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The news while there's still time to do something about it

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11 February 2009

Bloomberg News reported that the tally of U.S. government spending could reach as much as $9.7 trillion - enough to pay off more than 90% of the nation's home mortgages.

Already, the U.S. Federal Reserve, Treasury Department and Federal Deposit Insurance Corp. have lent or spent almost $3 trillion over the past two years and pledged another $5.7 trillion if needed. That adds up to almost two-thirds of the value of the entire gross domestic product for the U.S. economy last year.

As astonishing as the number itself is a continuing lack of transparency in how and to whom the funds are being distributed.

"We've seen money go out the back door of this government unlike any time in the history of our country,"ť Sen. Byron Dorgan, D-N.D., said on the Senate floor Feb. 3. "Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?"ť

Notably, only the stimulus package currently on the table - along with the $700 billion Troubled Asset Relief Program and last year's $168 billion tax rebate - have actually been voted on by lawmakers. An additional $8 trillion is in the form of government lending programs and guarantees.

In fact, Bloomberg filed a federal Freedom of Information Act lawsuit against the Federal Reserve Bank Nov. 7 seeking to force disclosure of borrower banks and their collateral. Arguments in the suit may be heard as soon as this month.

Wall Street Journal - Data released in December by federal banking regulators show that more than 40% of borrowers were at least 60 days past due eight months after their loan was modified. Critics say redefaults are so high because mortgage companies aren't doing enough to make payments more affordable.

Forty-seven percent of loan modifications completed in November resulted in higher payments for borrowers, typically because unpaid interest and fees were added to the loan balance, according to a study by Alan M. White, a professor at Valparaiso University Law School in Indiana.

Coming up with an effective modification is complicated by the fact that many troubled borrowers also have home-equity loans or credit-card debt, auto loans or other obligations that can make it difficult to afford even a lower mortgage payment. Other borrowers may be able to afford a modified payment, but lack the reserves to deal with unexpected bills.

"You don't want to modify a loan that you think will eventually redefault," said Thomas Lawler, an independent housing economist. "All that will do is delay the process and increase the cost."

With home prices tumbling, some analysts have been pushing for mortgage companies to reduce loan balances. Borrowers whose loan modifications include a principal reduction are less likely to redefault, according to an analysis by Credit Suisse, but mortgage companies have thus far been reluctant to write down loan balances.

Brad Reed, Alternet - Geithner says that letting private investors bid on these assets -- with government guarantees against large losses -- will allow the market to define concrete prices for them and thus "avoid a program that has government overpaying for a bunch of financial assets."

The trouble with this, of course, is that many of these assets will never be worth what the banks will accept for them. Economist Dean Baker, co-director of the Center for Economic and Policy Research, told me that the worst of these assets "have lost value because they rest primarily on underwater mortgages." The only way these assets will ever regain the value they've lost over the past few years, says Baker, is in the unlikely event that the housing bubble makes a comeback. . .

Another problem with Geithner's plan is that it leaves bank executives and shareholders relatively unscathed. If government dollars are used to prop up bad asset values and thus protect shareholders from being wiped out, then future banks will have more incentive to invest in risky assets, safe in the knowledge that the government will help pick up the tab and leave their executives intact when the next bubble pops. . .

If the nationalization solution presents a better alternative to the Geithner plan, why isn't it being employed?

There are two plausible explanations, and both are depressing. The first explanation is the most cynical one: that Geithner is protecting his friends within the banking industry from suffering the consequences of their poor decision-making. . .

The other explanation is that the Obama administration is so determined to transcend traditional partisan politics that it has bought into the false notion that America is an intractably "center-right" nation that will not tolerate massive government intervention into private institutions. . .

Brad Blog - At Monday night's prime-time press conference at the White House, President Obama was asked by NPR's Mara Liasson what he'd learned from his "experience with the stimulus" package, in regard to "future challenges" he will face, legislatively. The key part of his answer: "I suppose what I could have done is started off with no tax cuts, knowing that I was going to want some, and then let them take credit for all of them. And maybe that's the lesson I learned.". . . Yeah, giving away the store, by negotiating with oneself --- by handing billions of dollars in tax cuts to Republicans, before they'd even asked for it --- is something we long ago learned in Negotiations 101. Apparently Obama skipped class that day.

