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Erlernen Sie Von Uns, Amerika, Part III

David Leonhardt at NYT:

Remember the German economic boom of 2010?

Germany’s economic growth surged in the middle of last year, causing commentators both there and here to proclaim that American stimulus had failed and German austerity had worked. Germany’s announced budget cuts, the commentators said, had given private companies enough confidence in the government to begin spending their own money again.

Well, it turns out the German boom didn’t last long. With its modest stimulus winding down, Germany’s growth slowed sharply late last year, and its economic output still has not recovered to its prerecession peak. Output in the United States — where the stimulus program has been bigger and longer lasting — has recovered. This country would now need to suffer through a double-dip recession for its gross domestic product to be in the same condition as Germany’s.

Yet many members of Congress continue to insist that budget cuts are the path to prosperity. The only question in Washington seems to be how deeply to cut federal spending this year.

If the economy were at a different point in the cycle — not emerging from a financial crisis — the coming fight over spending could actually be quite productive. Republicans could force Democrats to make government more efficient, which Democrats rarely do on their own. Democrats could force Republicans to abandon the worst of their proposed cuts, like those to medical research, law enforcement, college financial aid and preschools. And maybe such a benevolent compromise can still occur over the next several years.

The immediate problem, however, is the fragility of the economy. Gross domestic product may have surpassed its previous peak, but it’s still growing too slowly for companies to be doing much hiring. States, of course, are making major cuts. A big round of federal cuts will only make things worse.

So if the opponents of deep federal cuts, starting with President Obama, are trying to decide how hard to fight, they may want to err on the side of toughness. Both logic and history make this case.

Let’s start with the logic. The austerity crowd argues that government cuts will lead to more activity by the private sector. How could that be? The main way would be if the government were using so many resources that it was driving up their price and making it harder for companies to use them.

In the early 1990s, for instance, government borrowing was pushing up interest rates. When the deficit began to fall, interest rates did too. Projects that had not previously been profitable for companies suddenly began to make sense. The resulting economic boom brought in more tax revenue and further reduced the deficit.

But this virtuous cycle can’t happen today. Interest rates are already very low. They’re low because the financial crisis and recession caused a huge drop in the private sector’s demand for loans. Even with all the government spending to fight the recession, overall demand for loans has remained historically low, the data shows.

Similarly, there is no evidence that the government is gobbling up too many workers and keeping them from the private sector. When John Boehner, the speaker of the House, said last week that federal payrolls had grown by 200,000 people since Mr. Obama took office, he was simply wrong. The federal government has added only 58,000 workers, largely in national security, since January 2009. State and local governments have cut 405,000 jobs over the same span.

The fundamental problem after a financial crisis is that businesses and households stop spending money, and they remain skittish for years afterward. Consider that new-vehicle sales, which peaked at 17 million in 2005, recovered to only 12 million last year. Single-family home sales, which peaked at 7.5 million in 2005, continued falling last year, to 4.6 million. No wonder so many businesses are uncertain about the future.

Without the government spending of the last two years — including tax cuts — the economy would be in vastly worse shape. Likewise, if the federal government begins laying off tens of thousands of workers now, the economy will clearly suffer.

Doug J.:

Bobo six months ago on German austerity:

The early returns suggest the Germans were. The American stimulus package was supposed to create a “summer of recovery,” according to Obama administration officials. Job growth was supposed to be surging at up to 500,000 a month. Instead, the U.S. economy is scuffling along.

[….]

The economy can’t be played like a piano — press a fiscal key here and the right job creation notes come out over there. Instead, economic management is more like parenting. If you instill good values and create a secure climate then, through some mysterious process you will never understand, things will probably end well.

An actual economics reporter (Dave Leonhardt) today:

With its modest stimulus winding down, Germany’s growth slowed sharply late last year, and its economic output still has not recovered to its prerecession peak. Output in the United States — where the stimulus program has been bigger and longer lasting — has recovered. This country would now need to suffer through a double-dip recession for its gross domestic product to be in the same condition as Germany’s.

[…..]

“It’s really quite striking how well the U.S. is performing relative to the U.K., which is tightening aggressively,” says Ian Shepherdson, a Britain-based economist for the research firm High Frequency Economics, “and relative to Germany, which is tightening more modestly.” Mr. Shepherdson adds that he generally opposes stimulus programs for a normal recession but that they are crucial after a crisis.

It’s pretty much a guarantee that any argument involving the idea of government as parent will be a faulty argument.

No one could have predicted that Paul Krugman would be right about austerity.

David Dayen at Firedoglake:

David Leonhardt is speaking simple economic truths in what must sound like a foreign language, given the tenor of debates over the past few months. Standard economic theories haven’t applied in Washington for a while, so Leonhardt’s essay has the force of the running man throwing the hammer into the Big Brother TV screen in the famous Apple 1984 commercial.

Leonhardt manages to mention that GDP is still growing too slowly in the US for mass hiring, even with a higher growth rate than Germany. He manages to note the state and local cuts that will blunt recovery. He manages to look at interest rates, which are historically low, and reason that government spending is not crowding out the private sector in any way. He calls John Boehner a liar for saying the federal workforce has grown by 200,000 employees since Barack Obama’s tenure in office (it’s about 1/4 that). He says that the problem right now is a lack of demand. He cites the much better example of Britain, which has gone whole-hog for austerity and seen negative job growth and negative GDP growth since.

I’d like to think that this kind of truth would, like resuscitating a dying patient, shock the political class back to life. More likely it will just fall down the memory hole, drowned out by the bipartisan cries of “we all want to cut spending.” The unemployed are still invisible, economic theory is still upside down, and one article won’t change that.

It would be nice if it did.

Andrew Leonard at Salon:

What do we learn from the correlation between states with the worst housing bust and budget shortfalls? If U.S. economic growth slows, the federal deficit situation will get worse. Republicans believe that cutting government spending will spur economic growth. But the evidence we have from countries that have attempted such a strategy since the Great Recession began to ebb — Germany and the United Kingdom — suggests exactly the opposite. Austerity policies are not the right medicine for a fragile economy.

