1/31/11





FORECLOSUREGATE 3.0   Jan 30 2011

Jan 2011 12:05 AM PST
Shahien Narisipour at Huffington Post revealed that the FCIC report, due to be released officially tomorrow, shows that contrary to its pious assertions to the contrary, Goldman received funds for its own account from the AIG bailout, to the tune of $2.9 billion.
Why is this significant? Because Goldman maintained that the monies it received from the rescue were for customer trades, not for its own account.
And while this may seem to be news, it isn’t, except for putting a firm dollar value on what Goldman received for its own account. We posted on Goldman’s AIG exposures both as principal and agent on February 7, 2010, and specifically flagged that the Abacus trades that Goldman insured with AIG were principal positions, not client trades. We caught some flack for it by the time from various commentators who seemed more persuaded by Goldman’s PR that the extensive work done by Tom Adams, which we presented in a series of posts in early 2010 (see here, here and here for some examples).
From the February 2010 post:
Possible Productive Lines of Inquiry That Get Short Shrift
The focus on Goldman’s marks with AIG largely bypasses what we think is a more serious issue: the role of all synthetic or heavily synthetic CDOs, which allowed Goldman to go net short. The usual vehicle for that was a “mezz” CDO, because the CDS would be on BBB subprime trances, the layer that would go “boom” first. The bulk of Goldman’s AIG-related CDOs were older vintage “high grade” CDOs, meaning the synthetic component was not large (on the deals we looked at, a maximum of 20%) and they would be on AA bonds, which were not the slice you’d be eager to use if your strategy was to go net short. So the fixation on the marks has the unfortunate effect of diverting attention away from what we think was the much more troubling activity: the use of heavily/all synthetic CDOs to establish a short position.
Even though the deal documents allowed for the possibility that Goldman would keep the short interest created by these deals, anyone who invested in them or acted as a guarantor would have thought very differently, and probably have asked for much higher returns if it had understood Goldman was acting as a principal rather than as a middleman (and how Goldman influenced the deal parameters to assure that its short position worked out). The story indicates that $5.5 billion of Abacus trades (a Goldman synthetic short program of 26 deals in total) were insured by AIG. Using the AIG Abacus trades as an entry point into the entire Abacus program would be a very useful exercise.
Note that the disclosure on the Abacus trades guaranteed by AIG continued to be sparse. The Abacus trades were pure synthetic CDOs, and pure synthetics were excluded from the Maiden Lane III portfolio (the special purpose entity established by the Fed to hold the non-synthetic CDOs that the Fed purchased from various dealers).
From Huffington Post:
Goldman Sachs collected $2.9 billion from the American International Group as payout on a speculative trade it placed for the benefit of its own account, receiving the bulk of those funds after AIG received an enormous taxpayer rescue…
At a hearing on July 1, 2010–two weeks before Goldman sent the e-mail acknowledging how $2.9 billion in AIG funds wound up in its own account–the crisis panel questioned Goldman’s chief financial officer, David A. Viniar and managing director David Lehman. Both said they knew nothing about AIG funds landing in the bank’s private coffers, according to a transcript of the hearing…
According to the crisis commission report, Goldman bought credit default swaps from AIG as a form of insurance on investments known as Abacus, which were pools of mortgage-linked securities.
It is separately a sign of the times that the Goldman CFO and a managing director in the CDO business could deny in sworn testimony that Goldman had received funds from its own account from the AIG rescue. As we stressed in our series of posts on the AIG exposures, the information we worked with was already in the public domain, even though few took the effort to piece together what it meant.


