fire 16 workers the day after Christmas and another 31 during the first quarter of next year, court papers show.

Ownership Changes

JPMorgan Chase & Co.’s private-equity unit, One Equity Partners LLC, in 2002 purchased a 53 percent stake in Polaroid for $56 million, helping it come out of its earlier bankruptcy. Petters Group began licensing Polaroid’s brand name in 2002 and bought the company in 2005 for $426 million.

The maker of One Step, I-Zone and JoyCam cameras was among the U.S. stock market’s “Nifty Fifty” three decades ago. The Nifty Fifty, compiled in 1972 by Morgan Guaranty Trust, a predecessor of JPMorgan, consisted of stocks considered certain to reward investors, regardless of how much they cost or how well the market performed.

Petters resigned as Petters Group chief executive officer Sept. 29 after the FBI received information that at least 20 investors may have been victims of a lending scam and raided the company’s Minnetonka headquarters. Petters has been jailed since his arrest. Several hedge funds that invested with Petters have also sought bankruptcy protection.

A former Petters Group tax accountant linked to the alleged fraud pleaded guilty today to conspiring to evade taxes. James Carl Wehmhoff, 67, admitted one count of conspiracy and one count of assisting tax fraud in federal court in St. Paul, Minnesota.

Land’s Inventions

Land, who left Harvard just months before graduation in 1932 to establish the company, is named on 533 patents, including one for the first synthetic polarizer.

The inventor kept Polaroid innovative for decades with products including 3-D film. The Polaroid OneStep was the world’s best-selling camera in the 1970s.

Lorrie Parent, a Polaroid spokeswoman, didn’t return a call for comment. The company earlier said it isn’t a target of the federal investigation.

The case is In re Polaroid Corp., 08-46617, U.S. Bankruptcy Court, District of Minnesota (Minneapolis).

To contact the reporters on this story: Courtney Dentch in New York at cdentch1@bloomberg.net; Michael Bathon in Wilmington, Delaware, at mbathon@bloomberg.net.

Last Updated: December 19, 2008 15:45 EST

1 in 7 Owes More Than House is Worth

Owners find themselves trapped underwater

By Stephanie Armour, USA TODAY

Michael and Cynthia Russell wanted to move to New York City, where they both work. Jobs are more plentiful there than in their town of Poughkeepsie, N.Y. But like millions of Americans today, the couple are stuck. They owe about $80,000 more on the home they bought in 2004 than it is now worth.

So instead of selling their home, Cynthia is going to school to become a registered nurse and Michael is working from home.

“We have had to find opportunities closer to home,” Michael Russell says. “We actually began trying to refinance in June 2007, but absolutely no one would take us.”

It’s a problem that’s only expected to get worse for legions of homeowners across the USA. Nearly one in seven homeowners is underwater, owing more on their mortgages than their homes are worth. That’s about 12 million homeowners, nearly double the number underwater at the end of 2007, according to Moody’s Economy.com. Most are homeowners who bought between late 2003 and 2007.

Home prices are projected to drop on average another 10%, bringing to about 14.6 million the number of homeowners who will be underwater on their mortgages by fall 2009, says Mark Zandi, chief economist at Moody’s Economy.com. By contrast, about 2.5 million homeowners had negative equity in their homes in 2006.

Increasingly, job seekers find that their homes are albatrosses imperiling their ability to relocate for higher incomes or more secure job opportunities. In fact, the greatest drop in home prices, in many cases, is in areas with the sharpest rise in unemployment.

“It’s a pretty alarming trend,” says Alan Steel, general manager of AOL Real Estate.

In California, about 18% of homeowners owe more on their first mortgages than their homes are worth. In Florida, it’s nearly one in four. Half of homeowners in Louisiana are underwater on their first mortgages.

Paying on ‘a lost cause’

Ken Schimpf, 61, a retired carpenter in Lancaster, Calif., briefly toyed with the idea of moving to Wyoming so he could be closer to his oldest son and live in an area where he could find work more easily. But he’s trapped by his house.

In August 2005, Ken and his wife, Juli, bought their home in Lancaster for $330,000. It seemed ideal at the time. The 1,900-square-foot, three-bedroom house includes an expansive master suite with a Jacuzzi, a pool, and 2.5-car garage where he keeps a 1923 T-Bucket hot rod that he and his wife worked on.

