Wednesday, February 28, 2007


"Homeownership has been sold to many people as the equivalent of a Powerball ticket," says Jacky Morales-Ferrand, who directs the city's housing development division. "But the truth is that not everyone can afford a home when the roof needs to be fixed or the plumbing breaks. Most of us won't win that Powerball ticket."

Wednesday, February 21, 2007

Joe Scarborough Article

When The Washington Monthly reached me at my office recently, a voice on the other side of the line meekly asked if I would ever consider writing an article supporting the radical proposition that Republicans should get their brains beaten in this fall.

“Count me in!” was my chipper response. I also seem to remember muttering something about preferring an assortment of Bourbon Street hookers running the Southern Baptist Convention to having this lot of Republicans controlling America’s checkbook for the next two years.

Maybe that’s because right-wing, knuckle-dragging Republicans like myself took over Congress in 1994 promising to balance the budget and limit Washington’s power. We were a nasty breed and had no problem blaming Bill and Hillary Clinton for everything from the exploding federal deficit to male pattern baldness. I suspected then, as I do now, that Hillary Clinton herself had something to do with “Love, American Style” and “Joanie Loves Chachi.” And why not blame her? Back then, Newt Gingrich felt comfortable blaming the drowning of two little children on Democratic values. Hell. It was 1994. It just seemed like the thing to do.

The terminally rumpled Dick Armey (R-Whiskey Gulch) even went so far as to suggest that the Clintons might be Marxists, drawing an angry personal rebuke from Bubba himself. But 12 years later, it is Armey’s fellow Republicans who should be sobered by the short and ugly history of Republican Supremacy.

Under Bill Clinton’s presidency, discretionary spending grew at a modest rate of 3.4 percent. Not too bad for a Marxist, even considering that his worst instincts were tempered by a Republican Congress. (Well, his worst fiscal instincts.)

But compare Clinton’s 3.4 percent growth rate to the spending orgy that has dominated Washington since Bush moved into town. With Republicans in charge of both sides of Pennsylvania Avenue, spending growth has averaged 10.4 percent per year. And the GOP’s reckless record goes well beyond runaway defense costs. The federal education bureaucracy has exploded by 101 percent since Republicans started running Congress. Spending in the Justice Department over the same period has shot up 131 percent, the Commerce Department 82 percent, the Department of Health and Human Services 81 percent, the State Department 80 percent, the Department of Transportation 65 percent, and the Department of Housing and Urban Development 59 percent. Incredibly, the four bureaucracies once targeted for elimination by the GOP Congress—Commerce, Energy, Education, and Housing and Urban Development—have enjoyed spending increases of an average of 85 percent.

It’s enough to make economic conservatives long for the day when Marxists were running the White House.

This must all be shocking to my Republican friends who still believe our country would be a better place if our party controlled every branch of government as well as every news network, movie studio, and mid-American pulpit. But evidence suggests that divided government may be what Washington needs the most.

During the 1990s, conservative Republicans and the Clinton White House somehow managed to balance the budget while winning two wars, reforming welfare, and conducting an awesome impeachment trial focused on oral sex and a stained Gap dress.

The fact that both parties hated each another was healthy for our republic’s bottom line. A Democratic president who hates a Republican appropriations chairman is less likely to sign off on funding for the Midland Maggot Festival being held in the chairman’s home district. Soon, budget negotiations become nasty, brutish, and short and devolve into the legislative equivalent of Detroit, where only the strong survive.

But in Bush’s Washington, the capital is a much clubbier place where everyone in the White House knows someone on the Hill who worked with the Old Man, summered in Maine, or pledged DKE at Yale. The result? Chummy relationships, no vetoes, and record-breaking debts.

As a political junkie who wept bitter tears the night Jimmy Carter got elected and shouted with uncontrolled joy when Ronald Reagan whipped his sorry ass four years later, I find myself ambivalent for the first time over a national election. After six years of Republican recklessness at home and abroad, I seriously doubt Nancy Pelosi or Harry Reid or the aforementioned Bourbon Street hookers could spend this country any deeper into debt than my Republican Party. With any luck, Democrats will launch destructive investigations, a new era of bad feelings will break out, and George W. Bush will stop using his veto pen to fill in Rangers’ box scores and instead start using it like a conservative president should.

Monday, February 19, 2007

No Child Left Behind, from recruiters that is


    (a) POLICY-
      (1) ACCESS TO STUDENT RECRUITING INFORMATION- Notwithstanding section 444(a)(5)(B) of the General Education Provisions Act and except as provided in paragraph (2), each local educational agency receiving assistance under this Act shall provide, on a request made by military recruiters or an institution of higher education, access to secondary school students names, addresses, and telephone listings.
      (2) CONSENT- A secondary school student or the parent of the student may request that the student's name, address, and telephone listing described in paragraph (1) not be released without prior written parental consent, and the local educational agency or private school shall notify parents of the option to make a request and shall comply with any request.
      (3) SAME ACCESS TO STUDENTS- Each local educational agency receiving assistance under this Act shall provide military recruiters the same access to secondary school students as is provided generally to post secondary educational institutions or to prospective employers of those students.
    (b) NOTIFICATION- The Secretary, in consultation with the Secretary of Defense, shall, not later than 120 days after the date of enactment of the No Child Left Behind Act of 2001, notify principals, school administrators, and other educators about the requirements of this section.
    (c) EXCEPTION- The requirements of this section do not apply to a private secondary school that maintains a religious objection to service in the Armed Forces if the objection is verifiable through the corporate or other organizational documents or materials of that school.
    (d) SPECIAL RULE- A local educational agency prohibited by Connecticut State law (either explicitly by statute or through statutory interpretation by the State Supreme Court or State Attorney General) from providing military recruiters with information or access as required by this section shall have until May 31, 2002, to comply with that requirement.

Friday, February 16, 2007

James Kunstler excerpt

I hasten to add it is a mistake to suppose that the US industrial economy has already been replaced by a so-called “information” economy or a consumer economy. In reality, manufacturing activities have been insidiously replaced over the past twenty years by a suburban-sprawl-building economy – and the mass production of suburban houses, highways, strip malls and big box stores is just a different sort of manufacturing than making hair driers and TV sets. The sprawl industry also drove a reckless debt creation racket and multiple layers of traffic in mortgages and spinoffs of mortgages (such as the derivatives trade based on bundled, securitized debt) which represents, at bottom, hallucinated wealth that in turn has spread false liquidity through the equity markets and is certain to affect them badly sooner or later. All this is what we have been calling the “housing bubble” and it is now beginning to fly apart with deadly effect.

Thursday, February 15, 2007

More Bus Token Money

McALLEN — Ike masterminded the liberation of Europe, but just couldn’t conquer Americans’ attachment to the paper bill.

Susan B. Anthony rallied the country to grant women equal rights, but she couldn’t convince it to believe the dollar was just as good on a coin.

And Sacagawea led Meriwether Lewis and William Clark to the Pacific, but couldn’t guide Americans toward a $1 coin.

Can the collective gusto of George Washington, Abraham Lincoln and Thomas Jefferson complete the job where the others failed?

After three failed attempts, the U.S. Mint hopes so, planning to use 36 dead presidents to finally get a dollar coin to "pass the buck" with the American people.

Today, the Mint is slated to begin circulating a new gold-colored $1 coin featuring the face of George Washington, the country’s first president.


The reason that these forgeries don't catch on with people is that folks inherently know the difference between base metal and real money like silver and gold and even knickel.
People pyscologically don't want to have a pocket full of bus tokens, it doesnt feel like money.

But paper isn't money either, I can hear people saying. That is true, it isn't.

And originally people didn't trust it either, but over generations it has come to be accepted by the public.