One of the sorry reminders of the decline of the rule of law in the United States is the frequency with which incidents of what look like document forgeries take place in foreclosure cases. The fact that a now-shuttered subsidiary of Lender Processing Services, a vendor to the servicing industry, had a price list for creating mortgage-related documents out of whole cloth attests to the long-standing demand for this sort of product.
The reason for this activity is simple. As we’ve stressed in various posts, in so-called private label securitizations (the non-Fannie/Freddie type), a great deal of evidence indicates that the originators and packagers of these deals did not bother complying with the contracts they created to govern these transactions on a widespread, perhaps pervasive basis sometime after 2003. And their shortcomings only come to light in foreclosures, and then (possibly) if the foreclosure is contested. Given how low foreclosure rates were historically, this was a risk the securitization industry seemed willing to take, and it is now reaping the fruit of this short-sighted bet.
The big problem for servicers and trustees (the parties that are responsible for the trust that holds the assets of the securitization) is that the pooling and servicing agreement which governs the securitization required that the note (the borrower’s IOU) be transferred though a specific set of parties by a specified time not all that long after the deal closed. Increasingly savvy anti-foreclosure lawyers recognize that the party attempting to foreclose may not have the legal standing to do so.
A new development is that the US Bankruptcy Trustee, which is part of the Department of Justice, has started poking around the nether world of slipshod and possible made-up documents, and is asking banks to explain what they are up to. These inquiries may be paving the ground for broader-based action.
The case in question is a Connecticut Chapter 13 filing (hat tip April Charney).
US Trustee Motion in CT for 2004 Examination
DeutscheBank purports to be the trustee for a particular 2005 mortgage securitization which contains the mortgage at issue. This is a partial list of the documentation problems; the motion itself makes for instructive reading:
In the first filing, Deutsche provides a copy of an undated promissory note which is not made out to the trust but the originator. A few days later, Deutshce filed an objection to the debtor’s plan of reorganization, and in it said the mortgage (the lien, not the note) had been recorded as transferred from the originator to Sand Canyon (a unit of Option One) in 2005 and then transferred to Deutsche less than two weeks before the bankruptcy filing. Note that a 2010 transfer is well outside the time parameters stipulated in the pooling and servicing agreement.
The borrower’s side asks what happened to the note, since there is no evidence it was transferred.
Several months later, Deutsche shows up in court with the usual fix for this sort of problem, an allonge (an attachment to a note that is so firmly secured that it is supposed to be inseparable to allow extra room for signatures. Query if the allonge were properly attached, how would it be possible to make a copy of the original note and not see at least part of the allonge?)
The truly creative part is these documents include an assignment of mortgage dated June 11, 2010, but effective as of May 1, 2005. I never knew law offices had time machines as part of their standard equipment. The trustee separately questions the 2010 assignment, since it was signed by an employee of Sand Canyon, when Sand Canyon did not own any mortgages or mortgage servicing rights at that point in time.
Even though the bankruptcy trustee is merely requesting a Rule 2004 examination (which means it wants someone from Deutsche to appear and answer questions about the case under oath), it is clear that he does not like what he sees so far:
The United States Trustee has reviewed the documents filed by Deutsche in this case and
has concerns about the integrity of those documents and the process utilized by Deutsche….Bankruptcy Courts have discussed the need for secured lenders to provide accurate information in filings before the Court… Consequently, “cause” exists authorizing the issuance of a subpoena to compel document production under Bankruptcy Rules 2004(c) and 9016…
The US Trustee has asked for a pretty extensive list of documents related to this bankruptcy. I’d love to be a fly on the wall and see the Deutsche employee try to explain his way out of this one.
Posted: 26 Jan 2011 12:53 PM PST
From the very outset, the Financial Crisis Inquiry Commission was set up to fail. Its leadership, particularly its chairman, Phil Angelides, was seen as insufficiently experienced in sophisticated finance. The timetable was unrealistic for a thorough investigation of a crisis this complex, let alone one international in scope. Its budget and staffing were too small. The investigations were further hampered by the requirement that subpoenas have bi-partisan approval along with Its decision to hold hearings with high profile individuals, including top Wall Street executives, before much in the way of lower-level investigation had been completed. The usual way to get meaningful disclosure from a top executive is to confront him with hard-to-defend material or actions; interrogations under bright lights, while a fun bit of theater, generally yield little in the absence of adequate prep.
So with expectations for the FCIC low, recent reports that the panel urged various prosecutors to launch criminal probes were a hopeful sign that the commission might nevertheless come out with some important findings. But correspondence from insiders in the last few days suggests otherwise. One, for instance, wrote, “I’m still in the process of getting the stink out of my clothes.”
These ideologically-neutral sources close to the investigation depict the commissioners as having pre-conceived narratives and of fitting various tidbits unearthed during the investigation into these frameworks, with the majority focusing more on the problems caused by deregulation and the failure of the authorities to use even the powers they had, while the minority assigns blame to government meddling, particularly housing-friendly policies.
These insiders see both sides as wrong, and want to encourage investigative reporters to challenge both the majority and dissenting accounts. They contend that both versions help perpetuate the myth that Wall Street was as much a victim of the crisis as anyone else.
One of these sources sent this document in an effort to question the notion that any of the reports coming out of the FCIC were the result of a fact-based investigative process, meaning operating in an objective manner, scouring information to see which theories or storylines seemed most consistent with what had been unearthed. As you will see, he makes clear that he regards all of the FCIC narratives as falling well short in explaining the crisis.
Now if we could only get Kurosawa to enter stage left and tell us what really happened…..
From a source close to the investigation:
Recently, I got started talking with a neighbor about ideologues in and around government. He had just read a book called Emerald City. He said it was about how we screwed up in Iraq by letting the ideologues run the post war show. The problem was that they had no “on the street” Iraqi experience. For them it was all theory and little practical experience. They were sure they were right and nothing could be said to change them. When things didn’t go according to plan, they just pretended it did or asserted events would turn their way shortly.
It occurred to me that we should be on the alert for this phenomenon when it comes to the three reports (one report and two dissents) to be released the Financial Crisis Inquiry Commission later this week. True to form, the reports start out with how many documents were reviewed and how many people interviewed. This sets us up to believe that the Commissioners relied on facts garnered from the documents and interviews in coming to their conclusions.
It would do Americans a lot of good to put this to the test. Did the Commissioners really use the facts to arrive at their conclusions or did they arrive at the conclusions first and are simply citing a selection of the facts to support their previously arrived at positions?
In fact, the majority will provide a history of financial crisis anecdotes and then try to fit the facts into its theory that the crisis was avoidable if only the financial sector took fewer risks and government was more competent. The dissents will do the same to support their theory that it was all government’s fault.
The problem is that the financial crisis was a real event. It didn’t happen in a theoretical model. It happened in real life and ruined the retirement savings of millions of Americans. Not only should we be skeptical of both the majority and the dissents, we should put them to the test to explain exactly how their theory explains the losses of hundreds of billions of dollars in the securities markets and trillions more in residential real estate. The question we should always keep in mind is for them to explain how abrupt catastrophic financial systemic failure happened. (Remember Secretary Paulson going to Congress kneeling before Nancy Pelosi and begging for three quarters of a billion [sic] dollars over the weekend.)
In a systemic failure there are always things that people do which in hindsight look imprudent: take on too much leverage, speculate instead of hedge, chase short term goals at the expense of long term security, panic, etc. If these things are offered up by the majority who says the crisis was avoidable, put them to the test. Which of the multitude of anecdotes were critical? If they can’t identify one or two critical factors, ask them specifically (anecdote by anecdote) whether the crisis would have occurred even if the anecdote in question didn’t occur. If they can’t tell you either, then really what they are saying is the crisis was a “perfect storm” of just the right mix of private sector greed and public sector incompetence coming together at the same time. In other words, what happened could not have been predicted and the crisis was not avoidable.
The ideologues in dissent have already started to sell a different theory. Some will try to say that the crisis was all due to affordable housing goals at the GSEs and the Community Reinvestment Act. This theory doesn’t hold true anywhere but in some right wing economist’s model. We should be able to assume that the GSEs did their best to pursue profits for their shareholders. That is, they didn’t intend to underwrite loans they knew would not be paid back. Nothing in the AHGs or CRA required them to underwrite bad mortgages. Indeed, those goals specifically were hedged so that they could be ignored if loans to satisfy them could not be made under terms which were economic.
The ideologues may say that underwriting bad mortgages by the GSEs resulted in an unsustainable increase in housing prices that all of a sudden collapsed (causing the financial crisis). But this would not (could not) have happened so widely and so quickly without other factors intervening. For example, how did the AHGs and CRA cause the rapid collapse of AIG, various monoline insurers, various investment banks, numerous money market funds or billions of dollars of losses in a huge number of mutual funds and pension funds none of which were subject either to the goals or CRA?
Catastrophic financial system collapse is not the result of largely unrelated anecdotes. There are too many firewalls in the system to allow it to happen. It has to be the result of one or more firewalls failing or something really big in the system going bad. What was there about the system that was big enough to cause systemic failure so quickly? What connects the two: the failure of the housing and securities markets?
Based on further discussions with individuals familiar with how the report was developed, the following shortcomings are evident:
The Commission was able to do comparatively little in the way of forensic work; the bulk of its effort was devoted to the hearings, which delivered relatively little in the way of new insight
As indicated above, the FCIC report is guilty of “drunk under the streetlight” behavior, of trying to fit its story to already known or easily found information. Even though the report makes extensive use of salacious extracts from e-mails, the insiders content that none of these information in these e-mails illuminates information critical to the crisis trajectory.
As a result, the report underplays or completely misses the real drivers of the crisis. Specifically, it gives short shrift to the obvious epicenters:
– How a previously benign securitization process allowed for the creation and sale of bad mortgages on a widespread basis
– How inadequate disclosure as alleged in a number of recently filed big lawsuits allowed mortgage backed bonds that contained many loans that fell below the underwriters’ promised standards to be sold to investors
– How a shadow banking system ballooned with products increasingly based on dubious financial instruments
– How CDOs that were devised by subprime shorts, most importantly the hedge fund Magnetar, drove the demand for the worst sort of subprime loans, extended the toxic phase of the subprime bubble well past its sell-by date
– How the dealer banks knowingly created toxic products, and via flawed risk management processes, allowed traders to retain significant portions of them via strategies that amounted to gaming of the banks’ bonus systems
Merely reading news releases of the last few weeks will show the shortcomings of the FCIC report. For instance, it skips over the role of the failure of the securitization industry to adhere to its own agreements, even though the FCIC was presented with this information last summer. It also is silent on the sort of abuses coming to light, such as the fact that Bear Stearns was allegedly double-dipping on its own deals, demanding that originators make extra cash payments on bad mortgages they had sold into pools that Bear was selling to investors, while failing to pass those payments on to investors (knowing that they instead would seek to have the bond insurers be the ones who would make investors whole).
Similarly, on the eve of the release of the FCIC report, the SEC, which astonishingly had declared disclosure on mortgage-backed securities to be “robust”, has done a quiet about face and has issued a new rule requiring issuers of asset backed securities to conduct a quality review and disclose to investors what that review consisted of. Note that this closing of a gaping loophole in disclosure has gone largely unnoticed.
The sad thing isn’t that the FCIC did not do its job. As we indicated earlier, that failure was by design. No one in the officialdom wants the mechanisms of the crisis to be exposed in full. It would compromise too many influential people and restoke well warranted public ire about the bailout of a miscreant financial services industry and its ongoing extractive behavior. Ironically, this core element of the dissent’s criticism is spot on, even if their own narrative suffers from precisely the same flaws. As FCIC commissioner Peter Walliston observes:
Like Congress and the Obama administration, the Commission’s majority erred in assuming that it knew the causes of the financial crisis…The Commission did not seriously investigate any other cause and did not effectively connect the factors it investigated to the financial crisis. The majority’s report covers in detail many elements of the economy before the financial crisis that the authors did not like, but generally fails to show how practices that had gone on for many years suddenly caused a worldwide financial crisis. In the end, the majority’s report turned out to be a just-so story about the financial crisis, rather than a report on what caused the financial crisis…..
From the beginning, the Commission’s investigation was limited to validating the standard narrative about the financial crisis—that it was caused by deregulation or lack of regulation, weak risk management, predatory lending, unregulated derivatives, and greed on Wall Street. Other hypotheses were either never considered or were treated only superficially. In criticizing the Commission, this statement is not intended to criticize the staff, who worked diligently and effectively under difficult circumstances and did extraordinarily fine work in the limited areas they were directed to cover. The Commission’s failures were failures of management.
By having the FCIC validate widely accepted, superficial, and ultimately inadequate explanations of the crisis, the Obama administration continues in its policy of looking forward rather than back, when looking back is the foundation of any serious scientific, investigative, or prosecutorial process. The odds are high that the media and the public at large will mistake the extensive use of anecdote in the FCIC report for accuracy and completeness. As with so many accounts of the crisis, the artful use of detail will yet again have the effect of diverting attention from the true drivers of the crisis and thus leave Wall Street free to devise new ways to wreck the economy for fun and profit.
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Guest Post: Inequality In America Is Worse Than In Egypt, Tunisia Or Yemen