Felix Salmon:

One of the best aspects of being a journalist is that you get to talk at length to the most knowledgeable and interesting experts on just about any subject you can think of. For me, yesterday was a prime case in point: a long and fascinating lunch with James Macdonald, the author of my favorite book on the history of sovereign debt. Turns out he also has a microscopic vineyard in Tuscany, so the conversation ebbed wonderfully from economics to wine and back.

Macdonald has an economic historian’s view of the current austerity debate, and he was very clear: if you look at the history of countries trying to cut and deflate their way to prosperity while keeping their currencies pegged, it’s pretty grim — all the way back to Napoleonic times. Sometimes, the peg is gold. For a good example of the destructive abilities of that particular peg, look at the UK in the 1920s, which Macdonald says was arguably worse than the US in the 1930s: shallower, to be sure, but substantially longer. The devaluation of the pound, when it finally came, was very long overdue.

At other times, the peg is simply political: Macdonald gives the example of southern Italy being locked into what was essentially the Piedmontese monetary system at the time of the Risorgimento. That might have been well over a century ago, but there’s a case to be made that it has hobbled just about everywhere south of Rome to this day — and that’s in a country with about as much internal labor mobility as between EU countries.

So from a historical perspective, the prospects for countries like Portugal, Ireland and Greece are pretty grim. They can cut their budgets drastically and stay pegged to the euro, but most of them would be better off in the position of Iceland, which can and did devalue in a crisis (and allowed its banks to default, too). So far, the Baltic states have stuck to their deflationary guns with the most determination and discipline, but such things work until they don’t: at some point it’s entirely possible that Latvia or Estonia could pull an Argentina and kickstart growth by devaluing.

Jonathan Chait at TNR:

I’m sure that, in the light of this new evidence, American conservatives will undertake a thorough rethinking of their anti-stimulus beliefs. After all, as they told us at the time, this was a natural experiment.

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Ashton Kutcher Is Surely Behind This

Adam Weinstein at Mother Jones:

Is that really Scott Walker? [Update: Yep.] A New York-based alt-news editor says he got through to the embattled Wisconsin governor on the phone Tuesday by posing as right-wing financier David Koch…then had a far-ranging 20-minute conversation about the collective bargaining protests. According to the audio, Walker told him:

  • That statehouse GOPers were plotting to hold Democratic senators’ pay until they returned to vote on the controversial union-busting bill.
  • That Walker was looking to nail Dems on ethics violations if they took meals or lodging from union supporters.
  • That he’d take “Koch” up on this offer: “[O]nce you crush these bastards I’ll fly you out to Cali and really show you a good time.”

But was it for real? Check out the details on the guerrilla caller and audio of his conversation below the jump.

According to his Wikipedia entry, Ian Murphy is a gonzo journalist and editor of the Buffalo Beast, an online mag that was founded in 2002 as an alternative biweekly by gonzo Matt Taibbi and a band of colleagues. Murphy’s probably best-known for a tough read about America’s war dead called “Fuck the Troops.” But if his latest Beast post, “Koch Whore,” is to be believed, it’s likely to be read a lot more widely.

When Wisconsin Democratic Sen. Tim Carpenter complained that Walker wouldn’t return any of the Dems’ calls, Murphy says he wondered: “Who could get through to Gov. Walker? Well, what do we know about Walker and his proposed union-busting,no-bid budget? The obvious candidate was David Koch.” Koch, of course, is one of the right-wing brothers behind Americans for Prosperity and a host of other GOP-friendly causes; MoJo‘s own Andy Kroll broke the news last week on the Koch brothers’ past support for Walker and his agenda.

So, Murphy says, he managed to have a phone audience with the governor by posing as Koch. And he taped the whole thing, copied on the videos below.

Jason Linkins at Huffington Post:

Here’s something for your “can this possibly be for real” file this morning. Over at the Buffalo Beast — the former print alt-weekly turned online newspaper founded by onetime editor Matt Taibbi, typically best known for its annual list of “The 50 Most Loathsome Americans” — there appear to be recordings of a phone call between Wisconsin Gov. Scott Walker and current editor Ian Murphy. Now, why on earth would Scott Walker want to talk on the phone with the editor of an online site in Buffalo? Well, he wouldn’t.

But what if said editor pretended to be David Koch of the famed Koch Brothers? Well, that’s a different story altogether, apparently! And so Walker, believing himself to be on the phone with his patron, seems to have had a long conversation about busting Wisconsin’s unions.

Buffalo Beast Publisher Paul Fallon told The Huffington Post that the audio is “absolutely legit.” That the call took place as described by the Beast has been confirmed by Walker spokesman Cullen Werwie.

“Basically what happened was, yesterday morning [Murphy] was watching television about this Wisconsin stuff and he saw a report where he saw Walker say he wasn’t going to talk to anybody,” Fallon said. “And he said, ‘I bet he would talk to somebody if he had enough oomph behind him.'”

This all apparently went down Tuesday afternoon, hours before Walker made his “fireside chat.” It took some doing: Murphy-as-Koch said he had several hoops to jump through before he was granted access to Walker, beginning with a receptionist, leading to the governor’s executive assistant, and finally ending up with his chief of staff, Keith Gilkes.

Alex Pareene at Salon:

So Walker will happily take a call from a Koch brother. He says that he considered “planting some troublemakers” among the protesters. He is convinced that everyone is on his side. Like most people who only watch Fox, he has a skewed impression of the popularity of his union-crushing proposals. (His plan is, nationally, roundly unpopular. Except on Fox.)

When “Koch” calls Mika Brzezinski “a real piece of ass,” Walker does not respond by saying something awful, which is a bit of a disappointment.