Silver dollars and half dollars are rarely in circulation these days because they are worth more than the face value of the coin, but earlier in my lifetime it was quite common to get a silver dollar in change and fifty cent pieces were even more common, though they weren't all silver.

Most nickels and dimes that are in circulation are knickel and copper, though they are being fastly replaced with zinc coins now.

It is very easy to tell the difference, they feel fake.

And take a look at a new penny, it is so thin, because it costs the government more than 1 cent to manufacture them. They will cease to be minted soon.People are melting pennies now for the metal content because of the rise in the price of copper over the last few years.

The constitution says that money shall be minted from gold or silver, because these two metals have been accepted as currency for thousands of years. So even if the government behind the money fails the coinage still maintains its value. After all, people spend millions of dollars raising gold and silver coins from shipwrecks. You've never heard of an expedition seeking to raise paper money from the ocean floor.

Somewhere along the line, the government began to substitute nickel for silver and then copper filling. So people began to hoard silver dollars and they began to dissappear from circulation. With the advent of coins being minted in zinc, the nickel/copper coins are beginning to be hoarded as well, because even nickel and copper have an inherent value as metals alone.

The task of the government now is not so much to replace the dollar bill with a coin, as much as it is to get younger generations adjusted to money being minted in zinc. A generation that grows up toting around bus tokens in their pocket will come to percieve worthless pot metal as money, and therefore the government will incur no cost at all when it comes to minting their currency.

Tuesday, February 13, 2007

Boy Kills 5 at Mall in Utah

SALT LAKE CITY — The 18-year-old gunman who opened fire on shoppers in a mall, killing five and wounding four others before police fatally shot him, was armed with several rounds of ammunition and was carrying two guns, authorities said Tuesday.

How many days will elapse before we find out the kid was on some form of pychotropic drugs?

Saturday, February 10, 2007

Sub-Prime Industry Tanking

NEW YORK (AFX) - The mortgage industry plunged deeper into distress this week as two lenders said sagging home prices and higher interest rates are pushing many borrowers into delinquency

HSBC Holdings PLC, Europe's biggest bank and a major player in the U.S. mortgage industry, said the market for "subprime" mortgages, or home loans to people with blemished or limited credit histories, is in trouble

Analysts' estimate for how much HSBC needs to sock away for problem loans is shy by a fifth, HSBC said. The London-based bank estimates it needs to set aside almost $10.6 billion to cover loans it won't be able to collect

Shares of mortgage providers fell across the board on Thursday, but none were hit as hard as New Century Financial Corp., a subprime mortgage lender based in Irvine, Calif. The company said late Wednesday accounting errors caused it to lose track of how drastically some of its mortgage loans are losing value

Three Wall Street analysts downgraded New Century, and the company's stock plummeted $9.21, or 30 percent, to $20.95 in afternoon trading on the New York Stock Exchange. The stock crashed through its previous 52-week low of $29.07, set last month

During the housing boom, many mortgage banks devised crafty loans allowing people to borrow money with no down payment and pay low interest rates for the first few years on adjustable mortgages. Now, as interest rates reset higher, more borrowers are missing payments and many lenders are going out of business or putting themselves up for sale

Subprime loans were once very attractive to some banks due to their higher interest rates

But HSBC said the weak housing market exacerbates credit problems in the subprime mortgage space. Until a little more than a year ago, stretched borrowers who needed to raise cash could take out a second mortgage on their houses and use that money to pay off loans. With housing prices stagnant -- and in some markets falling -- consumers' best source of financing has shriveled

The problem for these types of lenders may not go away quickly

"We expect poor subprime credit trends to continue at least through 2007 and into 2008," Merrill Lynch analyst Kenneth Bruce wrote in a research report

U.S. shares of HSBC Holdings fell $2.17, or 2.4 percent, to $90.05 in midday trading on the New York Stock Exchange

Another reason bad credit plagues mortgage lenders is it shrinks appetite for home loans in the bond market

Most mortgage lenders don't keep their loans; they package them into bonds and sell them to investors. Lenders' profits are determined by how much the bonds sell for

A loan marred by a missed payment loses value because of higher risk the loan won't be repaid. The price of a bond falls if it's backed by mortgage debt that has become riskier

When lenders sell loans, the deals normally include clauses allowing investors to force a lender to buy back a loan if the borrower misses an early payment. Roth Capital Partners analyst Richard Eckert said missed payments on subprime loans have become "epidemic," and investors are sending loans back to lenders with unusual frequency

New Century made two accounting mistakes: It didn't assume more investors would sell back loans, even as loan repurchases surged throughout 2006 amid defaults. And, New Century didn't assume the repurchased loans would be worth less. Piper Jaffray analyst Robert Napoli estimated a repurchased loan has typically lost 15 percent to 20 percent of its value

New Century said it will restate results for the first three quarters of 2006 and expects to post a loss for the fourth quarter. The company needs to set aside money anticipating more loan repurchases, and reflecting the lower value of those repurchased loans. The lender also said new loans this year will fall 20 percent as the company becomes more selective about which borrowers it lends to

Shares of mortgage lenders fell across the board Thursday. Countrywide Financial Corp. and IndyMac Bancorp., the two biggest independent U.S. mortgage lenders, each fell more than 2 percent. Novastar Financial Inc. fell 13 percent to a new 52-week low

Another sector hurt by the troubled subprime mortgage market is mortgage insurance. Companies like PMI Group Inc., Radian Group Inc. and MGIC Investment Corp. underwrite insurance policies that trigger when borrowers miss a payment on their mortgages. If mortgage credit worsens, these companies pay out more in insurance claims

Shares of PMI, Radian and MGIC each fell around 3 percent on Thursday

Friday, February 09, 2007

White House boots federal prosecutors, replaces them with cronies

On Tuesday of this week Sen. Dianne Feinstein (D-Calif.) went to the Senate floor to sound the alarm about a series of suspicious de facto firings of U.S. attorneys (USAs) across the country in recent weeks and months. USAs, of course, serve at the president’s will. Legally and constitutionally, he can fire them whenever he chooses. In practice, however, a sitting president seldom, if ever, without cause, cashiers serving USAs whom he himself has appointed. I’ve counted as many as seven USAs who appear to have been forced out. And Feinstein said that the administration has told her that between five and 10 USAs have been asked to tender their resignations.

And there’s another wrinkle to the story. Using a little-noticed provision dropped into last year’s renewal of the Patriot Act, the attorney general can appoint new USAs to serve for the duration of the president’s term without the need for Senate approval.

So what’s going on here? For folks like myself, there’s too much water under the bridge to grant this White House too many benefits of the doubt. But the evidence on the table suggests pretty strongly that the White House is up to no good — both in the choice of USAs who are getting the boot and those they’re choosing to appoint outside the confirmation process.

First is Carol Lam, U.S. attorney in San Diego, who announced her resignation on Tuesday. Lam’s office headed up the prosecution of arch-congressional crook ex-Rep. Randy “Duke” Cunningham (R-Calif.). And an expanded version of that investigation is now probing related crimes on Capitol Hill and — probably more importantly — at the CIA, particularly Bush appointee Kyle “Dusty” Foggo, longtime pal of accused Cunningham briber Brent Wilkes.

Legal sources involved in the case believe that Lam’s work on the expanded Cunningham case will be stymied by her departure. Dan Dzwilewski, head of the FBI office in San Diego, remarked to the Union-Tribune, “I can’t speak for what’s behind [her forced resignation], what’s the driving force behind this or the rationale. I guarantee politics is involved.”

The current work of the other fired USAs has less direct political implications. But several seem to have had ongoing investigations of allegedly corrupt Republicans.

And who are the folks getting the jobs? Well, the signs aren’t good there either.