CALVIN & HOBBES GOT IT ALL DOWN YEARS AGO

A WAR NEAR, DEADLY & UNMENTIONED

Johann Hari, Independent, UK - With the global economy collapsing all around us, the last issue President Barack Obama wants to talk about is the ongoing War on Drugs. But if he doesn't ­ and fast ­ he may well have two collapsed and hemorrhaging countries on his hands. The first lies in the distant mountains of Afghanistan. The second is right next door, on the other side of the Rio Grande.

Where in the world are you most likely to be beheaded? Where are the severed craniums of police officers being found week after week in the streets, pinned to bloody notes that tell their colleagues, "this is so that you learn respect"? Where are hand grenades being tossed into crowds to intimidate the public into shutting up? Which country was just named by the US Joint Chiefs of Staff as the most likely after Pakistan to suffer a "rapid and sudden collapse"?

Most of us would guess Iraq. The answer is Mexico. The death toll in Tijuana today is higher than in Baghdad. The story of how this came to happen is the story of this war ­ and why it will have to end, soon.

When you criminalize a drug for which there is a large market, it doesn't disappear. The trade is simply transferred from chemists and doctors to gangs. In order to protect their patch and their supply routes, these gangs tool up ­ and kill anyone who gets in their way. You can see this any day on the streets of London or Los Angeles, where teen gangs stab or shoot each other for control of the 3,000 per cent profit margins on offer. Now imagine this process on a countrywide scale, and you have Mexico and Afghanistan today.

Drugs syndicates control 8 per cent of global GDP ­ which means they have greater resources than many national armies. They own helicopters and submarines and they can afford to spread the woodworm of corruption through poor countries right to the top. . .

The cartels offer Mexican police and politicians a choice: plato o plomo. Silver or lead. Take a bribe, or take a bullet. Juan Camilo Mourino, the Interior Secretary, admits the cartels have so corrupted the police they can't guarantee the safety of the public any more. So the US is trying to militarize the attack on the cartels in Mexico, offering tanks, helicopters and hard cash.

The same process has happened in Afghanistan. After the toppling of the Taliban, the country's bitterly poor farmers turned to the only cash crop that earns them enough to keep their kids alive: opium. It now makes up 50 per cent of the country's GDP. The drug cartels have a bigger budget than the elected government, so they have left the young parliament, police force and army riddled with corruption and virtually useless. The US reacted by declaring "war on opium".

The German magazine Der Spiegel revealed that the NATO commander has ordered his troops to "kill all opium dealers". Seeing their main crop destroyed and their families killed, many have turned back to the Taliban in rage.

SUE THE WALL STREET MOB

Nicholas Von Hoffman, Nation - The financial should have to answer for what they have done, otherwise the endless palaver about accountability is just that: words.

They are beyond most criminal law, which is to be expected since the bankers and financiers hire the politicians who write the laws. Civil law is another matter. Given the oversupply of overly clever lawyers, there ought to be a couple of smart ones who can spin together the legal theory on which to sue Rubin and about 200 of the other top people who have brought economic disaster down on our heads.

Rubin may not have been the mastermind--there might not have been one--but he was in the control room throwing switches. As secretary of treasury he played a principal role in making sure nothing was done ten years ago after Brooksley Born, then chairman of the Commodity Futures Trading Commission, warned that unregulated derivatives "pose grave dangers to our economy." . . .

After leaving the Treasury with the road clear for the puppet masters of high finance to do anything they wanted, Rubin hied himself off to Citigroup, where he was paid $150 million to do his share in bringing the organization to ruin and untold billions in bailout money.

Rubin may be vulnerable under a federal criminal statute that makes it a crime to commit what is called "honest services fraud," defined as "a scheme or artifice to deprive another of the intangible right of honest services." A big shot convicted under the law could service as much as twenty years in a federal hostelry. Rubin and the others who drove their companies onto the rocks could be made answerable for their conduct given the right grand jury and a US attorney with a yen to make himself or herself famous. . .

If we cannot put these people in jail, we can sue the hell out of them, take away their money and give it to the unemployed. Taking their money away is not as good as a hanging, but seeing them turned out of their mansions with a tin cup and cardboard sign should assuage some of the anger.

SHERIFF ARRESTS 8 IN PHELPS BONG CASE

WIS TV, SC - The Richland County Sheriff's Department has been taking a lot of heat from people in this country and all over the world. They want to know why Sheriff Leon Lott is going after Michael Phelps.

Now it appears the case has expanded beyond Phelps' activities.

The party took place in November at a house on Blossom Street near Five Points.

It was at that house where someone snapped the photo of Phelps taking a hit on a marijuana pipe called a bong.

