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FRONTLINE INVESTIGATES THE ROOTS OF THE FINANCIAL CRISIS

FRONTLINE Presents
The Warning

Tuesday, October 20, 2009, at 9 P.M. ET on PBS

In the devastating aftermath of the economic meltdown, FRONTLINE sifts through the ashes for clues about why it happened and examines critical moments when it might have gone much differently.

In The Warning, airing Tuesday, Oct. 20, 2009, at 9 P.M. ET on PBS (check local listings), veteran FRONTLINE producer Michael Kirk (Inside the Meltdown, Breaking the Bank) unearths the hidden history of the nation's worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multi-trillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

http://www.pbs.org/...

(video clip previews over the fold ...)

FRONTLINE | "The Warning" | PBS

http://www.youtube.com/...

FRONTLINE | "The Warning": Sneak Peek 1 | PBS

http://www.youtube.com/...


Brooksley Born tried to Regulate the dangerous OTC Derivatives market --

Greenspan and Rubin stopped her!

Was the Sky really Falling? Was it about to, if Derivatives were left Unchecked?

Credit Crisis Cassandra
Brooksley Born's Unheeded Warning Is a Rueful Echo 10 Years On
By Manuel Roig-Franzia, Washington Post Staff Writer -May 26, 2009

A little more than a decade ago, Born foresaw a financial cataclysm, accurately predicting that exotic investments known as over-the-counter derivatives could play a crucial role in a crisis much like the one now convulsing America. Her efforts to stop that from happening ran afoul of some of the most influential men in Washington, men with names like Greenspan and Levitt and Rubin and Summers -- the same Larry Summers who is now a key economic adviser to President Obama.

She was the head of a tiny government agency who wanted to regulate the derivatives. They were the men who stopped her.

http://www.washingtonpost.com/...


The 'Oracle of Omaha', Warren Buffet gave a prophetic pronouncement back in 2003 about derivatives market, seeing the exponential dangers of the new-fangled class of investment, which he called: "financial weapons of mass destruction".  

Buffett warns on investment 'time bomb'
BBC - 4 March, 2003

The derivatives market has exploded in recent years, with investment banks selling billions of dollars worth of these investments to clients as a way to off-load or manage market risk.

But Mr Buffett argues that such highly complex financial instruments are time bombs and "financial weapons of mass destruction" that could harm not only their buyers and sellers, but the whole economic system.

Contracts devised by 'madmen'

Derivatives are financial instruments that allow investors to speculate on the future price of, for example, commodities or shares - without buying the underlying investment.
[...]
Some derivatives contracts, Mr Buffett says, appear to have been devised by "madmen".

He warns that derivatives can push companies onto a "spiral that can lead to a corporate meltdown",
[...]
Derivatives also pose a dangerous incentive for false accounting, Mr Buffett says.

The profits and losses from derivatives deals are booked straight away, even though no actual money changes hand. In many cases the real costs hit companies only many years later.

http://news.bbc.co.uk/...


SO why are these Derivative Bets, SO Dangerous?


Derivatives: Buffet calls them financial Weapons of Mass Destruction
By John Riley, Chief Strategist -- 01/18/08

What are Derivatives?

Derivatives are private contracts (bets) between financial institutions. They can be on the direction of commodities, the stock markets or currencies, but the banks’ favorites are interest rates. (You can go to the Comptroller of the Currency website to get their quarterly reports and see for yourself what Wall Street hopes you never see.)
[...]
The scariest part of derivatives is their leverage. Like exchange traded options, derivative contracts can control assets for only a fraction of the contract value. The banks take the leverage to an extreme and have very little in assets backing up their derivative portfolios. According to the Comptroller, the top 25 banks have assets that only amount to about 6% of the Notional Value of their derivatives.
[...]
Derivatives have barely any regulation on them. For years, Congress tried and Greenspan stood in the way. Banks barely mention them in the annual reports except for a footnote.

Thanks to the lack of regulation, derivatives have grown dramatically. There has been a 473% increase in the Notional Value of derivatives at the top 25 banks since 1999.

http://www.rapidtrends.com/...