Consider the estimable J. Timothy Griffin, U.S. attorney for the Eastern District of Arkansas since Dec. 20 of last year.

If you hadn’t heard about Griffin’s appointment, don’t feel bad; the guy he replaced hadn’t either. Griffin’s appointment was announced Dec. 15, before the then-U.S. attorney Bud Cummins had even been given a chance to resign. Cummins got the call on his cell phone telling him he was out the same day the announcement was made. He was out hiking with his son at the time.

Cummins, who subsequently said he got forced out for political reasons, resigned on Dec. 20, the same day Griffin was sworn in.

So who’s Griffin and what experience does he bring to the job?

A quick perusal of Griffin’s resume shows that his more-or-less exclusive vocation has been doing opposition research on Democrats on behalf of the Republican Party. Until recently, he was head of oppo research at the White House, working directly for Karl Rove. In 1999 and 2000, he was deputy research director for the Republican National Committee. In 2002 he returned as research director for the national GOP and stayed on for the next three years.

Before getting involved formally in oppo research he worked in what you might call de facto oppo research positions. In 1995 and 1996 he was associate independent counsel in the Henry Cisneros investigation. And after that he headed up to the Hill to work for Rep. Dan Burton (R-Ind.) investigating political contributions from Asian-Americans to Bill Clinton.

Oh, and I forgot to mention, according to Time, back in 2000, when he was in charge of digging up dirt on Al Gore, he apparently had a poster hanging on the wall behind his desk which read: “On my command — unleash hell on Al.”

I don’t think the readers of this paper are above having an admiration for a seasoned political operative, whichever party he or she may work for. But let’s just stipulate that Griffin seems like a pretty political guy. And it’s probably no mystery why the White House doesn’t want to see Karl Rove’s deputy through the Senate confirmation process before he takes over the reins in Arkansas.

I’m only getting started looking into the circumstances of these other firings and the records of the non-confirmed USAs who are to take their place. But I get the sense my suspicions will be amply rewarded.

Marshall is editor of
His column appears in The Hill each week.

Prewar Intelligence Unit at Pentagon Is Criticized

February 9, 2007

WASHINGTON, Feb. 8 — A Pentagon investigation into the handling of prewar intelligence has criticized civilian Pentagon officials for conducting their own intelligence analysis to find links between Saddam Hussein and Al Qaeda, but said the officials did not violate any laws or mislead Congress, according to Congressional officials who have read the report.

The long-awaited report by the Pentagon’s acting inspector general, Thomas F. Gimble, was sent to Congress on Thursday. It is the first major review to rebuke senior officials working for Defense Secretary Donald H. Rumsfeld for the way intelligence was used before the invasion of Iraq early in 2003.

Working under Douglas J. Feith, who at the time was under secretary of defense for policy, the group “developed, produced and then disseminated alternative intelligence assessments on the Iraq and Al Qaeda relationship, which included some conclusions that were inconsistent with the consensus of the Intelligence Community, to senior decision-makers,” the report concluded. Excerpts were quoted by Senator Carl Levin, a Michigan Democrat who has long been critical of Mr. Feith and other Pentagon officials.

The report, and the dueling over its conclusions, shows that bitter divisions over the handling of prewar intelligence remain even after many of the substantive questions have been laid to rest and the principal actors have left the government.

In a rebuttal to an earlier draft of Mr. Gimble’s report, Eric S. Edelman, the under secretary of defense, said the group’s activities were authorized by Mr. Rumsfeld and his deputy, Paul D. Wolfowitz. They did not produce formal intelligence assessments, and they were properly shared, the rebuttal said.

In a statement issued Thursday, Mr. Feith, who left the Pentagon in 2005, made similar points. Mr. Rumsfeld did not respond to telephone messages seeking comment.

According to Congressional officials, Mr. Feith’s statement and the policy office’s rebuttal, the report concluded that none of the Pentagon’s activities were illegal and that they did not violate Defense Department directives.

But the chairman of the Senate Intelligence Committee, John D. Rockefeller IV of West Virginia, said in a statement that because the inspector general considered the work of Mr. Feith’s group to be “intelligence activities,” the committee would investigate whether the Pentagon violated the National Security Act of 1947 by failing to notify Congress about the group’s work.

Senator Levin, who is chairman of the Senate Armed Services Committee, called the report a “very strong condemnation” of the Pentagon’s activities.

“I think they sought this kind of intelligence. They made it clear they wanted any kind of possible connections, no matter how skimpy, and they got it,” he said.

Mr. Feith and other officials in his Pentagon office have been accused by critics of the administration of distorting intelligence data to justify the invasion of Iraq. When Democrats were in the minority in Congress, Mr. Levin conducted an inquiry and issued a report excoriating Mr. Feith and others at the Pentagon for their conduct.

The conclusions the Pentagon team reached in the year or so before the invasion of Iraq have been generally known for some time and were largely discredited by the Sept. 11 commission, which found “no evidence” that contacts between the Iraqi government and Al Qaeda “ever developed into a collaborative operational relationship.”

According to Mr. Levin, the inspector general’s report did not make any specific recommendations, and he said that interagency coordination “will significantly reduce the opportunity for the inappropriate conduct of intelligence activities outside of intelligence channels.”

The Senate Intelligence Committee, meanwhile, is completing work on its own investigation into the use of intelligence by policy makers in the months before the Iraq war. Under Republican leadership, it had delayed an examination of Mr. Feith’s activities pending the outcome of the inspector general’s report.

The Pentagon’s rebuttal vehemently rejected the report’s contention that there was “inappropriate” use of intelligence by Pentagon civilians and said the effort to identify links between Saddam Hussein’s government and Al Qaeda was done at the direction of Mr. Wolfowitz, who was deputy defense secretary at the time.

Describing the work as a “fresh, critical look” at intelligence agency conclusions about Al Qaeda and Iraq, the Pentagon rebuttal said, “It is somewhat difficult to understand how activities that admittedly were lawful and authorized (in this case by either the secretary of defense or the deputy secretary of defense) could nevertheless be characterized as ‘inappropriate.’ ”

The Feith operation dates to shortly after the Sept. 11 terrorist attacks, when the Pentagon established a small team of civilians to sift through existing intelligence with the aim of finding possible links between terror networks and governments. Bush administration officials contended that intelligence agencies were ignoring reports of collaboration between Iraq and Al Qaeda.

By the summer of 2002, the group, whose membership evolved over time, was aimed at identifying links between Al Qaeda and Saddam Hussein’s government in Iraq.

The inspector general’s report criticizes a July 25, 2002, memo, written by an intelligence analyst detailed to Mr. Feith’s office, titled, “Iraq and al-Qaida: Making the Case.”

The memo said that, while “some analysts have argued” that Osama bin Laden would not cooperate with secular Arab entities like Iraq, “reporting indicates otherwise.”

The inspector general concluded that the memo constituted an “alternative intelligence assessment” from that given by the Central Intelligence Agency and other intelligence agencies and that it led to a briefing on links between Al Qaeda and Iraq that was given to senior Bush administration officials in August 2002, according to excerpts of the draft inspector general report quoted by Mr. Edelman.

It is not clear whether the inspector general revised his report after receiving the rebuttal.

The draft inspector general report said Mr. Feith’s office should have followed intelligence agency guidelines for registering differing views, “in those rare instances where consensus could not be reached.”

In his statement Thursday, Mr. Feith said he was pleased that the inspector general had cleared him of violating laws or Defense Department policies, but he called it “wrong” and “bizarre” for the report to criticize civilian officials for scrutinizing intelligence agency conclusions and passing along their findings to senior officials.

Mr. Feith also said that the inspector general’s findings reflected “confusion about the way policy and intelligence officials relate to one another in the real world.”