→ Washington’s Blog
Egyptian, Tunisian and Yemeni protesters all say that inequality is one of the main reasons they’re protesting.
However, the U.S. actually has much greater inequality than in any of those countries.
Specifically, the “Gini Coefficient” – the figure economists use to measure inequality – is higher in the U.S.

Gini Coefficients are like golf – the lower the score, the better (i.e. the more equality).
According to the CIA World Fact Book, the U.S. is ranked as the 42nd most unequal country in the world, with a Gini Coefficient of 45.
In contrast:
  • Tunisia is ranked the 62nd most unequal country, with a Gini Coefficient of 40.
  • Yemen is ranked 76th most unequal, with a Gini Coefficient of 37.7.
  • And Egypt is ranked as the 90th most unequal country, with a Gini Coefficient of around 34.4.
And inequality in the U.S. has soared in the last couple of years, since the Gini Coefficient was last calculated, so it is undoubtedly currently much higher.
So why are Egyptians rioting, while the Americans are complacent?
Well, Americans – until recently – have been some of the wealthiest
people in the world, with most having plenty of comforts (and/or
entertainment) and more than enough to eat.
But another reason is that – as Dan Ariely of Duke University and Michael I. Norton of Harvard Business School demonstrate – Americans consistently underestimate the amount of inequality in our nation.
As William Alden wrote last September:
Americans vastly underestimate the degree of wealth inequality in America, and we believe that the distribution should be far more equitable than it actually is, according to a new study.
Or, as the study’s authors put it: “All demographic groups — even those not usually associated with wealth redistribution such as Republicans and the wealthy — desired a more equal distribution of wealth than the status quo.”
The report … “Building a Better America — One Wealth Quintile At A Time” by Dan Ariely of Duke University and Michael I. Norton of Harvard Business School … shows that across ideological, economic and gender groups, Americans thought the richest 20 percent of our society controlled about 59 percent of the wealth, while the real number is closer to 84 percent.
Here’s the study.
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Egypt protests: America's secret backing for rebel leaders behind uprising

The American government secretly backed leading figures behind the Egyptian uprising who have been planning “regime change” for the past three years, The Daily Telegraph has learned.