Lott says the picture indicated a law was being broken in his jurisdiction. He said he couldn't ignore the violation just because Phelps is rich and famous.

We've now learned that since investigators began trying to build a case, they've made eight arrests: seven for drug possession and one for distribution. These are arrests that resulted as the sheriff's department served search warrants.

We've also learned that the department has located and confiscated that bong.

Sources say the owner of the bong was trying to sell it on eBay for as much as $100,000.

The owner, who wasn't even at the party, is one of the eight now charged.

Phelps is not one of those charged at this point, but the sheriff's department has strong evidence that matches the photo to the house on Blossom Street.

EMENDATION: OBAMA'S MEDICAL RECORD PLAN

Yesterday we ran comments by Betsy McCaughey for Bloomberg about a provision in the bailout bill that set up a mandatory electronic medical records program in the health industry. As the following indicates, some of her comments were exaggerated, but, as we point out later, this does let get this bad provision off the hook. It never should have been in the stimulus package.

Progress Report - Late last month, the House passed an economic recovery package containing $20 billion for health information technology, which would require the Department of Health and Human Services to develop standards by 2010 for a nationwide system to exchange health data electronically. The version of the recovery package passed by the Senate contns slightly less funding for health information technology. But as Congress moves to reconcile the two stimulus packages, conservatives have begun attacking the health IT provisions, falsely claiming that they would lead to the government "telling the doctors what they can't and cannot treat, and on whom they can and cannot treat." The conservative misinformation campaign began on Monday with a Bloomberg "commentary" by Hudson Institute fellow Betsy McCaughey, which claimed that the legislation will have the government "monitor treatments" in order to "'guide' your doctor's decisions."

In her commentary, McCaughey writes, "One new bureaucracy, the National Coordinator of Health Information Technology, will monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective." But the fact is, this isn't a new bureaucracy. The National Coordinator of Health Information Technology already exists. Established by President Bush in 2004, the office "provides counsel to the Secretary of HHS and Departmental leadership for the development and nationwide implementation" of "health information technology." Far from empowering the Office to "monitor doctors" or requiring private physicians to abide by treatment protocols, the new language tasks the National Coordinator with "providing appropriate information" so that doctors can make better informed decisions. As Media Matters noted, the language in the House bill, on which McCaughey based her column, does not establish authority to "monitor treatments" or restrict what "your doctor is doing" with regard to patient care. Instead, it addresses establishing an electronic records system so that doctors can have complete, accurate information about their patients. The Wonk Room's Igor Volsky pointed out that "this provision is intended to move the country towards adopting money-saving health technology (like electronic medical records), reduce costly duplicate services and medical errors, and create jobs."

Media Matters - In the commentary, McCaughey falsely claimed that under provisions in the economic recovery bill passed by House Democrats, "one new bureaucracy, the National Coordinator of Health Information Technology, will monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective. The goal is to reduce costs and 'guide' your doctor's decisions." In fact, the language in the House bill that McCaughey, a former lieutenant governor of New York, referenced does not establish authority to "monitor treatments" or restrict what "your doctor is doing" with regard to patient care, but rather addresses establishing an electronic records system such that doctors would have complete, accurate information about their patients "to help guide medical decisions at the time and place of care."

Washington Monthly - The National Coordinator for Health Information Technology isn't "new"; it was created by George W. Bush five years ago. More importantly, the measure is about medical records, not limiting physicians' treatments.

Progressive Review - While much of the foregoing is true, a reading of the legislation suggests unprecedented interference in the business of doctors and hospitals, not unlike the feds ordering every small business to use a certain software and then make regular reports on just how they are using it.

The measure did not belong in the stimulus package. It should have been a stand alone bill with full hearings, especially with the deep questions it raised concerning patient privacy.

Further, some of the language is vague enough to suggest the possibility of greater future federal control. For example:

"The Secretary shall seek to improve the use of electronic health records and health care quality over time by requiring more stringent measures of meaningful use . . .

"The National Coordinator shall annually evaluate the activities conducted under this subtitle and shall, in awarding grants, implement the lessons learned from such evaluation in a manner so that awards made subsequent to each such evaluation are made in a manner that, in the determination of the National Coordinator, will result in the greatest improvement in the quality and efficiency of health care."

Frankly, we preferred that was left to our doctor.

The mere existence of this measure presumes, even though appearing to deal only with health records, an assumed right of the federal government to intervene in health care in a substantial way that could easily be expanded. The gestalt behind this measure is completely different than programs like single payer or expanded Medicare that are designed to deal with paying for medical care, not controlling it.