War Profiteers have no worries

Okay, here’s the situation. It’s clear from the Libby trial that the White House, most notably Dick Cheney, was in a full out effort to discredit Joe Wilson. Libby’s pathetic excuse that he learned of Wilson’s identity from Tim Russert has been torn to shreds today by Russert himself, as well as others. As an aside, it seems like the Libby defense has been to portray Libby as a scapegoat for the leak, blaming it on Karl Rove, and essentially seeking to discredit Judy Miller, who spent 85 days in jail protecting Libby. With friends like that ….

Libby has told prosecutors that he learned of Mrs. Wilson’s CIA status from the vice president, forgot that, and then remembered that he had heard it from the vice president after the heard it later from a reporter. (I can’t make this up.) It’s clear that Cheney and Libby were working with quite a bit of vigor to control the media’s take on Joe Wilson’s op-ed piece that essentially discredited what Bush had said in the state of the union address; that Iraq was not seeking nuclear material from Niger.

They are guilty, everyone knows it, but it won’t matter. They can nail Libby to the wall and Bush will pardon him. The trial is only a formality. In light of this it is easy to understand why Rumsfeld was not let go until after the election. When the democrats gained control of the Congress, Bush “fired” Rumsfeld, not because he thought it was time for a change, but because they knew the Democratic congress would begin holding hearings on Iraq. If Rumsfeld was no longer Secretary of Defense he wouldn’t have to testify before the committee. He won’t be held accountable. It’s all iron clad. They will toss out a few low level crooks like the Army officers that profited by steering contracts in Iraq, but the profligate war profiteers like KBR will never be called to account for a single nickel of ill gotten gains. The profiteers like Cheney, Rumsfeld and assorted other criminals will walk off far richer than they were when they came into office and they will never lose a wink of sleep over the people they sent off on a fools errand that never came home.

Thursday, February 08, 2007

Why Dick Cheney Cracked Up

By FRANK RICH. Op-Ed Columnist, NYTimes on the Web, February 4, 2007

IN the days since Dick Cheney lost it on CNN, our nation’s armchair shrinks have had a blast. The vice president who boasted of “enormous successes” in Iraq and barked “hogwash” at the congenitally mild Wolf Blitzer has been roundly judged delusional, pathologically dishonest or just plain nuts. But what else is new? We identified those diagnoses long ago. The more intriguing question is what ignited this particularly violent public flare-up.

The answer can be found in the timing of the CNN interview, which was conducted the day after the start of the perjury trial of Mr. Cheney’s former top aide, Scooter Libby. The vice president’s on-camera crackup reflected his understandable fear that a White House cover-up was crumbling. He knew that sworn testimony in a Washington courtroom would reveal still more sordid details about how the administration lied to take the country into war in Iraq. He knew that those revelations could cripple the White House’s current campaign to escalate that war and foment apocalyptic scenarios about Iran. Scariest of all, he knew that he might yet have to testify under oath himself.

Mr. Cheney, in other words, understands the danger this trial poses to the White House even as some of Washington remains oblivious. From the start, the capital has belittled the Joseph and Valerie Wilson affair as “a tempest in a teapot,” as David Broder of The Washington Post reiterated just five months ago. When “all of the facts come out in this case, it’s going to be laughable because the consequences are not that great,” Bob Woodward said in 2005. Or, as Robert Novak suggested in 2003 before he revealed Ms. Wilson’s identity as a C.I.A. officer in his column, “weapons of mass destruction or uranium from Niger” are “little elitist issues that don’t bother most of the people.” Those issues may not trouble Mr. Novak, but they do loom large to other people, especially those who sent their kids off to war over nonexistent weapons of mass destruction and nonexistent uranium.

In terms of the big issues, the question of who first leaked Ms. Wilson’s identity (whether Mr. Libby, Richard Armitage, Ari Fleischer or Karl Rove) to which journalist (whether Mr. Woodward, Mr. Novak, Judith Miller or Matt Cooper) has always been a red herring. It’s entirely possible that the White House has always been telling the truth when it says that no one intended to unmask a secret agent. (No one has been charged with that crime.) The White House is also telling the truth when it repeatedly says that Mr. Cheney did not send Mr. Wilson on his C.I.A.-sponsored African trip to check out a supposed Iraq-Niger uranium transaction. (Another red herring, since Mr. Wilson didn’t make that accusation in the first place.)

But if the administration is telling the truth on these narrow questions and had little to hide about the Wilson trip per se, its wild overreaction to the episode was an incriminating sign it was hiding something else. According to testimony in the Libby case, the White House went berserk when Mr. Wilson published his Op-Ed article in The Times in July 2003 about what he didn’t find in Africa. Top officials gossiped incessantly about both Wilsons to anyone who would listen, Mr. Cheney and Mr. Libby conferred about them several times a day, and finally Mr. Libby, known as an exceptionally discreet White House courtier, became so sloppy that his alleged lying landed him with five felony counts.

The explanation for the hysteria has long been obvious. The White House was terrified about being found guilty of a far greater crime than outing a C.I.A. officer: lying to the nation to hype its case for war. When Mr. Wilson, an obscure retired diplomat, touched that raw nerve, all the president’s men panicked because they knew Mr. Wilson’s modest finding in Africa was the tip of a far larger iceberg. They knew that there was still far more damning evidence of the administration’s W.M.D. lies lurking in the bowels of the bureaucracy.

Thanks to the commotion caused by the leak case, that damning evidence has slowly dribbled out. By my count we now know of at least a half-dozen instances before the start of the Iraq war when various intelligence agencies and others signaled that evidence of Iraq’s purchase of uranium in Africa might be dubious or fabricated. (These are detailed in the timelines at The culmination of these warnings arrived in January 2003, the same month as the president’s State of the Union address, when the White House received a memo from the National Intelligence Council, the coordinating body for all American spy agencies, stating unequivocally that the claim was baseless. Nonetheless President Bush brandished that fearful “uranium from Africa” in his speech to Congress as he hustled the country into war in Iraq.

If the war had been a cakewalk, few would have cared to investigate the administration’s deceit at its inception. But by the time Mr. Wilson’s Op-Ed article appeared — some five months after the State of the Union and two months after “Mission Accomplished” — there was something terribly wrong with the White House’s triumphal picture. More than 60 American troops had been killed since Mr. Bush celebrated the end of “major combat operations” by prancing about an aircraft carrier. No W.M.D. had been found, and we weren’t even able to turn on the lights in Baghdad. For the first time, more than half of Americans told a Washington Post-ABC News poll that the level of casualties was “unacceptable.”

It was urgent, therefore, that the awkward questions raised by Mr. Wilson’s revelation of his Africa trip be squelched as quickly as possible. He had to be smeared as an inconsequential has-been whose mission was merely a trivial boondoggle arranged by his wife. The C.I.A., which had actually resisted the uranium fictions, had to be strong-armed into taking the blame for the 16 errant words in the State of the Union speech.

What we are learning from Mr. Libby’s trial is just what a herculean effort it took to execute this two-pronged cover-up after Mr. Wilson’s article appeared. Mr. Cheney was the hands-on manager of the 24/7 campaign of press manipulation and high-stakes character assassination, with Mr. Libby as his chief hatchet man. Though Mr. Libby’s lawyers are now arguing that their client was a sacrificial lamb thrown to the feds to shield Mr. Rove, Mr. Libby actually was — and still is — a stooge for the vice president.

Whether he will go to jail for his misplaced loyalty is the human drama of his trial. But for the country there are bigger issues at stake, and they are not, as the White House would have us believe, ancient history. The administration propaganda flimflams that sold us the war are now being retrofitted to expand and extend it.