Walker does reveal that he is planning to trick the Democrats into coming back into town for a “talk,” despite his lack of interest in compromising anything. He will ask them to open a session in the Assembly, and then take a recess for this talk. At that point, the Senate Republicans would hold the vote on the bill while Walker distracts the Democrats with this entirely pointless discussion:

They can recess it … the reason for that, we’re verifying it this afternoon, legally, we believe, once they’ve gone into session, they don’t physically have to be there. If they’re actually in session for that day, and they take a recess, the 19 Senate Republicans could then go into action and they’d have quorum because it’s turned out that way. So we’re double checking that. If you heard I was going to talk to them that’s the only reason why. We’d only do it if they came back to the capitol with all 14 of them. My sense is, hell. I’ll talk. If they want to yell at me for an hour, I’m used to that. I can deal with that. But I’m not negotiating.

Walker also thinks that Reagan crushing the air-traffic controllers’ union was “the first crack in the Berlin wall,” because he’s been stewing in the propaganda of conservative mythology for years.

Greg Sargent:

The Internet is burning up with the news that Governor Scott Walker may have been pranked by a caller claiming to be David Koch, and a spokesman for the Governor, Cullen Werwie, emails a statement confirming the call is legit:

The Governor takes many calls everyday. Throughout this call the Governor maintained his appreciation for and commitment to civil discourse. He continued to say that the budget repair bill is about the budget. The phone call shows that the Governor says the same thing in private as he does in public and the lengths that others will go to disrupt the civil debate Wisconsin is having.

More on this in a sec, but for now, suffice it to say that this will reinforce perceptions that Walker is in way over his head.

Michelle Malkin:

A left-wing website that specializes in pranking celebrities, pundits, and politicians — a la Howard Stern — is doing a Snoopy dance over a fake call its operatives made to GOP Gov. Scott Walker.

The hoaxer pretended to be David Koch, the progs’ favorite capitalist target.

I’m not going to give any direct traffic to the infamy-seekers. Here is the Memeorandum link round-up on the story. In sum, Walker talked to the poser for about 20 minutes (audio is here).

Walker stood firm on his no-negotiations stance with Big Labor and talked about his already publicized efforts to bring the Dems back to the state by requiring them to collect their paychecks in person

Ezra Klein:

To Walker’s credit, he doesn’t say anything incriminating. When Murphy/Koch offers to plant demonstrators, Walker declines. The worst you can say is that when Murphy/Koch makes a lewd comment about Mika Breszinski, Walker doesn’t challenge him on it. But that portion reads to me as Walker politely grunting in response to an odd provocation. I imagine politicians are pretty good at gently moving the conversation along when their contributors say crazy things.

But if the transcript of the conversation is unexceptional, the fact of it is lethal. The state’s Democratic senators can’t get Walker on the phone, but someone can call the governor’s front desk, identify themselves as David Koch, and then speak with both the governor and his chief of staff? That’s where you see the access and power that major corporations and wealthy contributors will have in a Walker administration, and why so many in Wisconsin are reluctant to see the only major interest group representing workers taken out of the game.

The critique many conservatives have made of public-sector unions is that they both negotiate with and fund politicians. It’s a conflict of interest. Well, so too do corporations, and wealthy individuals. That’s why Murphy — posing as Koch — was able to get through to Walker so quickly. And it shows what Walker is really interested in here: He is not opposed, in principle, to powerful interest groups having the ear of the politicians they depend on, and who depend on them. He just wants those interest groups to be the conservative interest groups that fund him, and that he depends on.

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Another Reason, Another Season, Another Palin Post

Sean Cockerham and Kyle Hopkins at Anchorage Daily News:

A leaked manuscript by one of Sarah Palin’s closest aides from her time as governor charges that Palin broke state election law in her 2006 gubernatorial campaign and was consumed by petty grievances up until she resigned.

The unpublished book by Frank Bailey was leaked to the media and widely circulated on Friday.

The manuscript opens with an account of Palin sending Bailey a message saying “I hate this damn job” shortly before she resigned as Alaska’s governor in July 2009, less than three years into her four-year term. The manuscript goes on for nearly 500 pages, a mixture of analysis, gossip and allegation.

Copies of the manuscript were forwarded around Alaska political circles on Friday. The Daily News received copies from multiple sources, the first from author Joe McGinniss, who is working on his own Palin book. McGinniss didn’t respond to a message asking where he obtained the manuscript and the reason he circulated it.

Bailey, a political insider who joined Palin’s 2006 campaign for governor and became part of her inner circle, has never before told his version of the Palin story. Bailey has consistently refused requests for interviews and did so again Friday. The book was co-written with California author Ken Morris and Jeanne Devon of Anchorage, who publishes the popular anti-Palin website Mudflats.

Caitlin Dickson at The Atlantic:

The book comes with all sorts of caveats–it’s not yet published, there’s been no outside verifcation, and Palin has yet to comment–but these are the new nuggets that Palin obsessives are digesting:

  • Palin may have violated Alaska’s state election law by collaborating with the Republican Governor’s Association on a campaign ad. “State candidates can’t team up with soft-money groups such as the Republican Governor’s Association, which paid for TV commericials and mailers in Alaska during the election in a purported ‘independent’ effort,” the Anchorage Daily News’ Sean Cockerham and Kyle Hopkins explain.
  • Bailey claims he was “recruited” by Palin’s husband, Todd, to take down Mike Wooten, a fire trooper who was engaged in a child custody battle with Palin’s sister, his ex-wife. According to Bailey, “Todd Palin kept feeding him information on Wooten, which he passed on to troopers.” Bailey also asserts that the selection of Superior Court Judge Morgan Christen as one of the top two judges considered for Supreme Court appointment by the governor was directly influenced by Christen’s ruling against Wooten in the custody fight with Palin’s sister.
  • Palin supposedly abandoned a commitment to work with the Alaska Family Council to promote a ballot initiative outlawing abortions for teens because she was working on her book. In the manuscript, Bailey writes that this was the final straw, as he had realized Palin was motivated primarily by the prospect of making money.
  • Bailey claims that the campaign trail revealed Palin’s widespread support was less than genuine. Bailey recalls, “we set our sights and went after opponents in coordinated attacks, utilizing what we called ‘Fox News surrogates,’ friendly blogs, ghost-written op-eds, media opinion polls (that we often rigged), letters to editors, and carefully edited speeches.”

