Monday, April 19, 2010
Now we know the truth. The financial meltdown wasn't a mistake – it was a con
Hiding behind the complexities of our financial system, banks and other institutions are being accused of fraud and deception, with Goldman Sachs just the latest in the spotlight. This has become the most pressing election issue of all
by Will Hutton
Goldman Sachs was in the spotlight last November when demonstrators protested outside its Washington offices against executive bonuses. Photograph: Andrew Harrer/Bloomberg via Getty Images
The global financial crisis, it is now clear, was caused not just by the bankers' colossal mismanagement. No, it was due also to the new financial complexity offering up the opportunity for widespread, systemic fraud. Friday's announcement that the world's most famous investment bank, Goldman Sachs, is to face civil charges for fraud brought by the American regulator is but the latest of a series of investigations that have been launched, arrests made and charges made against financial institutions around the world. Big Finance in the 21st century turns out to have been Big Fraud. Yet Britain, centre of the world financial system, has not yet levelled charges against any bank; all that we've seen is the allegation of a high-level insider dealing ring which, embarrassingly, involves a banker advising the government. We have to live with the fiction that our banks and bankers are whiter than white, and any attempt to investigate them and their institutions will lead to a mass exodus to the mountains of Switzerland. The politicians of the Labour and Tory party alike are Bambis amid the wolves.
Just consider the roll call beyond Goldman Sachs. In Ireland Sean FitzPatrick, the ex-chair of the Anglo Irish bank was arrested last month and questioned over alleged fraud. In Iceland last week a dossier assembled by its parliament on the Icelandic banks – huge lenders in Britain – was handed to its public prosecution service. A court-appointed examiner found that collapsed investment bank Lehman knowingly manipulated its balance sheet to make it look stronger than it was – accounts originally audited by the British firm Ernst and Young and given the legal green light by the British firm Linklaters. In Switzerland UBS has been defending itself from the US's Inland Revenue Service for allegedly running 17,000 offshore accounts to evade tax. Be sure there are more revelations to come – except in saintly Britain.
Beneath the complexity, the charges are all rooted in the same phenomenon – deception. Somebody, somewhere, was knowingly fooled by banks and bankers – sometimes governments over tax, sometimes regulators and investors over the probity of balance sheets and profits and sometimes, as the Securities and Exchange Commission (SEC) says in Goldman's case, by creating a scheme to enrich one favoured investor at the expense of others – including, via RBS, the British taxpayer. Along the way there is a long list of so-called "entrepreneurs" and "innovators" who were offered loans that should never have been made. Lloyd Blankfein, Goldman's CEO, remarked only semi-ironically that his bank was doing God's work. He must wake up every day bitterly regretting the words ever emerged from his mouth.
http://www.guardian.co.uk/business/2010/apr/18/goldman-sachs-regulators-civil-charges
GE: 7,000 tax returns, $0 U.S. tax bill
General Electric filed more than 7,000 income tax returns in hundreds of global jurisdictions last year, but when push came to shove, the company owed the U.S. government a whopping bill of $0.
How'd it pull off that trick? By losing lots of money.
GE had plenty of earnings last year -- just not in the United States. For tax purposes, the company's U.S. operations lost $408 million, while its international businesses netted a $10.8 billion profit.
That left GE (GE, Fortune 500) with no U.S. profit left for Uncle Sam to tax. Corporations typically face a 35% federal income tax on their earnings. Thanks to its deductions and adjustments, GE reported an actual U.S. federal income tax rate of negative 10.5%. It got to add a "tax benefit" of $1.1 billion back into its reported earnings.
"This is the first time in at least decades that GE has reported negative U.S. pretax income and it reflects the worst economy since the Great Depression," Anne Eisele, GE's director of financial communications, said via e-mail.
But what about the $10.8 billion profit overseas? GE is "indefinitely" deferring income tax payments on those profits, Eisele said.
http://money.cnn.com/2010/04/16/news/companies/ge_7000_tax_returns/index.htm
Why I'm Passing On Tea
The last week has seen a lot of analysis of the Tea Party Movement. It's a Republican rump, according to the NYT, and a national majority, according to Pat Caddell. My view is that it's so amorphous that you can slice it any which way. A minority of Americans seem enraged by the Obama administration in ways that are hard to explain. But many Americans also retain a healthy distrust of government and debt (even though they keep voting for lower taxes and more spending). They have a real point. Over the last decade, it is surely evident that big government has come back with a vengeance. And one has to grasp that part of the tea-party anger is pent up from the Bush years. Most of the rational tea-partiers accept that the GOP has been as bad - if not worse - than the Democrats on spending, borrowing and the size and scope of government in recent years. They repressed this anger during the Bush years out of partisan loyalty. Now, they're taking it all out on the newbie. It's both fair and also unfair.