In a replay of the run-up to the original invasion, a new National Intelligence Estimate, requested by Congress in August to summarize all intelligence assessments on Iraq, was mysteriously delayed until last week, well after the president had set his surge. Even the declassified passages released on Friday — the grim takes on the weak Iraqi security forces and the spiraling sectarian violence — foretell that the latest plan for victory is doomed. (As a White House communications aide testified at the Libby trial, this administration habitually releases bad news on Fridays because “fewer people pay attention when it’s reported on Saturday.”)

A Pentagon inspector general’s report, uncovered by Business Week last week, was also kept on the q.t.: it shows that even as more American troops are being thrown into the grinder in Iraq, existing troops lack the guns and ammunition to “effectively complete their missions.” Army and Marine Corps commanders told The Washington Post that both armor and trucks were in such short supply that their best hope is that “five brigades of up-armored Humvees fall out of the sky.”

Tomorrow is the fourth anniversary of Colin Powell’s notorious W.M.D. pantomime before the United Nations Security Council, a fair amount of it a Cheney-Libby production. To mark this milestone, the White House is reviving the same script to rev up the war’s escalation, this time hyping Iran-Iraq connections instead of Al Qaeda-Iraq connections. In his Jan. 10 prime-time speech on Iraq, Mr. Bush said that Iran was supplying “advanced weaponry and training to our enemies,” even though the evidence suggests that Iran is actually in bed with our “friends” in Iraq, the Maliki government. The administration promised a dossier to back up its claims, but that too has been delayed twice amid reports of what The Times calls “a continuing debate about how well the information proved the Bush administration’s case.”

Call it a coincidence — though there are no coincidences — but it’s only fitting that the Libby trial began as news arrived of the death of E. Howard Hunt, the former C.I.A. agent whose bungling of the Watergate break-in sent him to jail and led to the unraveling of the Nixon presidency two years later. Still, we can’t push the parallels too far. No one died in Watergate. This time around our country can’t wait two more years for the White House to be stopped from playing its games with American blood.

Russert Says He Didn't Tell Libby About CIA Officer

Journalist Says He Learned Plame's Role After Leak

By Carol D. Leonnig and Amy Goldstein
Washington Post Staff Writers
Thursday, February 8, 2007; A04

Tim Russert, the Washington bureau chief for NBC News, yesterday swiftly and firmly rejected I. Lewis "Scooter" Libby's assertion that the journalist revealed the identity of an undercover CIA officer to him during a telephone call in the summer of 2003.

Testifying as the final, and perhaps most critical, prosecution witness in the perjury trial of Vice President Cheney's former chief of staff, Russert recounted their conversation that July and how a "very agitated" Libby called to complain about MSNBC's "Hardball." Russert said that the subject of the CIA officer, Valerie Plame, never came up and that he could not have told Libby anything about her.

"That would be impossible," Russert said, "because I didn't know who that person was until several days later."

Libby, who faces five felony counts of lying to investigators about his role in the leak of Plame's identity, has repeatedly testified that he shared information about Plame with other reporters only after hearing it from Russert during the telephone call. Libby has acknowledged that Cheney first told him about Plame's CIA job, in mid-June, but said that he had forgotten the information by the time he heard it from Russert.

Special Counsel Patrick J. Fitzgerald has argued that Libby fabricated the story about learning the information from Russert in the July 10, 2003, telephone call to protect himself from criminal charges. Passing along gossip from a reporter would not be a crime, but disclosing a CIA officer's classified status to reporters after learning it from the vice president could be.

Prosecutors spent three years investigating whether senior Bush administration officials deliberately revealed Plame's status to punish her husband, former ambassador Joseph C. Wilson IV. The CIA had sent him to Africa in 2002 to investigate reports that Iraq had been trying to buy nuclear material there. Wilson found no evidence of the activity and in July 2003 accused the administration of twisting his findings to justify going to war. Eight days after he went public with his accusations, his wife's name and CIA role were revealed in a syndicated column by Robert D. Novak.

In 11 minutes of direct testimony, Russert offered a vivid description of his telephone call with Libby, and said it rapidly "evolved into a consumer complaint." Russert said Libby, who was then Cheney's chief of staff, was upset that "Hardball" host Chris Matthews had said in two broadcasts that the vice president was responsible for Wilson's mission to Niger for the CIA and had made negative remarks about Libby.

"What the hell is going on with 'Hardball'?" Russert quoted Libby as having asked him. "Damn it. I'm tired of hearing my name over and over again. What is being said is not true."

In addition to testifying that he had not mentioned Plame to Libby, Russert said that Libby did not bring her up, either.

Russert said he first learned about Plame and her CIA job from the Novak column on July 14, and said "Wow" when he read it. He testified that if Libby had mentioned to him during their phone call four days earlier that Wilson's wife worked at the CIA, he would have pursued it, asking questions about how Plame's job might relate to Wilson's accusations against the White House.

"That would be a significant story," he said.

Under cross-examination, defense attorney Theodore V. Wells Jr. pressed Russert to say that he had, in fact, asked Libby about Wilson, because the former ambassador had become a major figure in the news. Russert said that he had not, and that he had been "in listening mode" during the call.

"What happened is exactly what I told you, sir," Russert said. "I did not know" about Plame. "I did not talk about it."

Jurors heard Russert's testimony on the same day they listened to Libby say in his own words that he had the utmost respect for Russert as a journalist. Libby's admiring description of Russert came in audiotapes of his March 2004 grand jury testimony, the last of which were played in court yesterday morning. Libby said it meant more to him to hear the information from a reporter he considered so credible.

"Tim Russert, in my view anyway, is one of the best of the newsmen, the most substantive," Libby testified. "It struck me that not only did he know this, and I didn't know it, but he also thought it was important."

In portions of the tapes played yesterday, Fitzgerald repeatedly pressed Libby to explain any role the vice president may have played in the leak. During Libby's two grand jury appearances in March 2004, the special counsel asked whether Cheney believed that Plame was the reason the CIA sent Wilson on the mission to Niger, and whether he considered Wilson unqualified or biased. Fitzgerald also pressed Libby on whether Cheney suggested or implied that he should tell journalists that Wilson is married to a CIA officer.

In response to each question, Libby can be heard on the tapes carefully choosing words that would not implicate Cheney, and saying he could not recollect whether the vice president suggested they make Plame's CIA role public.

In his grand jury testimony, Libby said that as the CIA leak investigation was beginning in September 2003, he knew the probe would look at more than just which administration official leaked the name to Novak. He said he was aware that the president had asked administration officials to come forward.

Libby said he privately went to the vice president twice to ask whether Cheney wanted to know all the details of his conversations with reporters about Wilson and Wilson's wife in late June and early July.

"I would have been happy to unburden myself of it," Libby testified. "He didn't want to hear it. . . . I have no problem telling him what happened."

But he said Cheney shook his head no. "You don't have to," Libby recalled his boss telling him.

Libby's attorneys have argued in the trial that Libby had no motive to lie because he believed the investigation was focused solely on identifying Novak's source.

Military Must Fill Iraq Civilian Jobs

Rice, Pentagon at Odds Over Plan

By Karen DeYoung
Washington Post Staff Writer
Thursday, February 8, 2007; A18

Secretary of State Condoleezza Rice told Congress yesterday that more than 40 percent of nearly 300 State Department positions to be added in Iraq as part of President Bush's new strategy will have to be filled by military personnel.

"Frankly, the agencies of the U.S. government cannot fill that many posts" as quickly as necessary, Rice said at a hearing of the House Foreign Relations Committee yesterday morning. "And so our agreement with the Department of Defense was that for a period of time . . . we would actually use reservists to fill those positions."