They got an interest-only loan at 5.25%, with the rate locked in for five years.

But in January 2006, Juli was diagnosed with leukemia. She spent months in and out of the hospital. Ken eventually took a leave of absence from work to help care for her. She died last March. Now Ken is trying to make his mortgage payment of $2,600 a month by relying on his retirement pension of $1,900 a month and savings. He doesn’t want to lose the house because it’s also home to two adult children: a son who was laid off and a daughter who is working temporary jobs. In September, his mortgage payments will increase by almost $500 a month when the interest-only teaser runs out.

He’s selling his hot rod collection, looking for work and fast depleting his savings to make ends meet. Plans to sell the house were thwarted when he discovered the property is worth about $90,000 less than he paid for it. He doesn’t want to just walk away from the home because he fears that would devastate his credit.

“I really hate putting the money out each month into what appears to be a lost cause,” Schimpf says. “I just hope the economy turns around before too long so people can once again realize that owning a home is the American dream and not the American nightmare.”

The inability to relocate because of negative home equity isn’t just hurting workers who want to move for better jobs. It’s also straining employers. Employees and new hires are increasingly turning down relocation opportunities because of the housing market. A 2008 corporate relocation survey by Atlas Van Lines found that “family ties” was the top reason (62%) cited by companies for workers declining relocations. That was a sharp drop from 84% last year. By contrast, 50% of companies said employees cited “housing and mortgages concerns” as the reason for turning down relocation offers, vs. 30% in 2007.

The dramatic shift is forcing businesses to offer more generous relocation assistance at the same time they’re facing significant pressures to curtail costs because of the lackluster economy. In fact, the number of firms offering lump sum payments to transferees and new hires is at the highest in six years.

Some homeowners are so certain that their homes won’t appreciate anytime soon that they have pondered simply walking away. Accountant Jason Khan, 33, owes about $80,000 more on his Phoenix home than it’s worth in today’s market.

“I am not in danger of losing my house. I have no problem paying my mortgage payments,” he says in an e-mail. “However, I have considered walking away from my house and buying another … or making late payments to see if my mortgage company will renegotiate my principal with me.”

For the most part, lenders will only ease loan terms for homeowners who are at risk of default or foreclosure.

Home prices keep on falling

Economists say a rebound in the housing market is still months away. The drop in home prices has shown no signs of letting up. And at least $500 billion worth of option-ARM loans are expected to reset from mid-2009 through 2012, driving up monthly mortgage payments for homeowners.

That could lead to a wave of new foreclosures that “could drive down home prices and leave more people underwater,” Zandi says.

Jim Fawcett of Houston says the 6% decline in his home’s value is just enough of a drop to keep him from retiring and moving inland from the coast.

“There’s probably no way I could even sell my house in this market — short of giving it away,” says Fawcett, 70. “Homes in my area, a newer development, sit on the market for six months, don’t sell, then are taken off.”

Mara Stefan’s house is an unwanted reminder of her life before divorce. “As part of the settlement, I’m stuck in a house I don’t want to live in,” says Stefan, 42, who works in consumer technology and whose suburban Boston home is $60,000 underwater. She would love to move with her sons, Eric, 15, and Ethan, 6. “But it looks like I’ll have to be here awhile.”

Burger King Launches Men’s Body Spray

(AP) Looking to beef up your mojo this holiday season?

Burger King Corp. may have just the thing. The home of the Whopper has launched a new men’s body spray called “Flame.” The company describes the spray as “the scent of seduction with a hint of flame-broiled meat.”

The fragrance is on sale at New York City retailer Ricky’s NYC in stores and online for a limited time for $3.99.

Burger King is marketing the product through a Web site featuring a photo of its King character reclining fireside and naked but for an animal fur strategically placed to not offend.

The marketing ploy is the latest in a string of viral ad campaigns by the company. Burger King is also in the midst of its Whopper Virgins campaign that features an taste test with fast-food “virgins” pitting the Whopper against McDonald’s Corp.’s Big Mac.

Burger King Holdings Inc. shares rose 15 cents to close at $20.53.

Where’d The Bailout Money Go? Shhhh, It’s a Secret

WASHINGTON (AP)

Dec 22

By MATT APUZZO- It’s something any bank would demand to know before handing out a loan: Where’s the money going?

But after receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it.

“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,’” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”

The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest?