Andrew Sullivan:

Frank Bailey’s co-authored manuscript, “Blind Allegiance To Sarah Palin,” which leaked out via his agent’s emails to potential publishers, is dynamite. Why? Because Bailey was as close to the Palins as anyone from Palin’s first race for governor to the bitter end, is a rock-ribbed Fox News Republican, has vast amounts of firsthand data (the emails he has published alone reveal a lot), has contempt for Trig skeptics like yours truly, and comes to a simple conclusion in retrospect: Palin is a dangerous, vindictive, incompetent, congenital liar who has no business in any public office. Any publisher interested in the truth about Palin (Harper Collins therefore need not apply) should fight to publish it.

There’s a useful summary of its contents at the Anchorage Daily News, and some notes from the paper’s gossip column with this tart truth:

In the end, what makes Bailey’s manuscript worth more than other Sarah books is his liberal use of contemporaneous records — long quotes from e-mails written at the time by the actual participants. If you want to understand who Sarah really is, you can’t beat her own words.

There’s also just, well, nutritious nuggets like the following. Bailey describes Palin’s eventual media strategy: avoid any MSM interviews and get talking points out through surrogates. Who were they? Bailey names names: Bill Kristol, Mary Matalin, former Bush aides Jason Recher and Steve Biegun, GOP officials Nick Ayers and Michael Steele, Rush Limbaugh, Laura Ingraham, Glenn Beck, Greta Van Susteren, Sean Hannity, and Bill O‘Reilly.

Jon Bershad at Mediaite:

Unlike that other Palin book in the pipeline, Bailey wasn’t just geographically close to his subject (strangely, the Anchorage Daily News reports that author and Palin-neighbor Joe McGinniss was one of the people to pass them the leaked manuscript), he was actually a close confidant to both Palin and her husband, Todd. The book was reportedly put together with the help of 60,000 emails back and forth between he and the former governor. It actually opens with a quote from one of those emails as Palin tells Bailey she “hate[s] this damn job,” shortly before her resignation.

But, everyone’s wondering, what’s the dirtiest “all” that this tell-all “tells?”

Ed Morrissey:

The article quotes several passages from Bailey’s book, but none of them seem to rise to a level of scandalous behavior or shocking revelation.  Palin obsesses over her media image?  Well, maybe, but few politicians at the national level don’t.  Palin confidentially told Bailey “I hate this damn job”?  Even people who love their jobs have those moments, especially jobs with large responsibilities.  Bailey wonders why Palin decided to get caught up in the Carrie Prejean controversy in May 2009:

Concludes Bailey after the episode: “The question we failed to ask was: What does this possibly have to do with being governor of Alaska? While it had nothing to do with Alaska, it had plenty to do with publicity. Fox News made this an ongoing story, giving it wall-to-wall coverage. Sean Hannity in particular latched on with both hands. With Sarah suddenly an outspoken supporter, he had gorgeous Prejean on one arm and sparkling Governor Palin on the other. He appeared a happy man.”

It’s not exactly an unfair question, but it also presumes that every other governor ignores national stories and keeps themselves insulated, which is hardly the case.  Palin by this time had already become a national political figure, especially on conservative issues through the burgeoning Tea Party movement, and had been outspoken on social issues since the presidential election.  It’s hardly surprising that Palin would want to work to keep up a national profile, which is harder to do from Alaska, both for the grassroots leadership she wanted to provide and for her own political ambitions.  While it’s a fair point for criticism from the perspective of Alaskans, it’s hardly the mystery or the anomaly Bailey suggests.

Alex Pareene at Salon

Wonkette:

“A leaked manuscript by one of Sarah Palin’s closest aides from her time as governor charges that Palin broke state election law in her 2006 gubernatorial campaign and was consumed by petty grievances up until she resigned.” Nah, that doesn’t sound like her. Must be a governor of another unpopulated northern meth-and-jerky wasteland they’re thinking of. On the other hand, it appears this book has been leaked to Wonkette at least twice, by somebody with a South African e-mail address. And the publisher is said to be upset. Fine. Anyway, here is the good quote holding everything together, dating to right before her resignation as governor: “I hate this damn job.” If she didn’t like that job, she must be very happy she will never be president!

Laura Donovan at The Daily Caller:

Pam Pryor Palin, spokeswoman for Palin’s political action committee, said Palin probably won’t acknowledge Bailey’s book.

“Doubt she will respond to this kind of untruth,” Pryor wrote in an email to the Daily News.

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Weekend At Bernie’s Jail Cell

Diana Henriques at NYT:

Bernard L. Madoff said he never thought the collapse of his Ponzi scheme would cause the sort of destruction that has befallen his family.

In his first interview for publication since his arrest in December 2008, Mr. Madoff — looking noticeably thinner and rumpled in khaki prison garb — maintained that family members knew nothing about his crimes.

But during a private two-hour interview in a visitor room here on Tuesday, and in earlier e-mail exchanges, he asserted that unidentified banks and hedge funds were somehow “complicit” in his elaborate fraud, an about-face from earlier claims that he was the only person involved.

Mr. Madoff, who is serving a 150-year sentence, seemed frail and a bit agitated compared with the stoic calm he maintained before his incarceration in 2009, perhaps burdened by sadness over the suicide of his son Mark in December.

Besides that loss, his family also has faced stacks of lawsuits, the potential forfeiture of most of their assets, and relentless public suspicion and enmity that cut Mr. Madoff and his wife Ruth off from their children.

In many ways, however, Mr. Madoff seemed unchanged. He spoke with great intensity and fluency about his dealings with various banks and hedge funds, pointing to their “willful blindness” and their failure to examine discrepancies between his regulatory filings and other information available to them.

“They had to know,” Mr. Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”

Matt Schneider at Mediaite:

Bernie Madoff, the con artist who pleaded guilty two years ago to a series of financial crimes, gave his first jailhouse interview to The New York Times and was angry with a lot of his critics. Most notably, he attacked the news media for their “disgraceful” coverage of his son’s suicide.Appearing “noticeably slimmer,” “frail” and “agitated,” Madoff disclosed that banks and hedge funds were complicit all along and “had to know” about his schemes. He again claimed that his family was unaware of his crimes until the very end. In reporting on the interview, ABC’s Brian Ross quotes a prosecutor who concludes “Madoff is incapable of telling the truth still to this day.”