The State Department has asked the Pentagon for 129 people to fill slots in "business development, agribusiness, medicine, city management" and other areas for 10 new provincial reconstruction teams (PRTs), according to David Satterfield, Rice's coordinator for Iraq, who spoke to reporters in an afternoon briefing.

Deployments will last at least six months until Congress provides supplemental funding to pay for private contractors. The State Department has already filled its own slots on the new teams with 19 Foreign Service officers, Satterfield said, adding that the department is actively engaged in identifying appropriate contractors. The Agency for International Development will also supply personnel, he said.

The request for reservists to fill civilian-designated positions has been a source of tension between State and the tightly stretched Defense Department, which has already been asked to provide an additional 21,500 combat troops for Iraq.

In a Senate hearing Tuesday, Defense Secretary Robert M. Gates said that he shares the concerns raised by senior military officers over a Rice memo detailing the request. Their reaction, Gates said, "was mild compared to my reaction when I saw it."

Bush himself, Gates said, had mentioned during a White House meeting Monday that civilian agencies need to "step up to the task." Controversy over the request was first reported in Wednesday's New York Times.

State Department officials expressed surprise yesterday at Gates's remarks. At the hearing, Rice insisted there is no controversy, saying that agreement over the use of reservists for the PRTs had been reached as the new Iraq strategy was developed in December.

Not so, a Defense official countered, noting that Rice's memo to Gates arrived only recently. A State Department official acknowledged that the memo was dated Jan. 21, but said it was merely "formalizing on paper . . . discussions from back in December."

The disagreement raised the specter of past battles between then-Secretary of State Colin L. Powell and then-Defense Secretary Donald H. Rumsfeld, and those between Rumsfeld and Rice in Bush's second term. Amid yesterday's exchanges, both sides insisted that they were fully cooperating on the new strategy.

"We're trying to get synchronized in a way that is mutually beneficial," said one senior Defense official who spoke on the condition of anonymity. "We're talking every day and working together."

"Everybody just wants to pretend this never happened," a State Department official said of the tempest.

Late yesterday, both departments agreed that the 129 military personnel -- most of whom have not yet been identified and tasked -- may include active-duty troops as well as reservists. It is up to the military, the State Department agreed, to decide whom they can spare.

The administration has described the new Iraq plan as a "three-legged stool" in which additional combat troops will help provide a secure environment for the other two legs of political and economic development.

The plan calls for increased U.S. assistance through a doubling of the existing PRTs to 20 in Baghdad and around the country. By assisting designated Iraqi "moderates" who have eschewed sectarian and insurgent violence, the administration hopes to create employment and build local support for a unified Iraqi government.

The administration has asked Congress for $538 million in supplemental funds to pay for the program. The PRTs, which are projected to be up and running by the end of next month, will be housed with U.S. military combat brigades.

Saturday, February 03, 2007

Bush to Request Billions for Wars

Hill Democrats Express Skepticism

By Michael Abramowitz and Lori Montgomery
Washington Post Staff Writers
Saturday, February 3, 2007; A01

President Bush will ask Congress for close to three-quarters of a trillion dollars in defense spending on Monday, including $245 billion to cover the cost of fighting in Iraq and Afghanistan and other elements of the "global war on terror," senior administration officials said yesterday.

Democrats said the gigantic spending request will precipitate "sticker shock" on Capitol Hill, where lawmakers were already planning to scrutinize White House war-spending requests more zealously.

As expected, Bush will ask Congress for an additional $100 billion for Iraq and Afghanistan for the current fiscal year, to go with the $70 billion already approved. He will also seek an additional $145 billion for the wars in fiscal 2008, which begins Oct. 1, and administration officials warned that even more money probably will be needed.

Those totals come on top of regular spending for the Pentagon, which officials say will be $481 billion in 2008, a 10 percent increase over this year's budget.

If approved by Congress, the new war spending would bring the overall cost of fighting to about $745 billion since the Sept. 11, 2001, terrorist attacks on the United States -- adjusting for inflation, more than was spent on the Vietnam War.

The administration has obtained most of the funding for the wars in Iraq and Afghanistan through emergency or supplemental spending bills, which are not subject to the same level of congressional scrutiny as the regular budget. That practice has drawn sharp criticism from lawmakers and members of the bipartisan Iraq Study Group.

To answer those critics, White House budget officials say they will offer a much more detailed accounting of the costs of the war than they have previously provided, adding a special chapter to the thick budget books the president plans to send to Congress. But those details could be used by opponents of the war in arguing their case, according to lawmakers and other experts on Pentagon spending. Moreover, some war critics in Congress have served notice that they intend to use the spending bills containing the new money to try to bring the war in Iraq to a close.

"The defense budget request is the sleeper political issue of the year," said John J. Hamre, a former top Pentagon official who is chief executive of the Center for Strategic and International Studies. "When you add the various supplemental requests to the baseline defense budget, you get an astounding number, a number easily exploited by political opponents."

Top House Democrats, gathered yesterday in Williamsburg for a retreat, sounded skeptical about the new defense numbers and said they will not give the president a blank check.

"This is a huge number," said House Speaker Nancy Pelosi (D-Calif.), who noted that it includes an "opportunity cost" that would cut into Democrats' ability to fund domestic priorities.

"You can't help but note the irony: The president calls for us to rein in spending but sends us a budget for more than $700 billion in new spending," said House Budget Committee Chairman John M. Spratt Jr. (D-S.C.). "For Republicans who profess to oppose big spending, this will be a budget they will find hard to swallow."

Still, Spratt, Pelosi and other lawmakers did not rule out supporting the request. "We clearly want to make sure our troops have everything they need," said Rep. Nita M. Lowey (D-N.Y.), a member of the House Appropriations Committee.

Senate Majority Leader Harry M. Reid (D-Nev.) said in a statement that Democrats pledge to provide U.S. troops with "everything they need to do their jobs" but warned: "It is past time for the President to accurately and appropriately budget for this war and give the American people a full accounting of its true cost."

Though defense spending would see huge increases, the president's budget would allow a 1 percent increase for spending other than on defense, the first time in two years Bush has not sought cuts in government operations outside the Pentagon and homeland security.

Bush's budget also calls for slowing the rapid growth of Medicare, the federal health program for the elderly, by one percentage point. The president proposes to slice $66 billion over five years from previous projections by reducing payments to health-care providers such as hospitals and nursing homes and by charging wealthier seniors higher premiums for prescription-drug coverage.

The president wants to extend tax cuts that were enacted in 2001 and 2003 instead of letting them expire in 2010, as they are scheduled to do, and his budget would prevent the alternative minimum tax from expanding to ensnare millions of additional families next year. But after that, the president's budget would depend on billions of dollars in new revenue because of the rapid growth of the AMT.

That additional revenue -- along with projections for a healthy economy -- would allow Bush to keep his promise that the budget would be balanced by 2012, according to administration estimates, and that there would be a surplus, the first since Bush took office in 2001, despite a significant increase in military spending.

Since the attacks on the World Trade Center and the Pentagon, Congress has approved about $500 billion for military operations and terrorism-related activities, much of it appropriated as emergency spending. The Iraq Study Group, headed by former secretary of state James A. Baker III and former congressman Lee H. Hamilton, concluded in December that the public has not been "well-served" by that process and that the funds have received minimal scrutiny from either the White House or the Republican-controlled Congress.

Since Democrats took charge on Capitol Hill last month, they have promised to scrutinize the administration's spending requests more aggressively.

"We're going to be very focused in looking to see whether the funds are being spent wisely or simply going to fatten the pockets of big contractors like Halliburton," said Rep. Chris Van Hollen (D-Md.).

Vin Weber, a Republican strategist and former congressman, said he has long thought the coming defense bills would be among the most controversial facing the new Congress, which is now considering a nonbinding resolution to condemn Bush's decision to send more troops to Iraq.