Link to this video
By Tim Ross, Matthew Moore and Steven Swinford  2011 jan 28th
1499 Comments
The American Embassy in Cairo helped a young dissident attend a US-sponsored summit for activists in New York, while working to keep his identity secret from Egyptian state police.
On his return to Cairo in December 2008, the activist told US diplomats that an alliance of opposition groups had drawn up a plan to overthrow President Hosni Mubarak and install a democratic government in 2011.
The secret document in full
He has already been arrested by Egyptian security in connection with the demonstrations and his identity is being protected by The Daily Telegraph.
The crisis in Egypt follows the toppling of Tunisian president Zine al-Abedine Ben Ali, who fled the country after widespread protests forced him from office.
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The disclosures, contained in previously secret US diplomatic dispatches released by the WikiLeaks website, show American officials pressed the Egyptian government to release other dissidents who had been detained by the police.
Mr Mubarak, facing the biggest challenge to his authority in his 31 years in power, ordered the army on to the streets of Cairo yesterday as rioting erupted across Egypt.
Tens of thousands of anti-government protesters took to the streets in open defiance of a curfew. An explosion rocked the centre of Cairo as thousands defied orders to return to their homes. As the violence escalated, flames could be seen near the headquarters of the governing National Democratic Party.
Police fired rubber bullets and used tear gas and water cannon in an attempt to disperse the crowds.
At least five people were killed in Cairo alone yesterday and 870 injured, several with bullet wounds. Mohamed ElBaradei, the pro-reform leader and Nobel Peace Prize winner, was placed under house arrest after returning to Egypt to join the dissidents. Riots also took place in Suez, Alexandria and other major cities across the country.
William Hague, the Foreign Secretary, urged the Egyptian government to heed the “legitimate demands of protesters”. Hillary Clinton, the US Secretary of State, said she was “deeply concerned about the use of force” to quell the protests.
In an interview for the American news channel CNN, to be broadcast tomorrow, David Cameron said: “I think what we need is reform in Egypt. I mean, we support reform and progress in the greater strengthening of the democracy and civil rights and the rule of law.”
The US government has previously been a supporter of Mr Mubarak’s regime. But the leaked documents show the extent to which America was offering support to pro-democracy activists in Egypt while publicly praising Mr Mubarak as an important ally in the Middle East.
In a secret diplomatic dispatch, sent on December 30 2008, Margaret Scobey, the US Ambassador to Cairo, recorded that opposition groups had allegedly drawn up secret plans for “regime change” to take place before elections, scheduled for September this year.
The memo, which Ambassador Scobey sent to the US Secretary of State in Washington DC, was marked “confidential” and headed: “April 6 activist on his US visit and regime change in Egypt.”
It said the activist claimed “several opposition forces” had “agreed to support an unwritten plan for a transition to a parliamentary democracy, involving a weakened presidency and an empowered prime minister and parliament, before the scheduled 2011 presidential elections”. The embassy’s source said the plan was “so sensitive it cannot be written down”.
Ambassador Scobey questioned whether such an “unrealistic” plot could work, or ever even existed. However, the documents showed that the activist had been approached by US diplomats and received extensive support for his pro-democracy campaign from officials in Washington. The embassy helped the campaigner attend a “summit” for youth activists in New York, which was organised by the US State Department.
Cairo embassy officials warned Washington that the activist’s identity must be kept secret because he could face “retribution” when he returned to Egypt. He had already allegedly been tortured for three days by Egyptian state security after he was arrested for taking part in a protest some years earlier.
The protests in Egypt are being driven by the April 6 youth movement, a group on Facebook that has attracted mainly young and educated members opposed to Mr Mubarak. The group has about 70,000 members and uses social networking sites to orchestrate protests and report on their activities.
The documents released by WikiLeaks reveal US Embassy officials were in regular contact with the activist throughout 2008 and 2009, considering him one of their most reliable sources for information about human rights abuses.
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Posted: 30 Jan 2011 11:29 PM PST
I must note that per the New York Times, the memo appears to have gone out that Mubrak no longer has US support, but that is a very long way from saying that the US is in favor of uncontrolled outcomes, despite the sudden adoption of “pro democracy” spin:
Secretary of State Hillary Rodham Clinton called on Sunday for “an orderly transition to meet the democratic and economic needs of the people” in Egypt, stopping short of asking its embattled president, Hosni Mubarak, to resign, but laying the groundwork for his departure.
Related
Mrs. Clinton, making a round of Sunday talk shows, said Mr. Mubarak’s future was up to the Egyptian people. But she said on “State of the Union” on CNN that the United States stood “ready to help with the kind of transition that will lead to greater political and economic freedom.”
Speaking more bluntly than administration officials have so far, Mrs. Clinton said Mr. Mubarak’s appointment of a vice president was only the “bare beginning” of a process that must include a government dialogue with the protesters and “free, fair, and credible” elections, scheduled for September.
I’d love to have overheard the call with Netanyahu.
This little piece strikes me as a tad closer to the truth:
Given the fact that our little policy of backing dictators that are willing to bend to our interests has just backfired in a rather serious way, one might think a fundamental reassessment might be in order. As former CIA director Emile Nakhleh writes in the Financial Times:
The possible toppling of the regime of Egyptian president Hosni Mubarak, following unprecedented street protests, will be as dramatic for US policy as the removal of the Shah of Iran over three decades ago. US policymakers were caught just as off guard in 1978 as they were last week. The question of “who lost Iran” that bedevilled US policy and intelligence leaders must now be crackling again in the air as those sitting in Washington watch Cairo burn. They were not prepared for the chaos following the Shah’s collapse, and they are not prepared for what may follow Mr Mubarak today…
The problems that faced the US since the ayatollahs took power in Iran could quickly be repeated in post-Mubarak Egypt. When Tunisia’s dictator was ousted three weeks ago, Washington and other western capitals did not believe the scenario could be replicated in Egypt, for the same tired arguments: the state is too strong, the security services are in full control, and the army is loyal to the ruler. A variant of this argument says that secular elites, frightened of Islamists, would not rise up against a fellow “secular” regime. Or even more condescendingly: the Egyptian people are apathetic and afraid….
Failure to anticipate the intensity, size and persistence of these anti-Mubarak protests show that US policymakers have ignored the social and economic realities. They have been lulled by a pro-stability narrative that has been spun out by Mr Mubarak and other Arab autocrats. Unfortunately for Cairo and Washington, the street is saying the game is up.
Before I left the US government four years ago, my colleagues and I on numerous occasions briefed policymakers on Egypt’s dire economic and social conditions. If those conditions were not addressed, we argued, the “Arab street” would boil over. We said the tipping point would occur when different segments of the population – notably secular and religious – coalesced against the regime. Yet when our policymakers expressed concern to Mr Mubarak and other autocrats, they were told: “Don’t worry about it, we have it under control.” No longer fighting foreign wars, their militaries and security services were trained against their peoples.
So the uprising was not a “whocouldanode”; the powers that be were warned, but changing course no doubt looked inconvenient and costly. And while Nakhleh is hopeful that Obama will live up to his promises of a “new beginning” in Cairo, those of us who have seen his “change” bait and switch at close range know better.
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Why they won't let Freedom Reign...

Posted: 30 Jan 2011 02:34 PM PST
→ Washington’s Blog
Israeli Prime Minister Benjamin Netanyahu said on Friday:
I’m not sure the time is right for the Arab region to go through the democratic process.
Also on Friday, Saudi King Abdullah said he support Egyptian president Mubarak and called the protesters troublemakers for calling for freedom of expression:
Saudi King Abdullah has expressed his support for embattled President Hosni Mubarak and slammed those “tampering” with Egypt’s security and stability, state news agency SPA reported on Saturday.
The Saudi ruler, in Morocco recovering from back surgery performed in the United States, telephoned Mubarak early Saturday, the report said.
During the conversation, Abdullah condemned “intruders” he said were “tampering with Egypt’s security and stability … in the name of freedom of expression.”
As FireDogLake notes, the U.S. State Department has taken a similar position.
As a large group of well-respected American academics wrote in an open letter today to President Obama:
As political scientists, historians, and researchers in related fields who have studied the Middle East and U.S. foreign policy, we the undersigned believe you have a chance to move beyond rhetoric to support the democratic movement sweeping over Egypt. As citizens, we expect our president to uphold those values.
For thirty years, our government has spent billions of dollars to help build and sustain the system the Egyptian people are now trying to dismantle. Tens if not hundreds of thousands of demonstrators in Egypt and around the world have spoken. We believe their message is bold and clear: Mubarak should resign from office and allow Egyptians to establish a new government free of his and his family’s influence. It is also clear to us that if you seek, as you said Friday ‘political, social, and economic reforms that meet the aspirations of the Egyptian people,’ your administration should publicly acknowledge those reforms will not be advanced by Mubarak or any of his adjutants.
There is another lesson from this crisis, a lesson not for the Egyptian government but for our own. In order for the United States to stand with the Egyptian people it must approach Egypt through a framework of shared values and hopes, not the prism of geostrategy. On Friday you rightly said that “suppressing ideas never succeeds in making them go away.” For that reason we urge your administration to seize this chance, turn away from the policies that brought us here, and embark on a new course toward peace, democracy and prosperity for the people of the Middle East. And we call on you to undertake a comprehensive review of US foreign policy on the major grievances voiced by the democratic opposition in Egypt and all other societies of the region.
As Agence France-Presse reports:
“Egypt remains a major pawn in the Middle East,” said [Didier Billion, an expert at Institute for International and Strategic Relations (IRIS) in Paris]. The West fears “a domino effect if Mubarak falls, with a protest movement that could grow across the world.”
***
“One of the lessons here is that we need to be on the right side of history in these countries,” said US Senator John McCain, who lost his 2008 White House bid to Obama.
“We need to do a better job of emphasizing and arguing strenuously for human rights,” he said on the CNN news channel.
“You can’t have autocratic regimes last forever. The longer they last, the more explosive the results.”
Indeed, the U.S. is now becoming concerned that continuing to back Mubarak will ensure that it is on the losing side of history.
For that reason, Obama changed his tune today, saying that he supports an “orderly transition” in Egypt. This is not a change in America’s foreign policy so as to embrace democracy in the Middle East. Rather, it is simply a realization that America’s puppet in Egypt has lost his grip on power and is impossible to save.
As a prominent writer told me:
We really should be embarrassed. TE Lawrence promised the Arabs democracy in return for their support in WWI (it was critical to Allied victory) and Great Britain welched on the promise. This is more of the same BS.
Indeed, Wikipedia notes:
Britain had promised, through British intelligence officer T. E. Lawrence (aka: Lawrence of Arabia), independence for a united Arab state covering most of the Arab Middle East in exchange for Arab support of the British during the war.
It goes without saying that the hostility of the State Department and our “allies” in the War on Terror Israel and Saudi Arabia towards democracy in Egypt gives lie to the claim that the War on Terror is about bringing “democracy” to the Middle East.
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1/30/11