Uri Friedman at The Atlantic:

Madoff’s statements are particularly relevant at a time when Irving Picard, the trustee for Madoff’s victims, has accused JPMorgan Chase of harboring serious concerns about Madoff’s investment business but not notifying authorities or halting business with him. Yet, as Henriques notes, federal prosecutors have yet to accuse the major banks and hedge funds that dealt with Madoff “of knowingly investing in his Ponzi scheme.”

Madoff Has Helped Trustee

Madoff claimed he’s met with his victims’ trustee, Irving Picard, and provided him with information about the banks and hedge funds he did business with, though he says he hasn’t shared this information with federal prosecutors working on criminal cases.

Family Crisis Unforeseen

Madoff said he didn’t foresee the extent of the suffering his fraud would inflict on his family. His relations are confronting a barrage of lawsuits and his son, Mark, committed suicide in December. Madoff called some of the press coverage of Mark’s death “disgraceful” and stated that he didn’t attend Mark’s funeral because of prison regulations and because he didn’t want to turn the funeral into a “media circus.”

Mets Owner ‘Knew Nothing’

Picard alleges that New York Mets Owner Fred Wilpon and his brother-in-law, Saul Katz, knew or should have known from their financial dealings with Madoff that he was defrauding investors, but Madoff vehemently denies this: “They knew nothing. They knew nothing,” he asserted.

Andrew Leonard at Salon:

Should we trust him? After all, if there is one thing we know about Bernie Madoff, it is that he is one hell of a liar. But as evidence emerges that bank executives were exchanging e-mails wondering about Madoff’s amazing investment record, the possibility that the banks were purposefully looking the other way is not inconceivable.

The question is: What to do about it?

How about: Make sure government regulatory agencies entrusted with oversight over financial markets are adequately funded and staffed for the job?

Wouldn’t you know it — Obama wants to boost the budget for the Securities and Exchange Commission and the Commodity Futures Trading Commission, the two key government agencies watching over Wall Street

Jacob Heilbrunn at The National Interest:
As Frank Rich recently observed, Madoff was a “second-tier player.” But he could lead to bigger fry. The Wilpons, who own the New York Mets, are already in big financial trouble for their extensive dealings with Madoff–Donald Trump is angling to buy a majority stake in the team. Then there are the hedge funds and banks that were linked to, or in cahoots with, Madoff.

At this point Madoff has little to lose. President Obama shows little appetite for curbing the excesses that led to the last financial crash. Madoff cannot achieve redemption. His historical role as the biggest Ponizi schemer (so far) in history is set. He became the type-cast bad guy. For awhile Madoff took all the credit, if that’s the right phrase, for the malversation he oversaw. That’s changed. Now he seems to be interested in ensuring that his collaborators, witting or unwitting, also take the fall (though he is notably exempting his own family members from any knowledge of his transgressions).

Madoff’s own crediblity is shot. But if the information that he’s apparently providing to Picard pans out, then he may get his own measure of revenge for the humiliations he has suffered, and is suffering.  Balzac said that behind every great fortune is a crime. Madoff now seems intent on demonstrating the truth of that axiom. One thing seems clear: Madoff is not going to go down quietly. The aftershocks from his exposure may well continue to roil the financial world.

Joe Weisenthal at Business Insider

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The Keystone Kops Are After Greenwald!

Steve Ragan in Tech Herald:

After a tip from Crowdleaks.org, The Tech Herald has learned that HBGary Federal, as well as two other data intelligence firms, worked to develop a strategic plan of attack against WikiLeaks. The plan included pressing a journalist in order to disrupt his support of the organization, cyber attacks, disinformation, and other potential proactive tactics.

Update:

The Tech Herald was able to get in touch with Glenn Greenwald for his reaction to being singled out in the WikiLeaks proposal. He called the report creepy and disturbing. Moreover, he commented that the suggestions for dealing with WikiLeaks, along with the assumption that the organization could be undermined, were “hard to take seriously.”

The listed mitigations, such as disinformation or submitting false documents, have been discussed before. In 2008, the Pentagon had similar ideas, so that aspect of the document was nothing new.

Greenwald, as a journalist, is a prolific writer on media topics. He is a harsh critic of political figures and the mainstream media. The suggestion made by the proposal that he would pick career over cause is “completely against” what he is about, he told us.

“The only reason I do what I do is because im free to put cause before career,” he said.

Pointedly, he reminded us that his work includes taking aim at political figures, which could be a source of professional leverage with scoops or favors, as well as news organizations who could offer him gainful employment. None of these actions paints a picture of a man who would pick career over his passion.

Update 2:

WikiLeaks is hosting an official mirror of the sixth and final draft of the report. You can see a copy here.

Update 3:

Palantir Technologies has severed all ties with HBGary Federal and issued an apology to reporter Glenn Greenwald. More details here.

Update 4:

Berico Technologies has cut ties as well. More information is here.

Jesse Walker at Reason:

According to a report in the Tech Herald, three security firms recently pitched the Bank of America with a plan to take down WikiLeaks. If the documents at the core of the story are legit — and as Andy Greenberg of Forbes notes, “their level of detail would require immense effort on the part of counterfeiters” — the companies come off as Keystone Kops.

The most interesting detail is that the firms involved — HBGary Federal, Palantir Technologies, and Berico Technologies — placed a lot of emphasis on the pro-WikiLeaks blogger Glenn Greenwald, arguing that “Without the support of people like Glenn wikileaks would fold,” so “It is this level of support that needs to be disrupted.” The firms are confident that this can be done, since “most of them if pushed will choose professional preservation over cause, such is the mentality of most business professionals.”

The source of the documents is a massive trove of HBGary emails that was seized and released by Anonymous. The backstory behind that is pretty fascinating in itself.