Although some members have talked about tying the president's hands through the budget process, others are reluctant to try that for fear of being accused of not supporting the troops. If the situation in Iraq does not improve, however, many Democrats will be under pressure to restrict funding, Weber said.

Whatever happens on the battlefield, Senate Budget Committee Chairman Kent Conrad (D-N.D.) predicted, the United States will be paying for the war for years to come.

"There's going to be real sticker shock when we get down to what the truth is about the cost of this war," he said. "It's going to be way beyond what anybody has fessed up to."

Gen. Casey: Shinseki mistreated

Posted by Aamer Madhani at 6:15 am CST

For the record-and with quite a bit of prodding- Army chief of staff nominee Gen. George Casey made it known Thursday that he felt retired Gen. Eric Shinseki wasn’t treated all that nicely by the old guard in the Defense Department.

Shinkseki, of course, was the Army general who under persistent questioning from Sen. Carl Levin (D-Mich.) less than month before the U.S. invasion of Iraq told the Senate Armed Services Committee that he thought it would take hundreds of thousands of U.S. troops to keep the peace in post-war Iraq.

Former Defense Secretary Donald Rumsfeld and his deputy, Paul Wolfowitz, would deride Shinseki as being wildly off-the-mark to speculate it would take more troops to occupy Iraq than to topple Saddam Hussein’s regime.

The general, who was due to end his term as the chief of the army four months later, quietly retired after contradicting Rumsfeld’s plan to operate with a lighter force. Not one top civilian from the defense department attended his retirement ceremony, seen as a slap in the face by some top military officers.

Many critics of the White House’s handling of the war, including Levin, have pointed to Shinseki’s treatment as setting an atmosphere of fear among commanders on the ground in Iraq.

At Thursday's confirmation hearing for Casey, who is finishing up a troubled 2-1/2 year tour as the top commander in Iraq, it was Levin, now the chairman of the Senate Armed Services Committee, who asked Casey what he thought of Shinseki’s treatment.

For much of Casey’s tenure in Iraq, he was on the record against increasing the U.S. troop level in Iraq. But in recent weeks, Casey has gotten firmly behind President Bush’s plan to send 21,500 more troops to Baghdad and the Al Anbar province.

Here's the exchange between Casey and Levin:

SEN. LEVIN: You've talked a little bit about what General Shinseki said here about needing more troops, about the way he was treated. Do you have any feelings about the way he was treated after he spoke honestly about his opinion?

GEN. CASEY: I don't think he was treated well.

SEN. LEVIN: You've indicated on a number of occasions that your efforts were thwarted by Iraqi leaders…By the way, I couldn't agree with you more relative to Shinseki. I think he was treated miserably, and that message, I think, was an insult to everybody in uniform. But I'll leave it at that. You gave me an answer which is perfectly consistent with what I just said, although perhaps not as purple in its prose.

Friday, February 02, 2007

James Kunstler

January29, 2007
Housing Fetish
Martha Stewart was not an accident of history. She came along in the late 20th century as a kind of spirit guide to a society whose bad choices and misinvestments had led to the wholesale destruction of any place in America that people called home. And by this I mean the towns, neighborhoods, and city districts of our land, not just the individual dwellings.
By the 1980s, America had been converted, with monstrous efficiency, into what I have called a geography of nowhere, a panorama of identical highway strips, malls, big box warehouses, fried food out-parcels, and free parking wastelands -- all serving the endless new subdivision pods of single family houses. The ultimate result was a landscape full of places no longer worth caring about.
The program was carried out ruthlessly by big corporations and their hand-maidens, the road-builders, the house-builders, and the brotherhood of traffic engineers, but it was fully supported by the public at large and their elected local officials on the planning and zoning boards. It was both an "emergent" economic ecology -- a systemic response to decades of cheap oil and favorable geopolitics -- and a consciously mapped-out attempt to create a kind of Utopia, in this case a suburban Utopia of Happy Motoring. Whatever it was, nothing like it had ever been seen before.
It had many consequences but one of the worst was the impoverishment of public space. From the social point-of-view, it turned out that housing pods and highway strips lined with strip malls were a poor substitute for main street towns or walkable neighborhoods. Under the insane dictates of single-use zoning, each individual was trapped in a car for hours each day, often in vexing traffic with other isolated individuals, and also often in the company of little children with a low tolerance to being trapped and vexed. Older children lacking drivers' licenses lost access to other social realms beyond the subdivision of houses. The adventurous ones assembled in the bosky berms between the WalMarts and the KMarts to smoke a variety of drugs, worship Satan, and torture kitty cats. The rest were relegated to the room at home with the one-eyed-monster, the television.
The case was not much better for the adults. By the 1980s, both parents had to be out of the house generating income to pay the mortgage and especially to pay for the multiple cars needed to service the family headquarters. Mom went to work not because Betty Friedan said that actuarial science was more fun than managing a house, but because wages were stagnant and Dad could no longer make the family's ends meet.
Out of this sad and desperate circumstance, Martha Stewart arose. The promise of Stewartism was that if the public realm was now inaccessible or meaningless, then one should make the most of the private realm. This was accepted as self-evident by enough people to make Martha extremely wealthy. Luckily for Martha, her job was at home. She didn't have to drive thirty-eight miles to a cubicle in the billing office of Ramjack Medical and spend eight hours each day minutely examining spreadsheets on a computer monitor.
As her wealth and success increased, Martha's resources for doing things in and around the house enabled her to spin a fantasy of uber-homemaking that America found irresistible -- despite the fact that everyone else spent so much time away from the house that it was nearly impossible for them to emulate the goddess of hearth and home. Instead, they devoured her many publications and TV shows, finding consolation in all the beautifully portrayed scenes of Martha enacting the fantasy for them.
History is full of ironies and paradoxes, and one of them is that this avatar of home-making was relentlessly hunted down by federal prosecutors for allegedly scamming $40,000 on an insider stock sale, while true major league corporate CEO grifters walked off legally into their golden sunsets with hundreds of millions in back-dated stock options and other booty winkled out of feckless boards of directors.
It is also an ironic coincidence that at the exact time Martha Stewart went off to jail, the American home fantasy went totally off the rails. The systematic shut-down of America's manufacturing sector led policy-makers to insidiously try to replace it with a hyped-up housing industry. They kicked off the program by dropping the prime interest rate as close to zero as possible, making money extremely cheap to borrow. Everybody need a home, the logic went, including those who ordinarily wouldn't have qualified for regular mortgages that required substantial down payments, proof of employment, and other formalities. So the answer was to engineer a financing modality that would allow anyone to buy a house -- and thereby ramp up the "homebuilding" industry into super-hyper-turbo-overdrive, which would incidentally generate even more potential house-buyers among the many framers, trimmers, plumbers, electricians, painters, real estate agents, and sellers of Corian countertops, who made good wages or commissions on delivering the "product." Meanwhile, the new housing pods in evermore remote locations, where there were no towns, could be accessorized with all the requisite service infrastructure -- new highways, strip malls, Pizza Huts, WalMarts, Best Buys, and video rental joints, all of which had to be built by somebody, making for additional contracts, incomes, and potential house-buyers.
Meanwhile the financial wizards "innovated" methods for dispersing the risk associated with iffy loans (made to people with poor prospects for repayment) by bundling the mortgages into odd-lots and repackaging them as tradable securities, which could be used to "leverage" other finance "plays" yet more exotically abstracted from the actual making-and-selling real things of value. At the same time, the wizards converted the mortgage insurance business into a casino of swappable risk, materializing more fees and profits for themselves out of thin air.
This extremely complex racket worked well for a brief period of time, namely the period when the price of houses steadily increased, year after year, promoting the expectation that rising house "equity" was a permanent condition of life, and that the dependable annual increase in value could be "put to work" in the form of borrowing more money against it. The supposed increase in value protected those trafficking in swappable risk, since increased value banished the risk of loss, and the notion of moral hazard disappeared into the dumpster of history.
The whole racket floundered when several things changed or went awry. One was the sheer saturation of markets. Sooner or later, everybody who might possibly buy a house, got a house. The racket had had the perverse effect of stealing demand from the future by making house-buyers of those who were not really ready to buy -- e.g. very young adults with no savings or people with bad credit records. And not every immigrant from Bangladesh, El Salvador, or the Central African Republic could be positioned as a house buyer -- even under the now nearly nonexistent lending standards.
The next thing that went wrong was affordability. If absolutely everybody's house rose ten percent in value every year for years and years -- including every "pre-owned" raised ranch shitbox -- then sooner or later every house in America would cost at least half a million dollars. And with wages stagnant among the 90 percent who worked outside the financial services industry, sooner or later no house would be affordable to that 90 percent majority under even the most supernaturally lax lending provisions.
The final problem would come when central bankers had to raise interest rates so that customers for debt would accept the risk of investing in a national economy that was increasingly seen to be based on the engineering of modalities to get something for nothing.
This is the point we're at now. The whole system was greatly underwritten by the final peaking of available energy, chiefly oil, which made it possible in the first place to sell so much real estate in the farthest-flung outlands of the American landscape, including not only desert and swamp, but also prime farmland. The housing bubble began to collapse at exactly the moment that the world reached its all-time oil production peak: the summer of 2005.
Now the house market is both saturated and wildly mis-valued. Most of the new houses were built in places that will be logistically unfavorable as motoring becomes less affordable. Many of them are too large to heat as home heating becomes less affordable. The houses are overpriced. Those who must sell must drop their prices. Many such sellers will have to sell for less than the obligations still owed on their houses. The speculators have necessarily fallen by the wayside, because speculation is not possible in a falling market. Those who expected to sell old houses in older places for a half a million dollars or more to buy new houses in new places will have to stay put. As prices fall, the few potential buyers still left will step back in anticipation of further price drops. This "death spiral" will be self-reinforcing and take years to play out. As it occurs, many of the creatively-engineered contracts will be welshed on. Lenders will choke on "non-performing" mortgages. Mortgage-backed securities will lose their credibility and turn into junk or worse (worse-than-junk being certificates with no value whatsoever, not even pennies on the dollar). Bets, plays, leverages, positions, and hedges based on the idea that all these loans would continue performing will be wiped out.
The final result will be a dashed American Dream -- of a safe life in a happy home. Poor Martha Stewart will be seen as the goddess who failed. Well, she already has, really, having gone to prison and afterward retreated into her omnimedia fortress of corporate refuge (basically joining the enemy). As the middle class chokes and gets crushed under the weight of its unpayable debts and falling standards of living, Martha may be lucky to avoid getting eaten, along with a long list of other celebrity porkchops that an angry and grievance-filled public will turn on.
Finally, the idea that people could live happily ever after in "homes" devoid of any larger community context, or reality-based economic context, will fail. Perhaps we will even stop calling houses "homes" -- as we have been conditioned to do by the realtors hoping to manipulate all our subconscious desires for safety, familiarity, and order in this world of chaos and sorrow.