Amazing, as of the beginning of 2008, the Top 25 banks ONLY HAD 6% Collateral to back up all their over-leveraged Derivative BETS! That includes all those notorious Credit Default Swaps too, tucked in among those Credit Derivatives. The Bankers put only 6% Down, to back up their betting!

In the old days, before Deregulation, betting trading "on margin", required minimum levels of capital assets on hand to back up, extreme multiples of trading. But with Deregulation, those quaint requirements went out the window.

You got 1 Dollar, and want to bet $40 -- No Problem! How about $50?  How about $100?  Step right up, as long as you have the prestige of an Investment Bank, or a Billion Dollar Hedge Fund, to back you up. ... "Your Word is your Bond" -- in this unwatched and unregulated OTC arena. Or so we were told.

The sheer speculative arrogance of the Top Wall Street Bankers is truly astronomical when you chart it out. The Comptroller of the Currency (pdf), of US Dept of Treasury, has been busy collecting the data, if anyone cares to take the time to chart it out, like I have. (By the way a Trillion, is an awful big number -- It's a Million, Millions!)

The Top 5 Banks -- March 2008

The 6th-10th Over-leveraged Banks -- March 2008

The 11th-15th sort-of-leveraged Banks -- March 2008


The Top 5 Banks vs ALL the Rest of the Banks -- March 2008

The Top 5 Banks cornering 96.9% of the Derivatives -- March 2008


The NEW Top 5 Banks -- June 2009

Data source: Comptroller of the Currency (pdf), of US Dept of Treasury, has issued an updated report as of June 2009.


THAT IS WHY Brooksley Born and Warren Buffet, WARNED about the Toxicity of the Toxic Assets, well ahead of time -- TO DO SOMETHING!

AND THAT IS WHY the Greenspan and Company -- did ALL they could to Ignore and then Shelf their dire Warnings!


AND THAT IS WHY you should Watch FRONTLINE -- this week!

FRONTLINE | "The Warning": Sneak Peek 2 | PBS

http://www.youtube.com/...


FRONTLINE INVESTIGATES THE ROOTS OF THE FINANCIAL CRISIS

FRONTLINE Presents
The Warning

Tuesday, October 20, 2009, at 9 P.M. ET on PBS

That's tomorrow!

SET you DVR's NOW!


......................... also posted on docudharma

Originally posted to Digging up those Facts ... for over 8 years. on Mon Oct 19, 2009 at 07:13 PM PDT.

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    In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

    by jamess on Mon Oct 19, 2009 at 07:13:24 PM PDT

    •  Excellent diary! nt (12+ / 0-)

      "allow nothing to be in your life that you cannot walk out of in 30 seconds if you spot the heat around the corner". - movie HEAT

      by HEAT on Mon Oct 19, 2009 at 07:41:19 PM PDT

      [ Parent ]

    •  Thanks for letting us know! (13+ / 0-)

      "We the People of the United States...." -U.S. Constitution

      by elwior on Mon Oct 19, 2009 at 07:41:53 PM PDT

      [ Parent ]

      •  your welcome (21+ / 0-)

        thanks for saying!

        hat-tip to Thom Hartmann

        who put me on the trail, today.

        In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

        by jamess on Mon Oct 19, 2009 at 07:44:08 PM PDT

        [ Parent ]

        •  jamess - great heads up: But I think your diary (39+ / 0-)

          emphasizes exactly the wrong things ... but I say this with all due respect.

          You are providing some of the factual deconstruction on derivatives as "weapons of mass destruction"... using charts and graphs to illustrate.

          But the real story -- and one we should BRACE for -- is one we already something about:

          Let's call this Frontline Expose "Part A".

          "Part B" is the dismantling of regulations that prevented banks from being in the brokerage business and financial institutions from owning banks.

          "Part C" are our good friends at the Fed who looked the other way, and the greedy smartass bastards concocting these schemes, replicating the dotcom bubble which inevitably would burst, but it wouldn't matter because they would have made a killing all through the runup to bust.