Matthew Yglesias:

A consortium of national security contractors, led by Palantir Technology, seems to have been shopping a counter-WikiLeaks strategy. This slide is about neutralizing Glenn Greenwald:

— Glenn was critical in the Amazon to OVH transition
— It is this level of support that needs to be disrupted
— These are established professionals that have a liberal bent, but ultimately most of them if pushed will choose professional preservation over cause, such is the mentality of most business professionals.
— Without the support of people like Glenn, Wikileaks would fold

I like that they’re on a first-name basis with Greenwald. Lee’s 2008 book, The Fortune Cookie Chronicles: Adventures in the World of Chinese Food, is highly recommended. And remember, without the support of people like you, the Yglesias Blog would fold!

Kerry Lauerman at Salon:

We take threats against our own very seriously.

A bizarre plan for an attack on the whistle-blowing site WikiLeaks and journalists construed as sympathetic to it — first reported by the Tech Herald — clearly targets Salon’s Glenn Greenwald, saying that his “level of support” for WikiLeaks “needs to be disrupted.” The report (you can download the purported final draft here) is listed as an “overview by Palantir Technologies, HBGary Federal and Berico Technologies,” and according to a string of e-mails also leaked, was developed following a request from Hunton and Williams, a law firm that represents, among others, Bank of America.

Bank of America is the presumed next target of WikiLeaks, and has reportedly been bracing for what’s to come.

The leaked report singles out other journalists, as well, and suggests that “these are established professionals that have a liberal bent, but ultimately most of them if pushed will choose professional preservation over cause …” And goes on: “Without the support of people like Glenn wikileaks would fold.”

Emptywheel at Firedoglake:

Now aside from the predictable, but nevertheless rather shocking detail, that these security firms believed the best way to take WikiLeaks out was to push Glenn to stop supporting them, what the fuck are they thinking by claiming that Glenn weighs “professional preservation” against “cause”? Could they be more wrong, painting Glenn as a squeamish careerist whose loud support for WikiLeaks (which dates back far longer than these security firms seem to understand) is secondary to “professional preservation”? Do they know Glenn is a journalist? Do they know he left the stuffy world of law? Have they thought about why he might have done that? Are they familiar at all with who Glenn is? Do they really believe Glenn became a household name–to the extent that he did–just in December?

I hope Bank of America did buy the work of these firms. Aside from the knowledge that the money would be–to the extent that we keep bailing out Bank of America–taxpayer money, I’d be thrilled to think of BoA pissing away its money like that. The plan these firms are pushing is absolutely ignorant rubbish. They apparently know almost nothing about what they’re pitching, and have no ability to do very basic research.

Which is precisely the approach I’d love to see BoA use to combat whatever WikiLeaks has coming its way.

Glenn Greenwald:

My initial reaction to all of this was to scoff at its absurdity.  Not being familiar with the private-sector world of internet security, I hadn’t heard of these firms before and, based on the quality of the proposal, assumed they were just some self-promoting, fly-by-night entities of little significance.  Moreover, for the reasons I detailed in my interview with The Tech Herald — and for reasons Digby elaborated on here — the very notion that I could be forced to choose “professional preservation over cause” is ludicrous on multiple levels.  Obviously, I wouldn’t have spent the last year vehemently supporting WikiLeaks — to say nothing of aggressively criticizing virtually every large media outlet and many of their leading stars, as well as the most beloved political leaders of both parties — if I were willing to choose “career preservation over cause.”

But after learning a lot more over the last couple of days, I now take this more seriously — not in terms of my involvement but the broader implications this story highlights.  For one thing, it turns out that the firms involved here are large, legitimate and serious, and do substantial amounts of work for both the U.S. Government and the nation’s largest private corporations (as but one example, see this email from a Stanford computer science student about Palantir).  Moreover, these kinds of smear campaigns are far from unusual; in other leaked HB Gary emails, ThinkProgress discovered that similar proposals were prepared for the Chamber of Commerce to attack progressive groups and other activists (including ThinkProgress).  And perhaps most disturbing of all, Hunton & Williams was recommended to Bank of America’s General Counsel by the Justice Department — meaning the U.S. Government is aiding Bank of America in its defense against/attacks on WikiLeaks.

That’s why this should be taken seriously, despite how ignorant, trite and laughably shallow is the specific leaked anti-WikiLeaks proposal.  As creepy and odious as this is, there’s nothing unusual about these kinds of smear campaigns.   The only unusual aspect here is that we happened to learn about it this time because of Anonymous’ hacking.  That a similar scheme was quickly discovered by ThinkProgress demonstrates how common this behavior is.  The very idea of trying to threaten the careers of journalists and activists to punish and deter their advocacy is self-evidently pernicious; that it’s being so freely and casually proposed to groups as powerful as the Bank of America, the Chamber of Commerce, and the DOJ-recommended Hunton & Williams demonstrates how common this is.  These highly experienced firms included such proposals because they assumed those deep-pocket organizations would approve and it would make their hiring more likely.

But the real issue highlighted by this episode is just how lawless and unrestrained is the unified axis of government and corporate power.  I’ve written many times about this issue — the full-scale merger between public and private spheres —  because it’s easily one of the most critical yet under-discussed political topics.  Especially (though by no means only) in the worlds of the Surveillance and National Security State, the powers of the state have become largely privatized.  There is very little separation between government power and corporate power.   Those who wield the latter intrinsically wield the former.  The revolving door between the highest levels of government and corporate offices rotates so fast and continuously that it has basically flown off its track and no longer provides even the minimal barrier it once did.  It’s not merely that corporate power is unrestrained; it’s worse than that:  corporations actively exploit the power of the state to further entrench and enhance their power.

That’s what this anti-WikiLeaks campaign is generally:  it’s a concerted, unified effort between government and the most powerful entities in the private sector (Bank of America is the largest bank in the nation).  The firms the Bank has hired (such as Booz Allen) are suffused with the highest level former defense and intelligence officials, while these other outside firms (including Hunton & Williams and Palantir) are extremely well-connected to the U.S. Government.  The U.S. Government’s obsession with destroying WikiLeaks has been well-documented.  And because the U.S. Government is free to break the law without any constraints, oversight or accountability, so, too, are its “private partners” able to act lawlessly.  That was the lesson of the Congressional vesting of full retroactive immunity in lawbreaking telecoms, of the refusal to prosecute any of the important Wall Street criminals who caused the 2008 financial crisis, and of the instinctive efforts of the political class to protect defrauding mortgage banks.