Posted: 30 Jan 2011 01:28 AM PST
→ Washington’s Blog
Al Jazeera reported today:
[Al Jazeera reporter] Ayman Mohyeldin reports that eyewitnesses have said “party thugs” associated with the Egyptian regime’s Central Security Services – in plainclothes but bearing government-issued weapons – have been looting in Cairo. Ayman says the reports started off as isolated accounts but are now growing in number.
The Telegraph reports:
“Thugs” going around on motorcycles looting shops and houses, according to Al Jazeera. They say they are getting more and more reports of looting. More worryingly, one group of looters who were captured by citizens in the upmarket Cairo district of Heliopolis turned out to have ID cards identifying them as members of the regime security forces.
Similarly, Egyptian newspaper Al MasryAlyoum provides several eyewitness accounts of agents provacateur:
Thugs looting residential neighborhoods and intimidating civilians are government-hires, say eyewitnesses.
In Nasr City, an Eastern Cairo neighborhood, residents attempting to restore security told Al-Masry Al-Youm that looters were caught yesterday.
“They were sent by the government. The government got them out of prison and told them to rob us,” says Nameer Nashaat, a resident working alongside other youths to preserve order in the district. “When we caught them, they said that the Ministry of Interior has sent them.”
In Masr al-Qadeema, another district, scrap metal dealer Khaled Barouma, confirmed the same account. “The government let loose convicts. They let them out of prisons. We all know them in this neighborhood,” he said, adding that the neighborhood’s youth is trying to put the place in order by patrolling its streets with batons.
“The government wants people to believe that this is an uprising of convicts, which is not the case. The government is the one that is a criminal,” Khalil Fathy, a local journalist covering the events closely, said.
In Rehab City, a wealthy gated community in New Cairo, masked thugs broke through a civilian barricade in a truck and were caught by a neighborhood watch that has been guarding the city this evening.
“Even though we caught the ones we saw, now that they’re in, we know that more will be coming and we’re all running to protect our families and houses,” said Karim el-Dib, one of the men guarding the community.
Meanwhile, protestors caught two police informants attempting to rob a bank in the Mediterranean city of Alexandria.
Ayman Nour, opposition leader and head of the Ghad Party, told Al-Masry Al-Youm that his fellow party members have caught several thugs who work forthe Interior Ministry. After capturing them in downtown Cairo and Heliopolis, Nour’s followers found ministry of interior IDs on them, Nour said.
“The regime is trying to project the worst image possible to make it clear to people that they have only one of two alternatives: either the existing order or chaos,” he said.
Scores of looting incidents have been reported since yesterday. Many residential neighborhoods have been attacked by thugs and ex-convicts, despite military presence.
Bikyamasr reports:
Eyewitnesses reported that one plain clothed man attempted to loot and destroy private property, and when confronted he was shot. Bystanders then took his identification out and revealed that he was a police officer, leaving a number of demonstrators to argue that the government has told police to instigate looting and unrest.
And American intelligence service Stratfor provides the following unconfirmed report today:
Security forces in plainclothes are engaged in destroying public property in order to give the impression that many protesters represent a public menace.

As I noted in 2008:
When agents provocateur commit violence or destroy property at peaceful protests, they are carrying out false flag terrorism.
Wikipedia defines false flag terror as follows:
False flag operations are covert operations conducted by governments, corporations, or other organizations, which are designed to appear as if they are being carried out by other entities. The name is derived from the military concept of flying false colors; that is, flying the flag of a country other than one’s own. False flag operations are not limited to war and counter-insurgency operations, and have been used in peace-time; for example, during Italy’s strategy of tension.
If intelligence agencies or federal, state or local police themselves commit acts of violence against people or property, and then blame it on peaceful protesters, that is – by definition – false flag terror.
***
Read this to see how eagerly the mainstream media are to pin acts of violence on peaceful protesters, instead of the thugs who actually committed them.
And if you don’t know about agents provocateur, read this statement about Burma:
“They’ve ordered some soldiers in the military to shave their heads, so that they could pose as monks, and then those fake monks would attack soldiers to incite a military crackdown. The regime has done this before in Burma, and we believe they would do so again.”
And see this news from Canada, and this Wikipedia discussion.
And as I pointed out last year:
  • United Press International reported in June 2005:
    U.S. intelligence officers are reporting that some of the insurgents in Iraq are using recent-model Beretta 92 pistols, but the pistols seem to have had their serial numbers erased. The numbers do not appear to have been physically removed; the pistols seem to have come off a production line without any serial numbers. Analysts suggest the lack of serial numbers indicates that the weapons were intended for intelligence operations or terrorist cells with substantial government backing. Analysts speculate that these guns are probably from either Mossad or the CIA. Analysts speculate that agent provocateurs may be using the untraceable weapons even as U.S. authorities use insurgent attacks against civilians as evidence of the illegitimacy of the resistance.
  • Quebec police admitted that, in 2007, thugs carrying rocks to a peaceful protest were actually undercover Quebec police officers
  • At the G20 protests in London in 2009, a British member of parliament saw plain clothes police officers attempting to incite the crowd to violence
Similarly, an Indonesian fact-finding team investigated violent riots which occurred in 1998, and determined that “elements of the military had been involved in the riots, some of which were deliberately provoked”.
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Via: BBC