Thursday, February 01, 2007

Boston Panic

"All that we have mentioned has made it easy for us to provoke and bait this administration. All that we have to do is to send two mujahidin to the furthest point east to raise a piece of cloth on which is written al-Qaida, in order to make the generals race there to cause America to suffer human, economic, and political losses without their achieving for it anything of note..." Osama bin Laden

Livid about a publicity campaign that disrupted the city by stirring fears of terrorism, Boston officials vowed to prosecute those responsible and seek restitution, while others mocked authorities on Thursday for what they called an overreaction.

Officials found a slew of blinking electronic signs adorning bridges and other high-profile spots across the city Wednesday, prompting the closing of a highway and part of the Charles River and the deployment of bomb squads.

The 38 signs were part of a promotion for the Cartoon Network TV show "Aqua Teen Hunger Force," a surreal series about a talking milkshake, a box of fries and a meatball. The network's parent is Turner Broadcasting Systems Inc.

"It is outrageous, in a post 9/11 world, that a company would use this type of marketing scheme," Mayor Thomas Menino said. "I am prepared to take any and all legal action against Turner Broadcasting and its affiliates for any and all expenses incurred."

The 1-foot tall signs, which were lit up at night, resembled a circuit board, with protruding wires and batteries. Most depicted a boxy, cartoon character giving passersby the finger - a more obvious sight when darkness fell.

Two men who put up the promotions were to be arraigned Thursday on charges of placing a hoax device and disorderly conduct. Authorities say Peter Berdovsky, 27, of Arlington, and Sean Stevens, 28, of Charlestown, were hired to place the devices.

Berdovsky, an artist, told The Boston Globe he was hired by a marketing company and said he was "kind of freaked out" by the furor.

"I find it kind of ridiculous that they're making these statements on TV that we must not be safe from terrorism, because they were up there for three weeks and no one noticed. It's pretty commonsensical to look at them and say this is a piece of art and installation," he said.

Fans of the show mocked what they called an overreaction as about a dozen gathered outside Charlestown District Court on Thursday morning with signs saying "1-31-07 Never Forget" and "Free Peter."

"We're the laughing stock," said Tracy O'Connor, 34.

"It's almost too easy to be a terrorist these days," said Jennifer Mason, 26. "You stick a box on a corner and you can shut down a city."

O'Connor said there's nothing wrong with being vigilant, but said she said it was ridiculous to shut down a city "when anyone under the age of 35 knew this was a joke the second they saw it."

Authorities vowed to hold Turner accountable for what Menino said was "corporate greed," that led to at least $750,000 in police costs.

As soon as Turner realized the Boston problem around 5 p.m., it said, law enforcement officials were told of their locations in 10 cities where it said the devices had been placed for two to three weeks: Boston, New York, Los Angeles, Chicago, Atlanta, Seattle, Portland, Ore., Austin, Texas, San Francisco and Philadelphia.

"We apologize to the citizens of Boston that part of a marketing campaign was mistaken for a public danger," said Phil Kent, chairman of Turner, a division of Time Warner (nyse: TWX - news - people ) Inc.

Kent said the marketing company that placed the signs, Interference Inc., was ordered to remove them immediately.

Interference had no comment. A woman who answered the phone at the New York-based firm's offices Wednesday afternoon said the firm's CEO was out of town and would not be able to comment until Thursday.

Messages seeking additional comment from the Atlanta-based Cartoon Network were left with several publicists.

A voice mail box for Berdovsky was full Wednesday night. The Associated Press was unable to find whether Stevens had a lawyer.

Authorities are investigating whether Turner or other companies should be criminally charged, Attorney General Martha Coakley said. "We're not going to let this go without looking at the further roots of how this happened to cause the panic in this city," Coakley said.

In Seattle and several suburbs, the removal of the signs was low-key. "We haven't had any calls to 911 regarding this," Seattle police spokesman Sean Whitcomb said Wednesday.

Police in Philadelphia said they believed their city had 56 devices.

The New York Police Department removed 41 of the devices - 38 in Manhattan and three in Brooklyn, according to spokesman Paul Browne. The NYPD had not received any complaints. But when it became aware of the situation, it contacted Cartoon Network, which provided the locations so the devices could be removed.

"Aqua Teen Hunger Force" is a cartoon with a cultish following that airs as part of a block of programs for adults on the Cartoon Network. A feature length film based on the show is slated for release March 23.

Associated Press Writer Tom Hays in New York contributed to this report.

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