Nate Anderson at Wired

More Greenwald

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Memoirs Happen, Writing Is Messy

Caitlin Dickson at The Atlantic with the round-up:

Donald Rumsfeld’s memoir, “Known and Unknown,” isn’t set to be released until next week, but several news sites have obtained early copies. Previews of the book give insight into Rumsfeld’s negative opinion of several of his colleagues, his regrets or lack there of from his years as defense secretary, as well has personal struggles within his own family.

Thom Shanker and Charlie Savage at NYT:

Just 15 days after the terrorist attacks of Sept. 11, 2001, President George W. Bush invited his defense secretary, Donald H. Rumsfeld, to meet with him alone in the Oval Office. According to Mr. Rumsfeld’s new memoir, the president leaned back in his leather chair and ordered a review and revision of war plans — but not for Afghanistan, where the Qaeda attacks on New York and Washington had been planned and where American retaliation was imminent.

“He asked that I take a look at the shape of our military plans on Iraq,” Mr. Rumsfeld writes.

“Two weeks after the worst terrorist attack in our nation’s history, those of us in the Department of Defense were fully occupied,” Mr. Rumsfeld recalls. But the president insisted on new military plans for Iraq, Mr. Rumsfeld writes. “He wanted the options to be ‘creative.’ ”

When the option of attacking Iraq in post-9/11 military action was raised first during a Camp David meeting on Sept. 15, 2001, Mr. Bush said Afghanistan would be the target. But Mr. Rumsfeld’s recollection in the memoir, “Known and Unknown,” to be published Tuesday, shows that even then Mr. Bush was focused as well on Iraq. A copy was obtained Wednesday by The New York Times.

Bradley Graham at WaPo:

But Rumsfeld still can’t resist – in a memoir due out next week – taking a few pops at former secretaries of state Colin L. Powell and Condoleezza Rice as well as at some lawmakers and journalists. He goes so far as to depict former president George W. Bush as presiding over a national security process that was marked by incoherent decision-making and policy drift, most damagingly on the war in Iraq.

Much of Rumsfeld’s retrospective reinforces earlier accounts of a dysfunctional National Security Council riven by tensions between the Pentagon and State Department, which many critics outside and within the Bush administration have blamed on him. Speaking out for the first time since his departure from office four years ago, the former Pentagon leader offers a vigorous explanation of his own thoughts and actions and is making available on his Web site (www.rumsfeld.com) many previously classified or private documents.

Sounding characteristically tough and defiant in the 800-page autobiography “Known and Unknown,” Rumsfeld remains largely unapologetic about his overall handling of the Iraq conflict and concludes that the war has been worth the costs. Had the government of Saddam Hussein remained in power, he says, the Middle East would be “far more perilous than it is today.”

Addressing charges that he failed to provide enough troops for the war, he allows that, “In retrospect, there may have been times when more troops could have helped.” But he insists that if senior military officers had reservations about the size of the invading force, they never informed him. And as the conflict wore on, he says, U.S. commanders, even when pressed repeatedly for their views, did not ask him for more troops or disagree with the strategy.

Much of his explanation of what went wrong in the crucial first year of the occupation of Iraq stems from a prewar failure to decide how to manage the postwar political transition. Two differing approaches were debated in the run-up to the war: a Pentagon view that power should be handed over quickly to an interim Iraqi authority containing a number of Iraqi exiles, and a State Department view favoring a slower transition that would allow new leaders to emerge from within the country.

Dan Amira at New York Magazine:

Shortly after the Abu Ghraib scandal broke in 2004, Secretary of Defense Donald Rumsfeld offered President George W. Bush his resignation. Bush refused. Five days later, just so there was no confusion, Rumsfeld offered again, and once again, Bush refused. It was another two and a half years until Rumsfeld was finally canned. But in his upcoming 800-page memoir, Known and Unknown, Rumsfeld writes that he really wishes Bush had just let him go earlier.

Howard Kurtz at Daily Beast:

One of the few personal anecdotes in the 815-page volume takes place more than 12 hours after hijacked planes struck not only the World Trade Center but the Pentagon, filling his office with heavy smoke and forcing him to evacuate with other employees, some of them wounded. His spokeswoman, Torie Clarke, asked if he had called his wife of 47 years, Joyce. Rumsfeld replied that he had not.

“You son of a bitch,” Clarke said with a hard stare.

“She had a point,” Rumsfeld writes.

Matt Lewis:

But so far, the most interesting response has come from Senator John McCain.

As George Stephanopolous reported,

“I respect Secretary Rumsfeld. He and I had a very, very strong difference of opinion about the strategy that he was employing in Iraq which I predicted was doomed to failure,” the Arizona Republican said on “GMA.”

McCain and Rumsfeld had clashed over troop levels.

“And thank God he was relieved of his duties and we put the surge in otherwise we would have had a disastrous defeat in Iraq,” McCain told me.

Jen Dimascio and Jennifer Epstein at Politico

Alex Pareene at Salon:

Rumsfeld is also going to release a website full of “primary documents” that he thinks will prove his point. It will be like the WikiLeaks, only instead of pulling back the curtain and exposing American diplomatic and military secrets, they will probably just be a bunch of memos about how much Rumsfeld was “concerned” about the security situation in post-invasion Baghdad. Also I bet there will be a document that says “I promise Donald Rumsfeld had no idea that we were torturing and killing prisoners, signed, everyone at Abu Ghraib.”

Speaking of! Rumsfeld says Bill Clinton called him once and said: “No one with an ounce of sense thinks you had any way in the world to know about the abuse taking place that night in Iraq.” Yes, well, the people with ounces of sense are completely wrong.