          Alan Grayson has done a masterful job of deposing Bernake and Paulson and Geitner and heads of the Wall Street Banks -- and thank god there is SOMEONE actually smart about all this in Congress -- who understood all the intricacies and could play it with a poker face drawing these bastards into admissions of strange things like, "we dont know exactly where the TARP money went".  So we all know now (for those who didn't know already) it's a dirty rigged game --with Wall Street Bankers and Fed and various Congress men and women all conspiring to maximize profits for the inside circle. A perfect storm of what Michael Moore has now essayed in his latest film.

          We still don't have any answers from these assholes -- and so there are two major points that, to me, this coming expose is going to blow the lid off:  The role of U.S. Presidents in enabling all of this stuff to go on:

          (a) Clinton, just from that short trailer, is going to get nailed -- and he should get nailed for the legislation that removed all the safeguards that were designed to prevent this predictable greed machine from avalanching.

          (b) We already know Bush Jr is a crook who acted like, as usual, there are a few bad apples, but otherwise things are swell. "We're turnin' the corner!"

          (c) but Obama is going to get massive fallout form this series as well.. because he would have to be a complete idiot to not know the complicity of Paulson, Bernake, Geitner in this debacle -- yet who does he choose as his financial standard bearers? All the foxes guarding the hen-house. It's a crime what he's done, and it confirms a lot about what we already have learned about Obama the not-make-waves Corporatist. Despite the good things he does, his choices of personnel to extract us from this mess were devastatingly bad. (Because if he's not stupid -- and he's not -- then he has to know they were knee deep in it all, yet these were his choices and he's still gung ho on Bernake).

          All I can say is thank god again that Grayson appeared on the horizon around April and quietly but surely started grilling every single one of the financial players. As many have noted, the unlikely partnership of Grayson and Ron Paul, who has pushed for an audit of the Fed, is the strongest thing to date that anyone in US Govt is doing to stop this further charade, and wind back the tape and issue some penalties for all this stuff Obama would flick off his shoulder as water under the bridge -- when right now we need a mop.

          Well, even a thousand mops do no good to dry the deck when the Fed and wall street are allowed to keep dumping tons of water back onto deck.

          Excuse the lenght of this comment. I am not suggesting that what you have essayed above is off the mark. But that you have focused on the widgets that various people handled that got us into trouble. It's not the widgets -- it's the widget rules makers.

          And I predict Clinton is going to get slammed -- and the blowback is going to be the right wing revisiting their meme in response to the Democratic Party mantra of the past decade that Clinton ushered in unprecedented prosperity and a technical surplus -- while we all decried Bush for depleting that at his endless ATM sending it all to war.

          FACTS don't drive the narrative in America, we should know by now. Perception does. And the GOP continues to master the art of deceptive messaging -- which has managed to keep them in the game despite what should have been a slam dunk on health care had not the Harry Reids and Obamas neen obsessed with concensus and 60 votes.

          The GOP message machine -- is going to unleash a massive campaign to show how Clinton brought all this on -- and this will be delivered 24/7 on Fox News... and the other end of the store will be Obama keeping on deck the very people who helped sink the ship.

          To me that is the hidden story here -- and I suggest we all prepare for it, because it's not going to be about the mechanics of derivatives once it's funneled into the court of public opinion on the cable shows.

          my 2 cents... But I sincerely thank you for posting the preview clip from this series. It's about time America sees how this dirty game has been played for decades and decades.

          --
          -- FEEDBACK: CHANGE.gov - empty "marketing" of citizen access, or real idea-submit mechanism?

          by rhfactor on Mon Oct 19, 2009 at 09:48:07 PM PDT

          [ Parent ]

          •  Hey, post this as a diary, too! nt (17+ / 0-)

            A nation is a mutual undertaking. - Roger Ebert

            by Bob Love on Mon Oct 19, 2009 at 10:00:53 PM PDT

            [ Parent ]

            •  ( * ) (18+ / 0-)

              that's nice to say. I don't post diaries anymore; it's too stressful and too time-consuming to then address questions and comments fro the rest of the day. Hats off to everyone who does do that. I can't manage it. And besides, I'm usually too pissed off that it pisses everyone else off :) So I now and then post comments, and at least i feel satisfied in expressing some thoughts...