It's fair because Obama is a liberal who believes government can and should help the poor and disadvantaged and has proven it by providing access to insurance for the working poor. But it's unfair because Obama's fiscal and governing record is massively distorted by the impact of the bank meltdown, the steep revenue-killing recession, and the stimulus. Until its last months, the Bush administration could claim no such excuses for its awful debt-management. The big Bush jumps in discretionary spending, the big leap in entitlements under the unfunded Medicare D program, the long nation-building wars put off-budget, and the huge claims for executive power dominant in the first term: all these are far more damning to my mind than Obama's pragmatism in grappling with an economic collapse or even the healthcare reform, which at least formally claims to reduce the deficit and pay for itself (unlike Bush's Medicare-D). Even the protests at the manner in which the health reform was passed are disingenuous. The Medicare-D process - involving holding the vote open for hours and brutal arm-twisting on the floor of the House - was far, far more cynical and brutal.
And this is why, despite my own deep suspicion of big government, I remain unmoved by the tea-partiers. Their partisanship and cultural hostility to Obama are far more intense, it seems to me, than their genuine proposals to reduce spending and taxation. And this is largely because they have no genuine proposals to reduce spending and taxation. They seem very protective of Medicare and Social Security - and their older age bracket underlines this. They also seem primed for maximal neo-imperial reach, backing the nation-building efforts in Afghanistan and Iraq, favoring war against Iran, etc. Only Ron Paul, peace be upon him, extends his big government critique to the military-industrial-ideological complex.
So they are truly not serious in policy terms, and it behooves the small government right to grapple with this honestly. They both support lower taxation and yet bemoan the fact that so many Americans do not pay any income tax. They want to cut spending on trivial matters while enabling the entitlement and defense behemoths to go on gobbling up Americans' wealth. And that lack of seriousness is complemented by a near-fanatical cultural alienation from the modern world.
http://andrewsullivan.theatlantic.com/the_daily_dish/2010/04/why-im-passing-on-tea.html
Kent State Anniversary Blues
How Can You Run When You Know?"
By PAUL KRASSNER
In my book, Magic Mushrooms and Other Highs: From Toad Slime to Ecstasy, Freddy Berthoff described his mescaline trip at a Crosby, Stills, Nash and Young concert in the summer of 1970 when he was 15. "Earlier that spring," he wrote, "the helmeted, rifle-toting National Guard came up over the rise during a peace-in-Vietnam rally at Kent State University. And opened fire on the crowd. I always suspected it was a contrived event, as if someone deep in the executive branch had said, 'We've got to teach those commie punks a lesson.'" Actually, President Nixon had called antiwar protesters "bums" two days before the shootings. While Freddy was peaking on mescaline, CSNY sang a new song about the massacre:
Tin soldiers and Nixon coming
We're finally on our own
This summer I hear the drumming
Four dead in O-hi-o…
Plus nine wounded. Sixty-seven shots – dum-dum bullets that exploded upon impact -- had been fired in 13 seconds. This incident on May 4, 1970 resulted in the first general student strike in U.S. history, encompassing over 400 campuses.
Arthur Krause, father of one of the dead students, Allison, got a call from 
But NBC News correspondent James Polk discovered a memo marked "Eyes Only" from Ehrlichman to Attorney General John Mitchell ordering that there be no federal grand jury investigation of the killings, because Nixon adamantly opposed such action.
Polk reported that, "In 1973, under a new Attorney General, Elliot Richardson, the Justice Department reversed itself and did send the Kent State case to a federal grand jury. When that was announced, Richardson said to an aide he got a call from the White House. He was told that Richard Nixon was so upset, they had to scrape the president off the walls with a spatula."
Last year, Allison Krause's younger sister, Laurel, was relaxing on the front deck of her home in California when she saw the County Sheriff's Deputy coming toward her, followed by nearly two dozen men. "Then, before my eyes," she recalls, "the officers morphed into a platoon of Ohio National Guardsmen marching onto my land. They were here because I was cultivating medical marijuana. I realized the persecution I was living through was similar to what many Americans and global citizens experience daily. This harassment even had parallels to Allison's experience before she was murdered."
What if you knew her
And found her dead on the ground
How can you run when you know?
Now, 40 years later, Laurel, her mother and other Kent State activists have been organizing the "2010 Kent State Truth Tribunal" scheduled for May 1-4 on the campus where the slaughter of unarmed demonstrators originally occurred. The invitation to participate in sharing their personal narratives has been extended to 1970 protesters, witnesses, National Guardsmen, Ohio and federal government officials, university administrators and educators, local residents, families of the victims. The purpose is to uncover the truth.
Laurel was 0nly 15 when the Kent State shootings took place. "Like any 15-year-old, my coping mechanisms were undeveloped at best. Every evening, I remember spending hours in my bedroom practicing calligraphy to Neil Young's 'After the Goldrush,' artistically copying phrases of his music, smoking marijuana to calm and numb my pain." When she was arrested for legally growing marijuana, "They cuffed me and read my rights as I sobbed hysterically. This was the first time I flashed back and revisited the utter shock, raw devastation and feeling of total loss since Allison died. I believed they were going to shoot and kill me, just like Allison. How ironic, I thought. The medicine that kept me safe from experiencing post-traumatic stress disorder now led me to relive that horrible experience as the cops marched onto my property."