Add to this the major question of patient privacy - how long will it be before the NSA, FBI and Homeland Security have easy access to these records? - and there are more than enough reasons for this measure to have been dropped from the bailout bill.

Consider that every citizen who arrives at a hospital with an overdose or having drunk too much will be in a file easily accessible by law enforcement and others regardless of what nice promises are made to the contrary. It might even possible for the police to charge some one based on a doctor's report of drug use. And, of course, it’s a substantial gift to the spy agencies, the biggest data collection system since the NSA started recording phone calls.

Welcome to Obama's brave new world.

HOW MUCH DID THE BI-PARTY KNOCK OUT OF YOUR SCHOOL SYSTEM'S CONSTRUCTION BUDGET?

Pro Publica has figured it out by state and school district. For example, DC loses $47 million or $837 per student thanks to the bipartisan alteration to the second bailout bill.

POT QUOTES & FACTS

Collected by Robbie Genner, Huffington Post

"Two of my favorite things are sitting on my front porch smoking a pipe of sweet hemp, and playing my Hohner harmonica." - Abraham Lincoln (from a letter written by Lincoln during his presidency to the head of the Hohner Harmonica Company in Germany)

"Hemp is of first necessity to the wealth & protection of the country." - Thomas Jefferson, U.S. President

"Make the most you can of the Indian Hemp seed and sow it everywhere." - George Washington, U.S. President

"We shall, by and by, want a world of hemp more for our own consumption." - John Adams, U.S. President

"Penalties against possession of a drug should not be more damaging to an individual than the use of the drug itself; and where they are, they should be changed. Nowhere is this more clear than in the laws against possession of marihuana in private for personal use... Therefore, I support legislation amending Federal law to eliminate all Federal criminal penalties for the possession of up to one ounce of marihuana." - Jimmy Carter, U.S. President

"I inhaled frequently. That was the point." - Barack Obama, U.S. President

"The war on drugs has been an utter failure. We need to rethink and decriminalize our nation's marijuana laws." -Barack Obama, January 2004

"The illegality of cannabis is outrageous, an impediment to full utilization of a drug which helps produce the serenity and insight, sensitivity and fellowship so desperately needed in this increasingly mad and dangerous world." - Carl Sagan, renown scientist, astronomer, astrochemist, author and TV host

"Why use up the forests which were centuries in the making and the mines which required ages to lay down, if we can get the equivalent of forest and mineral products in the annual growth of the hemp fields?" - Henry Ford, whose first Model-T was constructed from hemp fibers and built to run on hemp gasoline

"Prohibition. . . goes beyond the bound of reason in that it attempts to control a man's appetite by legislation and makes a crime out of things that are not crimes. A prohibition law strikes a blow at the very principles upon which our government was founded" -Abraham Lincoln

"The prestige of government has undoubtedly been lowered considerably by the prohibition law. For nothing is more destructive of respect for the government and the law of the land than passing laws which cannot be enforced. It is an open secret that the dangerous increase of crime in this country is closely connected with this." - Albert Einstein quote on Hemp

"That is not a drug. It's a leaf." - Arnold Schwarzenegger, Governor of California

"I now have absolute proof that smoking even one marijuana cigarette is equal in brain damage to being on Bikini Island during an H-bomb blast" - Ronald Reagan

"If the words 'life, liberty and the pursuit of happiness' don't include the right to experiment with your own consciousness, then the Declaration of Independence isn't worth the hemp it was written on." - Terence McKenna

[]

The first Bibles, maps, charts, Betsy Ross's flag, the first drafts of the Declaration of Independence and the Constitution were made from hemp.

80% of all textiles, fabrics, clothes, linen, drapes, bed sheets, etc. were made from hemp until the 1820s with the introduction of the cotton gin.

It was legal to pay taxes with Hemp in America from 1631 until the early 1800s.

Refusing to grow Hemp in America during the 17th and 18th Centuries was against the law. You could be jailed in Virginia for refusing to grow hemp from 1763 to 1769.

Rembrants, Gainsboroughs, Van Goghs as well as most early canvas paintings were principally painted on hemp linen.

In 1916, the U.S. Government Dept. of Agriculture predicted that by the 1940s all paper would come from hemp and that no more trees need to be cut down.

For thousands of years, 90% of all ships' sails and rope were made from hemp. The word 'canvas' is Dutch for cannabis.