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              -- FEEDBACK: CHANGE.gov - empty "marketing" of citizen access, or real idea-submit mechanism?

              by rhfactor on Mon Oct 19, 2009 at 10:43:59 PM PDT

              [ Parent ]

              •  Clinton was the beginning of the end of (10+ / 0-)

                the Democratic Party as we knew it.  He created the Wall Street Democrats and that is what Obama is.  

                They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich

                by dkmich on Tue Oct 20, 2009 at 01:51:06 AM PDT

                [ Parent ]

                •  i totally agree -- i have been stunned for (16+ / 0-)

                  YEARS why people have worshipped him, and i would routinely PUKE when I'd hear him, at dailykos, lionized as "Big Dawg" .. my view would be, "fuck that"... he's always been in whatever line leads him to the most personal adulation. That's why he took out Howard Dean with his DLC comrades -- Dean was becoming more sought after than "Big Dawg", big dawg didn't like that. And, most impt, Dean was and still is an ANTI-corporatist, so Clinton Democrats were back then in 2002-2004, and are still now, enemies of the Dean progressives. that's my view. but it's 2:30am here and i was skyping someone overseas, now i am off to bed.  dkmich, the more I review in my mind all the things Kucinich has spoken about and more importantly ACTED on, walking his talk, the more saddened I am that he was more or less corporate-media-cursed from having even a SHOT at President. You had the right man as your standard bearer. If I were him, I would have a hard time persisting -- yet he does. A lot to admire about him. thought i would add that, though it is way off topic... well, then again, not. I doubt HE'D be rewarding Goldman Sachs execs with insider jobs in the US Fed Govt, courtesy of Obama. wtf is up with that. oh never mind. refer to your post title above. and the body of your post. that's the best summary of the past 15 years. And a damning statement on what caused our democracy to crumble. and it has crumbled. I don't see it rebuilding, i really don't. If we were to primary Obama and elect Alan Grayson prez, that would perhaps chnage my mind.

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                  by rhfactor on Tue Oct 20, 2009 at 02:33:19 AM PDT

                  [ Parent ]

                  •  Your frustration and pain.................... (13+ / 0-)

                    ................ is shared by many many citizens.

                    There are old political comic strips showing fat cat Robber Barons controling Congress with their bulging pockets of money. We are living the repeat addition.

                    When we listened to Obama, we heard a newage FDR. Though he was just speaking politicaleze. We have been snookered and it sucks a big one.

                    May I add a point I occasionally make about the birth of our nation.

                    This country was founded primarily for 2 reasons.

                    1. To fight against the trade practices of the East India Company (that era's Globalism).
                    1. Tyranical Monarchical rule that refused to acknowledge rule of law and habius corpus and the use of courts to arbitrate(our age's Emperor Presidency.

                    So we are back at the beginning, and I'd suggest Ghandi's revolution as a recourse to regaining our nation, as opposed to the French way. But I am only one voice.  

                    Corporate money for campaigns does not equal free speach, it is legalized bribery.

                    by socks on Tue Oct 20, 2009 at 03:10:22 AM PDT

                    [ Parent ]

                    •  Back at the beginning, yes. And your "2 reasons" (15+ / 0-)

                      should give everyone (me included of course) pause to reflect.

                      It's odd how the most basic concepts of how this country was founded and why are diluted and diluted further generation after generation.

                      I only have to go back to the greatest marketing slogan of its time:

                             

                      No taxation without representation.

                      I pay a lot in taxes, and I have had no feeling at all of being represented. And I'm not exaggerating. Pelosi is my Congresswoman and I don't have any affinity for her policies or process or methods. Everytime I hear how she's really making a case for the Public Option, I keep asking myself "why?". Why would she do THAT yet allow and be lah-dee-dah fine with FISA abuse and retroactive telecom immunity? Did she fight for that? The site where the AT&T digital fiber split was made, and routed into the locked NSA room is the AT&T Switching Station on Folsom Street in downtown San Francisco. This building --- is a mere 6 blocks from DiFi's SF Senate office... and aprox 15 blocks from Madame Decider's office. And I am to believe that with the way politics works, bribery, scratch my back I'll scratch yours, that neither of these fine public servants had any inkling that this was going on a stone's throw away?