Davos 2011: Calls for stability in Egypt

Protesters in Cairo, 28 January 2011 Tens of thousands took part in the protests in Cairo and other cities

Japan's Prime Minister Naoto Kan wants Egyptian President Hosni Mubarak to start a dialogue with his people in the wake of ongoing protests.
"I hope the government of Egypt will restore security and peace," Mr Kan said in a speech to the World Economic Forum in Davos.
The unrest in Egypt has now become one of the major topics of discussion amongst the leaders at the gathering.
Meanwhile Tunisia has told Davos the country is "open for business" again.
'Tourism disrupted' There was an uprising in the north African country two weeks ago which saw President Zine al-Abidine Ben Ali toppled after 23 years in power.
But Mustapha Kamel Nabli, new Tunisian Central Bank Governor, told WEF delegates that there was now a "much more favorable business environment".
"We don't see any major difficulties and would like to make this clear to investors," he added.
He said people were returning to work, public services were working, and that the financial and banking system was holding steady, as was liquidity and the exchange rate.
"Clearly tourism has been disrupted but we hope this will be a transitory problem, and tourism will come back to regular levels," he said.

“Start Quote

Anything that threatens development is a concern for us”
End Quote Angel Gurria OECD secretary general
Mr Nabli also criticized the agencies how downgraded  Tunisia's credit rating after the unrest.
He called the reaction "a little bit weird" as the political changes would improve the business environment and "root out cronyism".
The downgrade would probably make it more expensive to borrow on the open markets, the central bank governor said.
So as a result, Tunisia had decided to postpone a planned bond issue. "We can afford to wait," Mr Nabli added.
'Concern' The head of the OECD said he feared the impact of the ongoing instability in Egypt.
"Anything that threatens development is a concern for us," says Angel Gurria.
Meanwhile Amnesty International secretary general Salil Shetty said the protests in Egypt should be a "wake-up call" for the economic, political and business elite meeting in Davos.
"It is time the rhetoric on human rights and reform delivered here is matched with genuine steps to uphold the rights of people."
Economist Nouriel Roubini reported that an impromptu session had been arranged to discuss the instability in Egypt and Tunisia.
'Positive' opportunity Also speaking in Davos, US Senator John Kerry said Mr Mubarak needed to respond to the concerns of his citizens.
Mr Kerry told BBC World the situation in Egypt was critical, and of enormous concern to everybody in the region and the world.
"The key is for Mr Mubarak to respond adequately to real frustrations and pent-up demand in the general population of Egypt."
He added: "He [Mubarak] can turn this into a positive and transformative event for Egypt."
But he said the situation may have gone too far to be recovered.
He added that the employment and education needs of citizens of some countries in the region had not always been met, adding to frustration among the young.
Meanwhile Saudi Arabia's stock exchange fell by more than 6% on Saturday because of concerns over Egypt.
Anger Anti-government protesters have taken to the streets in Egypt for a fifth day despite President Mubarak's promise to appoint a new cabinet.
Mr Mubarak said overnight that he had asked the government to resign after he imposed a curfew and ordered troops to back up police as they struggled to control crowds who flooded the streets to demand that he step down.
The Tunisian upheaval began with anger over rising food prices, high unemployment and anger at official corruption - problems which have also left many people Egypt feeling frustrated and resentful of their leadership.
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Fear Extreme Islamists in the Arab World? Blame Washington

Saturday 29 January 2011
by: Jeff Cohen, t r u t h o u t | Op-Ed
Fear Extreme Islamists in the Arab World? Blame Washington
Protesters in the streets of Cairo, Egypt. (Photo: Ed Ou/The New York Times)
In the last year of his life, Martin Luther King Jr. questioned US military interventions against progressive movements in the Third World by invoking a JFK quote: "Those who make peaceful revolution impossible will make violent revolution inevitable."
Were he alive to witness the last three decades of US foreign policy, King might update that quote by noting: "Those who make secular revolution impossible will make extreme Islamist revolution inevitable."
For decades beginning during the Cold War, US policy in the Islamic world has been aimed at suppressing secular reformist and leftist movements. Beginning with the CIA-engineered coup against a secular democratic reform government in Iran in 1953 (it was about oil), Washington has propped up dictators, coaching these regimes in the black arts of torture and mayhem against secular liberals and the left.
In these dictatorships, often the only places where people had freedom to meet and organize were mosques - and out of these mosques sometimes grew extreme Islamist movements. The Shah's torture state in Iran was brilliant at cleansing and murdering the left - a process that helped the rise of the Khomeini movement and ultimately Iran's Islamic Republic.
In a pattern growing out of what King called Washington's "irrational, obsessive anti-communism," US foreign policy also backed extreme Islamists over secular movements or government that were either Soviet-allied or feared to be.
In Afghanistan, beginning BEFORE the Soviet invasion and evolving into the biggest CIA covert operation of the 1980s, the US armed and trained native mujahedeen fighters - some of whom went on to form the Taliban. To aid the mujahedeen, the US recruited and brought to Afghanistan religious fanatics from the Arab world - some of whom went on to form Al Qaeda. (Like these Washington geniuses, Israeli intelligence - in a divide-and-conquer scheme aimed at combating secular leftist Palestinians - covertly funded Islamist militants in the occupied territories who we now know as Hamas.)
This is hardly obscure history.
Except in US mainstream media.
One of the mantras on US television news all day Friday was: Be fearful of the democratic uprisings against US allies in Egypt (and Tunisia and elsewhere). After all, we were told by Fox News and CNN and Chris Matthews on MSNBC, it could end up as bad as when "our ally" in Iran was overthrown and the extremists came to power in 1979.
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Such talk comes easy in US media where Egyptian victims of rape and torture in Mubarak's jails are never seen. Where it's rarely emphasized that weapons of repression used against Egyptian demonstrators are paid for by US taxpayers. Where Mubarak is almost always called "president" and almost never "dictator" (unlike the elected president of Venezuela).
When US media glibly talk about the Egyptian and Tunisian "presidents" being valued "allies in the war on terror," it's no surprise that they offer no details about the prisoners the US has renditioned to these "pro-Western" countries for torture.
The truth is that no one knows how these uprisings will end.
But revolution of some kind, as King said, seems inevitable. Washington's corrupt Arab dictators will come down as surely (yet more organically) as that statue of Saddam, another former US ally.
If Washington took its heel off the Arab people and ended its embrace of the dictators, that could help secularists and democrats win hearts and minds against extreme Islamists.
Democracy is a great idea. Too bad it plays almost no role in US foreign policy.
Creative Commons Licenseused via Truthout.com
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user  via: FireDogLake 