None of the banks provided specific answers.

“We’re not providing dollar-in, dollar-out tracking,” said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars.

Some banks said they simply didn’t know where the money was going.

“We manage our capital in its aggregate,” said Regions Financial Corp. (RF) spokesman Tim Deighton, who said the Birmingham, Ala.-based company is not tracking how it is spending the $3.5 billion it received as part of the financial bailout.

The answers highlight the secrecy surrounding the Troubled Assets Relief Program, which earmarked $700 billion – about the size of the Netherlands’ economy – to help rescue the financial industry. The Treasury Department has been using the money to buy stock in U.S. banks, hoping that the sudden inflow of cash will get banks to start lending money.

There has been no accounting of how banks spend that money. Lawmakers summoned bank executives to Capitol Hill last month and implored them to lend the money – not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no process in place to make sure that’s happening and there are no consequences for banks who don’t comply.

“It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry,” said Elizabeth Warren, the top congressional watchdog overseeing the financial bailout.

But, at least for now, there’s no way for taxpayers to find that out.

Pressured by the Bush administration to approve the money quickly, Congress attached nearly no strings on the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent.

“Those are legitimate questions that should have been asked on Day One,” said Rep. Scott Garrett, R-N.J., a House Financial Services Committee member who opposed the bailout as it was rushed through Congress. “Where is the money going to go to? How is it going to be spent? When are we going to get a record on it?”

Nearly every bank AP questioned – including Citibank and Bank of America, two of the largest recipients of bailout money – responded with generic public relations statements explaining that the money was being used to strengthen balance sheets and continue making loans to ease the credit crisis.

A few banks described company-specific programs, such as JPMorgan Chase’s plan to lend $5 billion to nonprofit and health care companies next year. Richard Becker, senior vice president of Wisconsin-based Marshall & Ilsley Corp. (MI) (MI), said the $1.75 billion in bailout money allowed the bank to temporarily stop foreclosing on homes.

But no bank provided even the most basic accounting for the federal money.

“We’re choosing not to disclose that,” said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.

Others said the money couldn’t be tracked. Bob Denham, a spokesman for North Carolina-based BB&T Corp., said the bailout money “doesn’t have its own bucket.” But he said taxpayer money wasn’t used in the bank’s recent purchase of a Florida insurance company. Asked how he could be sure, since the money wasn’t being tracked, Denham said the bank would have made that deal regardless.

Others, such as Morgan Stanley (MS) spokeswoman Carissa Ramirez, offered to discuss the matter with reporters on condition of anonymity. When AP refused, Ramirez sent an e-mail saying: “We are going to decline to comment on your story.”

Most banks wouldn’t say why they were keeping the details secret.

“We’re not sharing any other details. We’re just not at this time,” said Wendy Walker, a spokeswoman for Dallas-based Comerica Inc., which received $2.25 billion from the government.

Heine, the New York Mellon Corp. spokesman who said he wouldn’t share spending specifics, added: “I just would prefer if you wouldn’t say that we’re not going to discuss those details.”

The banks which came closest to answering the questions were those, such as U.S. Bancorp and Huntington Bancshares Inc., that only recently received the money and have yet to spend it. But neither provided anything more than a generic summary of how the money would be spent.

Lawmakers say they want to tighten restrictions on the remaining, yet-to-be-released $350 billion block of bailout money before more cash is handed out. Treasury Secretary Henry Paulson said the department is trying to step up its monitoring of bank spending.

“What we’ve been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we’re doing this,” Paulson said at a recent forum in New York. “So we’re building this organization as we’re going.”

Warren, the congressional watchdog appointed by Democrats, said her oversight panel will try to force the banks to say where they’ve spent the money.

“It would take a lot of nerve not to give answers,” she said.

But Warren said she’s surprised she even has to ask.

“If the appropriate restrictions were put on the money to begin with, if the appropriate transparency was in place, then we wouldn’t be in a position where you’re trying to call every recipient and get the basic information that should already be in public documents,” she said.

Garrett, the New Jersey congressman, said the nation might never get a clear answer on where hundreds of billions of dollars went.

“A year or two ago, when we talked about spending $100 million for a bridge to nowhere, that was considered a scandal,” he said.

—

Associated Press writers Stevenson Jacobs in New York and Christopher S. Rugaber and Daniel Wagner in Washington contributed to this report.