                      What gets me is that IT STILL is going on!  After it was exposed by Mark Klein, a fiber optic specialist at AT&T, our Congress did nothing, other than the make a new law that said the abuses were fine. And Obama rubber stamps it when he gets in office?

                      I'm sorry, that is but one example among many of how I have no representation at all for my values and beliefs and opinions. I may have a person DESIGNATED as my "representative", but this person, and one of my two US Senators, are immovable, they don't hold townhall meetings, they don't query their district, you're lucky to get a phony letter mailed to you up to 3-4 months after calling in to say "I strongly urge Rep Pelosi to vote against that measure, and I like to speak to someone about this policy" --- If you get a letter back at all, it will thank you for taking part in that most sacred duty of the citizen -- to be a part of representative democracy.

                      Is anybody saying to me "hey, you can forgo your taxes this year, since no one is representing you in Washington?"... Of course not.

                      As for the method of reckoning with our modern reality of being back at the beginning? I know it would take a lot of time & effort to map out with great specific detail how you believe the Ghandi method, incredibly honorable as it is, would work in this case. There was no neuro-linguistic messaging back then, or scientific readouts from sensors how different parts of our brains light up to certain emotional appeals, there was no 24/7 cable.

                      How would you gain leverage?  I mean in under 50 years? Because it you're talking about it taking 50-100 years, the last thing I am interested is trying to resuscitate this immoral and un-law-abiding country we live in.

                      In one of my longest comments here, prob as long as 2 diaries, some time in this past year, I did mapout what i consider the only non-violent method of overthrow of our current non-working system. Maybe you can find it with it's keyword "i-org" ... it's the result of all I learned from the Dean Campaign of what worked, what didn't, and most impt, why liberal/or at least Democratic organizations routinely don't collaborate. Look at the amazing initiatives Jane & Firedoglake undertook this year... did Kos join in to add leverage? F*** no. He doesn't do anything that adds leverage to overall progressive power. I heard it directly in 2005 that DFA wouldn't work with MoveOn because MoveOn refused to work with DFA on combined strategies to influence Congress and policy. Anyway, I tried many things for 2 years after, like a crazy chef in a kitchen adding ketchup to chocolate and sauerkraut to try to arrive at the missing ingredient. And I ate many a crappy creation, and had those ingredients thrown at me too in those post-Dean campaign days/years.

                      But I sent this quest to my subconscious mind and then one day while kayaking on a quiet lake in south Tahoe, it hit me. And I will leave it at that. Wny? becasue it's 3:45 am, and i have a morning meeting -- AND -- because I have articulated it before -- and got two people who really seemed keen on it. Any follow-through from either one? Guess.

                      Anyway, i-org would enable small-to-very largescale cross-organizational projects to be organized, staffed and carried out in ways that combine various of the best of breed tools created by the netroots from 2002 to today... But more important, for those who were interested (since not everyone would be), we would create a para-government of sorts, creating our own agenda for what is needed in America, and begin executing towards those goals. One of the finest examples of new hybrid methods of accomplishing long-clogged-up but highly needed projects is Brad Pitt's passion project in New Orleans called "Make it Right". That guy has bypassed completely the stupid ineffectual govt, and he's bypassed the typical corporate donors. And he didnt just put in his own moiney, though he did SEED it that way -- But the design of the whole concept from beginning to end, from vision to specific methodologies -- is nothing short of genius. Though he's generally appreciated nationally as a smart guy, until one investigates what he's done in New Orleans to build new housing in the Lower Ninth Ward in new Orleans -- which got wiped out by Katrina, and then virtually wiped out again of all Federal and local planning for post-Katrina rehabitation in New Orleans -- it's impossible to grasp the depth to which he's driven an entirely new methodology of getting things done.

                      if for no other reason than a good read, and inspiration at a time when I have no representation at all (perhaps you do not either), google it, it ight be MIR9.org  (make it right 9th ward)

                      (Now i am really truly sorry for going so off-topic here. But in my defense, i got "provoked" by dkmich. He therefore must take complete and total blame)

                      --
                      -- FEEDBACK: CHANGE.gov - empty "marketing" of citizen access, or real idea-submit mechanism?

                      by rhfactor on Tue Oct 20, 2009 at 04:01:16 AM PDT

                      [ Parent ]

                      •  Create a para-party? (2+ / 0-)
                        Recommended by:
                        Lujane, CIndyCasella

                        Anyway, i-org would enable small-to-very largescale cross-organizational projects to be organized, staffed and carried out in ways that combine various of the best of breed tools created by the netroots from 2002 to today... But more important, for those who were interested (since not everyone would be), we would create a para-government of sorts, creating our own agenda for what is needed in America, and begin executing towards those goals.