Rumsfeld also apparently devotes a lot of space to rewaging various long-forgotten bureaucratic disputes. There is something about George H. W. Bush, whom he clearly hates. Rumsfeld also wants everyone to know that former Vice President Nelson Rockefeller was “bullying” and an “imperial vice president,” which is hilarious for many reasons, including Rumsfeld’s closeness to Dick Cheney and the fact that as Gerald Ford’s chief of staff, Rumsfeld basically blocked Rockefeller from doing anything.

Now let’s enjoy the attempted rehabilitation of Rumsfeld in the press, where his awfulness has probably been entirely forgotten.

Wonkette:

Rummy says Defense was preparing for offense on Afghanistan at the time, but Bush asked him to be “creative.” Creative! Perhaps the military could stage a production of Grease for the people of Iraq before taking a bow and dropping a bomb on them?

The book mixes the policy and the personal; at the end of the same Oval Office session in which Mr. Bush asked for an Iraq war plan, Mr. Rumsfeld recounts, the president asked about Mr. Rumsfeld’s son, Nick, who struggled with drug addiction, had relapsed and just days before had entered a rehabilitation center. The president, who has written of his own battles to overcome a drinking problem, said that he was praying for Mr. Rumsfeld, his wife, Joyce, and all their children.

“What had happened to Nick — coupled with the wounds to our country and the Pentagon — all started to hit me,” Mr. Rumsfeld writes. “At that moment, I couldn’t speak. And I was unable to hold back the emotions that until then I had shared only with Joyce.”

Ah, there you have it. Rumsfeld could have said, “What the fuck are you talking about going to war with Iraq for? Our country was just attacked by a foreign terrorist organization we need to go try to destroy. Iraq has nothing to do with this. Aren’t you more concerned with winning this war we haven’t even begun yet?” But instead, his son had done some drugs. Sure thing, Rumsfeld. Perfectly good excuse. You should drop some leaflets on the families of people, American and Iraqi, whose children have died in that war. “Sorry, my son was doing drugs. I was emotional at the time. Not my fault.”

So here you have it: There’s finally someone to blame the entire Iraq War on: Nick Rumsfeld. HOPE YOU LIKED THOSE DRUGS, ASSHOLE!

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Kenneth Cole Steps In It

Kenneth Cole twitter

Kenneth Cole PR twitter

Katherine Noyes at PC World:

For all those who needed an illustration of how a business shouldn’t use Twitter, Kenneth Cole kindly provided it this week by using the current unrest in Egypt as a promotional tool.

“Millions are in uproar in #Cairo,” read the original tweet from Thursday morning. “Rumor is they heard our new spring collection is now available online at http://bit.ly/KCairo.”

Widespread uproar was the result, all right, but not as a result of any spring collection. Such was the magnitude of the outcry at Cole’s insensitivity, in fact, that the company hastily removed the tweet that same day and issued two retractions instead.

“Re Egypt tweet: we weren’t intending to make light of a serious situation,” read the first. “We understand the sensitivity of this historic moment -KC”

A second, posted on Facebook soon afterward, read as follows:

“I apologize to everyone who was offended by my insensitive tweet about the situation in Egypt. I’ve dedicated my life to raising awareness about serious social issues, and in hindsight my attempt at humor regarding a nation liberating themselves against oppression was poorly timed and absolutely inappropriate.”

Erik Hayden at The Atlantic:

And a snapshot of reactions:

  • The Next Web – “Oh dear, we thought that big brands might have learnt that hijacking hashtags isn’t a good idea”
  • Advertising Age – “Kenneth Cole and others in the media and marketing industries not only suffer from a lack of tact, they suffer from a lack of historical knowledge and the ability to grasp that the situation in Egypt could get a hell of lot uglier than it is even at this moment.”
  • Styleite – “Apparently Kenneth Cole knows there’s nothing like a violent political revolution to boost sales!”

Brenna Ehrlich at Mashable:

Cole made a similarly indelicate statement in the past; following 9/11, he told the New York Daily News: “Important moments like this are a time to reflect… To remind us, sometimes, that it’s not only important what you wear, but it’s also important to be aware.”

The Twitterverse, unsurprisingly, is not happy with Cole’s 140-character missive. A fake account — @KennethColePR, à la @BPGlobalPR — has even cropped up, mocking the designer with such tweets as: “Our new slingback pumps would make Anne Frank come out of hiding! #KennethColeTweets.”

Amy Odell at New York Magazine:

Since the Tweet caused mass offense around the Internet, a Kenneth Cole parody account @KennethColePR emerged. Its tweets include, “‘People from New Orleans are flooding into Kenneth Cole stores!’ #KennethColeTweets.” Also: “People of Haiti, fall into our store for earth-shattering savings! #KennethColeTweets.” Not to be outdone by: “Hey, Pope Benedict – there’s no way to fondle our spring shoes inappropriately! #KennethColeTweets.”An hour ago, the pranksters got serious, tweeting that they would turn over the fake account to the brand if they made a donation to Amnesty International or another charitable organization. And still, a quick scan of the Kenneth Cole Facebook wall reveals a lot of people thought that Cairo tweet was funny anyway.

Adam Clark Estes in Salon:

Oh, Kenneth.

Unspoken rule No. 1: Don’t make jokes about tragedies. You’ve donethis sort of thingbefore — mixing up bad puns and profundity. It’s oh-so-tempting to try to make light of grim situations, sad stories and global traumas. Don’t try to make it funny. That’s what comedians are for. Kenneth Cole is a fashion designer known for sharp-looking dress shoes, not sharp wit.

Unspoken rule No. 2: Don’t make marketing gimmicks out of tragedies. This is just like rule No. 1 but more directed at Kenneth Cole. When the world’s attention is fixated on one event, sometimes it’s not the best idea to jump up and down with the “Look at me!” routine. The unrest in Egypt isn’t the Super Bowl. It’s a troubling story with historical implications. Nobody wants to hear about your spring slacks.

Chris Morran at The Consumerist:

When you think of Kenneth Cole, you probably don’t associate the apparel brand with edgy, topical humor. And you probably won’t ever again, after the company stuck its shiny leather shoe in its mouth with a Tweet referencing the current political upheaval in Egypt.

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