Mubarak Tries to Sow Chaos, Egyptians Still Say No
By: Siun Saturday January 29, 2011 4:02 pm
Nighttime in Egypt and everyone is wondering what comes next. The people are still out in Tahrir Square in Cairo but Mubarak still sits … well, somewhere hidden away trying to figure out his next move. Obama and Clinton and the rest of the Washington crew must be trying to figure out the same. Watching sources like CNN, you see some clarity, mostly from reporters on the ground, and unimaginable idiocy of which, for me, the best example was hearing Don Lemon of CNN say, over scenes of a Cairo neighborhood, that you see “young men carrying sticks and Samurai Swords.” That’s a sadly perfect example of how little we understand about Egypt and the Middle East.
And of course, the continuing reports of looting and similar chaos help build a case for an imposed “solution” – whether it’s Mubarak slaughtering the people or some US backed “compromise” rather than a government chosen by the people.
As we discussed earlier, those “thugs” are reported by quite reliable Egyptian sources to be Mubarak paid thugs:
Thugs looting residential neighborhoods and intimidating civilians are government-hires, say eyewitnesses.
In Nasr City, an Eastern Cairo neighborhood, residents attempting to restore security told Al-Masry Al-Youm that looters were caught yesterday.
“They were sent by the government. The government got them out of prison and told them to rob us,” says Nameer Nashaat, a resident working alongside other youths to preserve order in the district. “When we caught them, they said that the Ministry of Interior has sent them.”
In Masr al-Qadeema, another district, scrap metal dealer Khaled Barouma, confirmed the same account. “The government let loose convicts. They let them out of prisons. We all know them in this neighborhood,” he said, adding that the neighborhood’s youth is trying to put the place in order by patrolling its streets with batons.
“The government wants people to believe that this is an uprising of convicts, which is not the case. The government is the one that is a criminal,” Khalil Fathy, a local journalist covering the events closely, said.
… Meanwhile, protestors caught two police informants attempting to rob a bank in the Mediterranean city of Alexandria.
Ayman Nour, opposition leader and head of the Ghad Party, told Al-Masry Al-Youm that his fellow party members have caught several thugs who work for the Interior Ministry. After capturing them in downtown Cairo and Heliopolis, Nour’s followers found ministry of interior IDs on them, Nour said.
“The regime is trying to project the worst image possible to make it clear to people that they have only one of two alternatives: either the existing order or chaos,” he said.
This is the same sort of choice Mubarak has used in the past when he presented his regime as the only safe preventative to an Islamic takeover of Egypt. While fear of the Muslim Brotherhood may sell to American pundits, it’s not working on the streets of Cairo. Whether stirring up thuggery will cause the military to step in on the government’s side if the chaos increases is an open question particularly since Mubarak has picked two new figureheads with close ties to the military in Suleiman and Shifik. As I write, CNN has Wolf Blitzer interviewing the Egyptian Ambassador to the US and they are singing the praises of these appointments with Wolf reminding us that these are reliable men with good ties to the U.S and to Israel.
Today also saw major demonstrations worldwide in support of the Egyptian people. Here in Chicago, several hundred people gathered on Michigan Avenue in front of the Egyptian Consulate to voice their opposition to Mubarak and calls for Obama to cut Mubarak loose – but even stronger was the clear message of support for the people in the streets and the love of their homeland, Egypt. While I was there, amidst rousing Arabic chants, the crowd sang the Egyptian national anthem and many wept – hoping that these days are the beginning of a new future.
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Mubarak’s Secret Police “Thugs” Try to Disrupt Revolution
By: Siun Saturday January 29, 2011 10:09 am
Since Tuesday, protesters have been reporting that government thugs, NDP party thugs, have been acting initially as provocateurs and now as looters. There were widespread reports Thursday night for example that plain clothes police were spreading petrol on cars and otherwise preparing chaos.
Now the reports of thugs breaking into homes, hospitals and threatening neighborhoods are increasing.
Al Jazeera’s Ayman Mohyeldin is reporting that thugs in one neighborhood were seized and found to have state security id and carrying state issued weapons. The same pattern was seen in Tunisia. He notes that these are Mubarak’s police but in plain clothes.
As he says, with the police off the streets – they know there is no one to keep order and so they are taking advantage – and “attempting to steal away the momentum of the protests.:
7:38pm Ayman Mohyeldin reports that eyewitnesses have said “party thugs” associated with the Egyptian regime’s Central Security Services – in plainclothes but bearing government-issued weapons – have been looting in Cairo. Ayman says the reports started off as isolated accounts but are now growing in number.
If Mubarak and the NDP can generate enough chaos and frighten the more affluent portions of the populace, they provide an excuse and rationale for a brutal crackdown.
Al Masry Al Moum reports
Protesters have been attempting to organize popular committees in endangered areas in order to secure neighborhoods. ..
In the Maadi district of Cairo, residents living next to the Carrefour shopping mall–which was looted on Friday–told Al-Masry Al-Youm by phone that they saw thugs approaching their buildings.
Similar reports were relayed from the Mohandessin area in Cairo, where thugs reportedly attacked houses.
In the affluent quarter of the Fifth Settlement to the east of Cairo, residents also reported thugs cordoning their buildings and threatening to break in. Six armored vehicles have been deployed in the neighborhood, according to eyewitnesses.
Note that the reports all reference “thugs” – these are not protesters and the people in the neighborhoods seem to be well aware of who it is who is sowing chaos and danger.
In Alexandria people have poured onto the street chanting again against Mubarak and Suleiman.
Just now, ElBaradei made a statement pointing to Mubarak’s refusal to step down as the cause of the chaos and then said:
“Unless Mobarak steps down, Egypt will collapse today…We are seeking a change of regime. President Mubarak should step down. We should head towards a democratic state through a new government and free democratic elections…The whole world should realize that the Egyptians are not going home until their demands are realized…We are talking about taking down the Pharaonic dictatorship.”
How soon with Clinton and Obama issue another strongly worded “concern” about how Mubarak needs to “reform?”
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1/28/11