                        I moved away from progressive CA initiative campaigns after the early '90s because there was more infighting among progressives at the time than among moderate Republicans. (And there were still some of them at the time.) The paragraph above describes what has needed to be done for many years.

                        •  i mean to reply earlier (0+ / 0-)

                          sorry but i couldn't monitor the thread yesterday or today. thanks for your reply.

                          When I say para-govt, it really isn't para-party. It starts with an assunmption that

                          1. our current govt system is broken and doesn't work. we do not have a functioning representative democracy.
                          1. that broken govt never follows the agenda that I and many others favor, and I have learned that all the emails and letters and phine calls and faxes and office visits and protests in world do not MOVE or influence them to REPRESENT ME AN MY QUESTS FOR AMERICA.
                          1.  Thus, a para-govt would be people across the ciountry working out a national agenda, a 1 year plan, 5 year plan, 10 year plan, and 15 year plan. Various best of breed internet tools would be used to help push up the most favored issues etc. (take MoveOn's and consider that a Model T Ford... it's a terroibly crude filter-up system)
                          1.  Then projects are undertaiken that reflect action steps that move toward those goals. And the entire agenda is developed without any concern whatsoever for state or US COngress or what a Presiden t wants. Thery are all bypassed completely out of the loop. because the goal is not to persuade or influence them. that's a lost battle.
                          1. THID DOES NOT MEAN that US govt is ignored. The money is still there. And if there are people who might cnsider themslevs "bridges" between both worlds, those people might focus on grants, others might choose projects and actions that use whatever IS available thru the recogbnized govt to help achieve the para-governemnt's objectives and agenda.
                          1. Different methods of funding would have to be developed. But think about how much was raised from public sector to finance dumb TV ads to run a national Presidential campaign.  The mechanism are there to start chanelling people's money to other methods or delivery systems for achieving goals.  We still pay our taxes, we still have obligations to our govt until such time it is not our govt.

                          But this is a wholly-separate arm -- private enterprise per se -- which seeks entiurely new ways to achieve the PLATFORM that we have developped for our lives. Soon there would be crossover poiunts -- where US govt gets on board a proposal or policy that this paragovt initiates -- who knows maybe in innovatibve use of energy.

                          The main thing is the objective is never ever to influence that corrupted and bloated and ineffectual system that has proven it does not work. and if it does work, it is a terribly bad business that misspends its money grossly, has terrible management, and caN'T seem to get traction.

                          1. One other principle:  A complete "flip" on the notion of social justice and public interest always being starvation industries. A governing principle would be that when money is raised, it is raised in the same way a business raises money in IPOs, etc... With budgets that reflect god paying jobs, realy competitive paying jobs as corporate world -- completely flipping idea that "citizen work" is always meant for just starving idealists.

                          Think Brad Pitt and New Orleans.

                          As for followups, that won't happen here. I have concluded dailykos has some great great great minds, and good action takers, but the site in not organized in any way to try to shape or psuh forward any actions.  I won't be releasing any of the branding (it's very high-end) for i-org (byt the way, it also means, in addition to "my control center for organizing different things impt to me in my life" -- the inter-org... Just like the internet is a network connecting computers, the interorg would connect organizations, but NOT by their official joining. That's what I learned. they will never ever do that. people are obsessively fearful of having their work diluted by a com,panioon organization, thus they compete vs collaborate.

                          No, the inter-org is truly the people... like blood cells that move through the blood stream.. we might flow through various organizations' arteries only in that other people in a given org may join in the development and implementation of the project.

                          But once again, no more being held hostage by the egocentric perosnas that usualy head up these orgs. They are good orgs, they get things done, they just don't collaborate. and that means they are not being effective.