She began to see the interconnectedness of those events. The dehumanization of Allison was the logical, ultimate extension of the dehumanization of Laurel. Legally, two felonies were reduced to misdemeanors, and she was sentenced to 25 hours of community service. But a therapist, one of Allison's friends from Kent State, suggested to Laurel that the best way to deal with the pain of PTSD was to make something good come out of the remembrance, the suffering and the pain. "That's when I decided to transform the arrest into something good for me," she says, "good for all. It was my only choice, the only solution to cure this memorable, generational, personal angst. My mantra became, 'This is the best thing that ever happened to me.' And it has been." That's why she's fighting so hard for the truth to burst through cement like blades of grass.
Paul Krassner is the editor of The Realist. His books include: Pot Stories for the Soul, One Hand Jerking and Murder at the Conspiracy Convention. He can be reached through his website: http://paulkrassner.com/
Man arrested at silo to face federal charges
By WHITNEY PANDIL-EATON
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Special Agent E.K. Wilson of the FBI said Sauder has been charged with one count of federal criminal trespass and was taken into federal custody Friday afternoon. Wilson said a criminal complaint filed Friday morning was pending, but would not speculate on any additional charges.
Dressed in a green plaid, button-up shirt and khakis, under which ankle shackles could be seen, Sauder made his initial court appearance Friday afternoon at the U.S. District Courthouse in Minot in front of Magistrate Judge Charles S. Miller Jr. via videoconference.
Throughout the 45-minute hearing, Sauder repeatedly interrupted Miller by raising issues of jurisdiction, intent and his right to trial by jury, all of which were rebuffed until the appropriate hearing.
Sauder was appointed a public defender and was placed in the custody of the Attorney General until a detention hearing is held on Monday. He'll remain in custody until then in the Ward County Jail. No trial date has been set.
http://www.minotdailynews.com/page/content.detail/id/538544.html
Health Insurers Hedge Bets With Fast Food Stock
Researchers Lambast Health Insurance Companies; Not All Convinced Investment Is Irresponsible
Companies providing life and health insurance owned $1.9 billion worth of stock in the fast-food industry Jack in the Box, McDonald's, Burger King, Yum! Brands (KFC, Taco Bell, Pizza Hut, and others), and Wendy's/Arby's - as of June 11, 2009, researchers reported online in the American Journal of Public Health.
"The insurance industry, ostensibly, appears to be concerned about people's health and well-being," Boyd said.
But, he said, "If the insurance industry is willing to invest in products known to be harmful and/or kill people then, prima facie, this is not an industry that actually cares about health and well-being."
Although Boyd acknowledged that fast food can be consumed responsibly, he said the aggregate evidence points toward a negative effect on public health.
"We argue that insurers ought to be held to a higher standard of corporate responsibility," he and his co-authors wrote in their paper.
All of the study authors are members -- and two are co-founders -- of Physicians for a National Health Program, a nonprofit organization advocating for universal, single-payer national health insurance.
"PNHP opposes for-profit control, and especially corporate control, of the health system and favors democratic control, public administration, and single-payer financing," the organization's mission statement reads.
Boyd said that the passage of healthcare reform makes the issue of owning stock in fast-food companies especially important.
"The health insurance industry is going to have a much bigger stake in providing healthcare, and what we're doing in our paper is reminding people that [the industry's] primary interests are in earning money and generating profit, not in insuring people's health," he said.
Obama DoJ indicts NSA whistleblower...are you mad yet?
By Ross Levin
If you were mad at all about Bush's violations of civil liberties when he was president, this will get you fuming:
In a rare legal action against a government employee accused of leaking secrets, a grand jury has indicted a former senior National Security Agency official on charges of providing classified information to a newspaper reporter in hundreds of e-mail messages in 2006 and 2007.
The official, Thomas A. Drake, 52, was also accused of obstructing justice by shredding documents, deleting computer records and lying to investigators who were looking into the reporter's sources.
"Our national security demands that the sort of conduct alleged here -- violating the government's trust by illegally retaining and disclosing classified information -- be prosecuted and prosecuted vigorously," Lanny A. Breuer, the assistant attorney general in charge of the Justice Department's criminal division, said in a statement.
This is not just a single instance of outrage. It is a microcosm of the Obama presidency, the political success of corporate America, and the failure of its opposition.
So the Obama Administration successfully indicted an important recent whistleblower, a man who revealed a lot about the secret (and very, very possibly unconstitutional, not to mention immoral) wiretapping programs at the NSA. This takes it one step further than the Bush Administration ever took the cat and mouse game they played with whistleblowers, since this is the first one who has actually been prosecuted.
http://www.opednews.com/articles/Obama-DoJ-indicts-NSA-whis-by-Ross-Levin-100417-242.html
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