  The White-Wash...
Posted: 28 Jan 2011 12:55 AM PST
The Financial Crisis Inquiry Commission report increasingly looks like a whitewash. Even though the commission has made referrals for criminal prosecution, you’d never know that reading its end product. The references to “fraud” and “crime” are sparing, and ex mention of the SEC’s fraud investigation of Goldman, consist almost entirely of mortgage fraud, which is the FBI’s notion of “fraud for profit” or “fraud for housing”, meaning borrower fraud. The book also acknowledges the fraudulent lending by firms that were prosecuted like Ameriquest. In other words, the notion that the TBTF firms might have engaged in less than savory activity is remarkably absent from the report.
The FCIC has also been unduly close-lipped about their criminal referrals, refusing to say how many they made or giving a high-level description of the type of activities they encouraged prosecutors to investigate. By contrast, the Valukas report on the Lehman bankruptcy discussed in some detail whether it thought civil or criminal charges could be brought against Lehman CEO Richard Fuld and chief financial officers chiefs Chris O’Meara, Erin Callan and Ian I Lowitt, and accounting firm Ernst & Young. If a report prepared in a private sector action can discuss liability and name names, why is the public not entitled to at least some general disclosure on possible criminal actions coming out of a taxpayer funded effort? Or is it that the referrals were merely to burnish the image of the report, and are expected to die a speedy death?
Matt Stoller provides further support for the cynical take. Via e-mail:
I was on a conference call today with Phil Angelides and Brooksley Born, two commisioners of the Financial Crisis Inquiry Commission. During their unveiling of the FCIC report, they used words like deregulation, leverage, imprudent risk-taking, reckless behavior, failures at credit agencies, and failed regulators. Left out were words like crime, fraud, looting, or a specialized form of looting known as control fraud. At every point reporters asked about their referrals of criminal cases, which someone leaked before the report came out, they demurred. “We are not prosecutors”, said Angelides.
I asked about the criminal nature of the crisis. I said I didn’t want to know about any specific case, but whether they thought that fraud or crime was a core cause of the crisis. This is an important distinction, because the real question at hand is whether you trust the system to correct itself, or whether you believe that the people running the system are the problem and must be removed before we can fix the system. It’s obvious, as you’ll see, that Born and Angelides believe the former.
Neither Born nor Angelides would answer whether accounting fraud or crime was a primal cause of the crisis. The gist of the response was “it’s all in the report,” along with an attempt to pretend like they had discovered the systemic mortgage origination fraud that the FBI discussed in 2004. Born also repeated that they wouldn’t disclose specific cases of criminal referrals, even though I had specifically said that I was not interested in such disclosures. It was a filibuster, and an obvious one at that. I kept pressing, and asked them repeatedly to answer my question, and after the third follow-up Angelides finally said they had to go.
With that, the FCIC has completed the final act of oversight for the last Democratic Congress, and it held true to what Democrats in the last Congress believed. Everyone was at fault for the crisis, but no one is to blame. This was Bush’s line in 2008, that “Wall Street got drunk”, and Obama’s line throughout the Dodd-Frank mark-up. The Republicans went after the GSEs and “regulation”, and the Democrats sadly lamented the tragedy of the crisis. Again, everyone’s at fault, and no one is to blame. I saw high-ranking Democrat Carolyn Maloney brag yesterday about her vote for TARP in the hearing on foreclosures, noting that the Dow busted through 12,000 as a sign of prosperity. This is what they believe, in their bones. There was no theft, only tragedy. The American economy lives on the crack of financialization, not the production of valuable services and goods that solve real problems.
You can even read Obama’s Cooper Union speech from 2008, and with a few additions, it’s basically that narrative. Deregulation bad, regulation good. New Deal “outmoded”, excessive pay a problem. (I do find it amusing that Obama in 2008 brought up how other banks spread rumors about Bear Stearns so it would collapse, and then stressed how the SEC “should investigate and punish this kind of market manipulation.” But that’s kind of an exception, an adorable one that suggested there were rhetorical remnants of outrage among elites)
The FCIC report is destined for the same dustbin of history as that speech. It is a document of and by well-meaning insiders that just can’t deal with the corruption they were supposed to investigate. It’s a psychological crutch maybe, or perhaps a denial mechanism, but it doesn’t really matter. This report is just a cover-up, the same kind of cover-up that is allowing the thieves to escape with their loot.
Nothing will come from the generation in power who created this mess. They just don’t have it in them. The bad guys will steal again. I mean, crime pays. Besides, who’s going to call it crime, anyway?
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Dubai's millionaire Islands "Sinking"

theworld-lead01.jpeg

Dubai's "The World," a collection of artificial islands designed to resemble a map of planet Earth, is reportedly sinking back into the water. From the Telegraph:

The islands were intended to be developed with tailor-made hotel complexes and luxury villas, and sold to millionaires. They are off the coast of Dubai and accessible by yacht or motor boat.

Now their sands are eroding and the navigational channels between them are silting up, the British lawyer for a company bringing a case against the state-run developer, Nakheel, has told judges.

"The islands are gradually falling back into the sea," Richard Wilmot-Smith QC, for Penguin Marine, said. The evidence showed "erosion and deterioration of The World islands", he added.-

The World is sinking: Dubai islands 'falling into the sea' [Telegraph via Inhabitat]

via boingboing



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Billionaires Caucus

Clockwise from top left: Glenn Beck, Rush Limbaugh, Jim DeMint, Ed Meese, John Cornyn and Bob McDonnell. | AP Photos
The conferences have drawn A-listers like Beck, Limbaugh, DeMint and others. | AP Photos Close
By KENNETH P. VOGEL & SIMMI AUJLA | 1/27/11 4:18 AM EST

This weekend, for the eighth straight year, the billionaire Koch brothers will convene a meeting of roughly 200 wealthy businessmen, Republican politicians and conservative activists for a semi-annual conference to raise millions of dollars for the institutions that form the intellectual foundation – and, increasingly, the leading political edge – of the conservative movement.

In the past, the meetings have drawn an A-list of participants – politicians like Sen. Jim DeMint of South Carolina, leading free-market thinkers including American Enterprise Institute president Arthur Brooks, talkers Rush Limbaugh and Glenn Beck and even Supreme Court justices - to mingle with the wealthy donors who comprise the bulk of the invitees. The meetings adjourned after soliciting pledges of support from the donors – sometimes totaling as much as $50 million – to non-profit groups favored by the Kochs.

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For the most part, the meetings, which are closed to the public and reporters, have attracted little attention outside conservative circles. But very different circumstances surround the Koch conference set to begin Saturday at an exclusive resort outside Palm Springs, Calif.

The Koch brothers – Charles and David – have come under intense scrutiny recently for their role in helping start and fund some of the deepest-pocketed groups involved in organizing the tea party movement such as Americans for Prosperity, and for steering cash towards efforts to target President Barack Obama, his healthcare overhaul, and congressional Democrats in the run-up to the 2010 election.

Liberal critics have launched a campaign to highlight what they say is the systematic way in which the Kochs use their political giving to advance a conservative economic and regulatory agenda designed to further the interests of their oil, chemical and manufacturing empire.

Common Cause, the liberal watchdog group, is planning a protest called “Uncloaking the Kochs” and what it calls “the billionaires caucus” on Sunday a few miles down the road from the resort in Rancho Mirage, Calif., where this weekend’s conference will be held, and a handful of reporters have made plans to try to cover the Koch’s closed-door gathering.

While the Koch conferences have taken on an undeniably political edge – a June summit featured sessions on voter mobilization efforts for the 2010 midterms as well as solicitations for an ad campaign attacking Democratic lawmakers – those who have attended the meetings say the critics have it all wrong.

“The main goal of the seminars appeared to me to be education on the challenges that face the American system of free enterprise and democracy, and what people can do about them,” said Virginia Gov. Bob McDonnell, a conservative Republican who has attended at least seven of the meetings.

McDonnell, who is not attending this weekend’s conference, said he was introduced to the gatherings by “free market friends up in Northern Virginia, some in the Koch enterprises institution,” and he cast the conferences as playing an important role in the political process.

“Groups on the right, left and in the middle get together all over this great country to exercise their first amendment rights to talk about these issues - some of them are public. Some of them are closed meetings,” he said. “So, to the degree that some on the left may be trying to attack these Koch seminars is really ridiculous.”

Until recently, the secrecy surrounding the meetings had always been tight.


Read more: http://www.politico.com/news/stories/0111/48277.html#ixzz1CMdq1xHU

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