                          /rhfactor

                          for anyone who sees this who has an interest, this prioject got out on hold due to "real work" calling back to me. but it is still on track to go forward.
                          my email is rhfactorUSA at g-mail dot-c-om

                          --
                          -- FEEDBACK: CHANGE.gov - empty "marketing" of citizen access, or real idea-submit mechanism?

                          by rhfactor on Wed Oct 21, 2009 at 04:38:53 PM PDT

                          [ Parent ]

                      •  Thanks for the references.................. (3+ / 0-)
                        Recommended by:
                        snazzzybird, Lujane, farbuska

                        ............. looks like I'll be doing some reading.

                        I'm in Arkansas, so you could say I am not represented either. Mark and Blanche don't seem to have my interests at heart. lol And my House member is a Republican.

                        Let me say that I admire your passion and activity, now to the real work of keeping the fortitude ingaged.

                        There are times I have to take time to de-stress from some of the ineptitude and out right anti-Constitutional legislation that even Democrats have stooped to too.

                        But to make a defense of my Ghandi comment. First I'd like to mention how much frustration is boiling under the surface from every nook and cranny. And it isn't necessarily from folks steeped in political thoughtfullness. People are losing pensions, jobs, hours of work, bennies, and gaining massive debt increases on credit cards, losses of investments in homes that they are upside down on the loans for.

                        And not one hint of relief seems to be in the works as of today. I know many people who are cutting meals so their kids can eat, and have been doing that for months now.

                        Across the board, people are mad and often make accusations that sound like it is all Obamas fault. And that is a big danger.

                        This has been a systematic takedown of our economy in slow mation. And the messaging from both sides has left a confussing trail of missinformation.

                        Ghandi took a simple thing like salt that was taxed (and laws made it illegal to make ones own salt), so Ghandi did a simple thing he walked to the sea and made his own. Breaking the law and defying the British tax to do a simple thing for himself, joined by massive support.

                        As Ghandi walked he was joined by people from every strata of society, in the sheer size and exuberance of defiance defeated the British Impire.

                        This can be done today as well. With the right simple thing and a leader who has integrity enough to face down brut strength with a pure message that we are taking our country back from the corrupt governance. It didn't cost Ghandi anything he didin't have inspades already..... guts.

                        It worked in Selma and can again.

                        Corporate money for campaigns does not equal free speach, it is legalized bribery.

                        by socks on Tue Oct 20, 2009 at 04:46:11 AM PDT

                        [ Parent ]

                    •  "socks" as in the cat? (0+ / 0-)

                      Clinton abandoned him, too. And didn't take care that his dog Buddy was in a safe environment...

                      •  ugh........ no not the cat............... (1+ / 0-)
                        Recommended by:
                        DorothyT

                        ........... it was all I was wearing the 1st day I joined a chat and I've used it ever since as a nik.

                        Corporate money for campaigns does not equal free speach, it is legalized bribery.

                        by socks on Tue Oct 20, 2009 at 04:49:13 AM PDT

                        [ Parent ]

                    •  That means we can't hack Cheney's head off? (0+ / 0-)

                      And Newt's? (plop)
                      And Boehner's? (plop)
                      McConnell's? Cantor's? Limbaugh's?
                      (plop)
                      (plop)
                      (plop)
                      Ghandi's OK and all, but is there no limit to our Francophobia?

                      I'm the plowman in the valley - with my face full of mud

                      by labradog on Tue Oct 20, 2009 at 05:33:12 AM PDT

                      [ Parent ]

                  •  When Clinton undercut HRC's healthcare plan... (4+ / 0-)
                    Recommended by:
                    Bob Love, Catte Nappe, elwior, farbuska

                    By "when," I mean the exact moment.

                    I don't think this small but telling moment was highlighted on the news at the time. Perhaps this was a C-SPAN thing back in the day, but I remember Bill Clinton speaking off the cuff at a big Governor's Conference. He was talking about Hillary's healthcare plan, and made a startling admission -- with as much body language as verbal language -- that of course not all of Hillary's plan would make it through. Eyebrows raised, wink-wink, smirk. She was engaged in the fight of her life for this plan at that moment and he gave it away. The "not all" was anything lobbyists wanted it to be.