Hemp fuel is non-toxic, biodegradable and does not contribute to sulfur dioxide air poisoning.

In Feb. 1938, Popular Mechanics called Hemp a 'Billion Dollar Crop.' It was the first time a cash crop had a business potential to exceed a billion dollars.

TROUBLE FOR ONLINE NEWSPAPERS

Newsosaur - One of the biggest reasons to question the potential for standalone newspaper sites has been identified by Greg Harmon of Belden Interactive, who since 2001 has polled 300,000 newspaper website users in 250 markets across the country.

In his work, Harmon has discovered quite consistently that fully two-thirds of the visitors to newspaper sites say they visited the site because they are readers of the print newspaper.

This suggests that newspapers have taken good advantage of the strength of their brands and the visibility they command in the markets they serve. But what would happen if the print product went away?

A case could be made that website readership would rise, because readers would have few, if any, other places to get local news. However, it is unlikely the vacuum created by the disappearance of the print paper would remain unfilled for long. . .

Fighting to gain visibility, traffic and advertising, a standalone newspaper website would be burdened by the second major problem turned up consistently in Harmon's research: Young consumers, who represent the future of any media business, spurn newspaper websites.

Year after year since 2001, Harmon reports, the average age of newspaper website visitors has been rising as the number of readers under the age of 35 declines.

As of 2007, half of newspaper site visitors were 45 or older. By comparison only 34% of the U.S. population is 45 or older, according to the latest data available from the U.S. Census Bureau.

On the other hand, the number of younger visitors to newspaper sites is falling. While 46% of newspaper site visitors were between the ages of 18 and 34 in 2001, the number dropped to 27% in 2007, according to Harmon's research.

The third reason to be concerned about the strength and stability of standalone newspaper website readership is that the bulk of the users not referred to newspaper sites by the print product are relatively fickle visitors who Harmon calls "fly-bys."ť

Fly-bys, which represent about a third of a newspaper site'S traffic, are people who were referred to the newspaper's site from a link at Google, Digg, Drudge, Huffington Post or someplace else. They drop in long enough to glance at a specific article on the newspaper site and then are gone. They are not the same as the loyal readers prized by either print or online advertisers. . .

Part of a three part series
RECOVERED HISTORY

HOW CLOSE THE WORLD ECONOMY CAME TO COLLAPSING

NEW YORK CITY CUTS CRIME & LOWERS NUMBER IN PRISON

David Wilson, Guardian, UK - Michael Jacobson from the Vera Institute of Justice summed it up best of all: "In New York there is lower crime, safer communities and fewer people in prisons.". . . The United States has been in the grip of mass incarceration since 1970, and as a result is between five and 10 times more likely to use imprisonment than similar western-style democracies – a reality that falls disproportionately on the poor. As a result one in three adult African-Americans is now in some form of correctional supervision. More than 2.2 million Americans are currently in jail.

In New York City, however, prison numbers are declining. Rikers Island Correctional Facility. . . at its high point in the 1990s, it held as many as 23,000 individuals, overflowing into three barges moored alongside the island; its population currently rests at around 14,500. Such a population decline has enabled the jail to develop a more systematic pre-release system, which links inmates with job, treatment and training programmes in the community. . . Elsewhere, the city has actually closed some prison facilities.

At the heart of the changing sensibility towards the use of prison in New York City is an attempt to reconcile two seemingly irreconcilable concepts – first, taking low-level, "quality of life" crime seriously, but also, secondly, not over-relying on the use of prison as a means of combating those offenders who transgress in these ways. And, of course, convincing the community that not sending these offenders to jail but offering them other kinds of intervention is in the long run the best approach to adopt. As Greg Berman, Director of the Center for Court Innovation and formerly the lead planner for the Red Hook Community Justice Center puts it, this is not "jail or nothing" but about "problem solving justice that creates a space for punishment, help, services and accountability". . .

The New York City approach has garnered public and political support, and thus allowed criminal justice professionals to guide, prompt and push public policy. One factor in all of this has been the development of a more technocratic language to explain what is being done, or as Berman characterized it, "a move away from the language of social justice". Indeed, the most obvious example of this technocratic approach was the detailed maps of the Justice Mapping Centre – an organization that uses computer mapping and other graphical depictions of quantitative data "to analyze and communicate social policy information". In this way politicians from both left and right have been able to sign up to approaches which are demonstratively effective, moving away from crude ideas of what is "tough" or "soft" on crime.

David Wilson is chair of the Commission on English Prisons Today.