                    There was a network feed of Clinton arriving at the South Lawn by helicopter later that night, if memory serves. Hillary came blasting out to meet him before he approached the building, talking his ear off. Only if you saw what he'd said to the governors, and the way he said it, could you imagine what she was saying.

                    •  This is the 1st...................... (2+ / 0-)
                      Recommended by:
                      snazzzybird, DorothyT

                      ................ I've heard of this.

                      WOW............. just wow. I had no idea he had undermined Hillary's healthcare iniatives.

                      Cold bugger!

                      I've loved this cold cad, he can talk such a good game. Lord knows he is the one that talked Democrats into accepting Globalism. And it has been a down hill slide once he also talked us into Presidental fast track trade agreements.

                      Who needs enemies when you have a friend like this?  

                      Corporate money for campaigns does not equal free speach, it is legalized bribery.

                      by socks on Tue Oct 20, 2009 at 05:00:16 AM PDT

                      [ Parent ]

                •  The DLC. Rahm was the writing on the wall. (5+ / 0-)
                  Recommended by:
                  elwior, jamess, divineorder, ruscle, farbuska

                  After that appointment, everything that followed was predictable and explainable. It just took some time to recover from the fired up rhetoric hangover.

                  Proud member of the fringe left.

                  by obiterdictum on Tue Oct 20, 2009 at 04:42:23 AM PDT

                  [ Parent ]

                •  Was Obama always a WS Democrat or was that the (1+ / 0-)
                  Recommended by:
                  jamess

                  only way he could win?  Certainly, Hillary was.  Edwards said all the right things as far as I was concerned, but...

                  Well, how can we reach Obama to ditch the dirty rats he has in our Treasury?  

                  This show is a good start, because it educates the public that Tim Geithner isn't doing a good job cleaning up the mess, because he helped to cause it, which combats the propaganda his Wall Street pals have been broadcasting all over the MSM like mushroom clouds and yellowcake.

                  Information is the currency of democracy. ~ T.J.

                  by CIndyCasella on Tue Oct 20, 2009 at 10:21:02 AM PDT

                  [ Parent ]

          •  How many times can I rec this? (2+ / 0-)
            Recommended by:
            jamess, newlymintedjerseygirl

            Proud member of the fringe left.

            by obiterdictum on Tue Oct 20, 2009 at 04:39:27 AM PDT

            [ Parent ]

          •  Great comment. Would like to see Rep. Grayson (2+ / 0-)
            Recommended by:
            jamess, farbuska

            hop on this from today's NYTimes on the chicanary revolving around Lehman's bankruptcy and red-herring of its precipitation of the financial crisis.

            To keep the talks alive after the session at Sullivan & Cromwell, Mr. Paulson and Mr. Geithner over the course of the next week arranged a secret meeting between Mr. Fuld and Mr. Lewis.

            It would take place at a previously scheduled event on the evening of Monday, July 21, in New York. Mr. Paulson was being honored at a dinner at the New York Fed in Lower Manhattan, organized by Mr. Geithner as an opportunity for the secretary to get together with top leaders from JPMorgan Chase, Goldman Sachs and Morgan Stanley, as well as Mr. Fuld and Mr. Lewis.

            Perhaps Grayson can extend an invitation to Geithner to further enlighten the public as to what took place at this dinner party of Fed and Wall Street elites as the crisis was reaching a white-hot burn.

            I'd also like to see the tab for this little tete-a-tete. Maybe Grayson can dog the Federal Reserve Bank examiners out of the FR Board on this one.

            A good writer is another government.

            by newlymintedjerseygirl on Tue Oct 20, 2009 at 08:04:05 AM PDT

            [ Parent ]

    •  Barney Frank wants little derivative regulation (29+ / 0-)

      Lying for Bonuses, Banks Are Cooking the Books Again

      Unfortunately the financial reforms proposed in Congress have no chance of reining in the Big Banks' worst excesses.

      As Foreclosures Hit All-Time High, Wall Street on Pace to Hand Out Record $140B in Employee Bonuses

         JUAN GONZALEZ: And William Black, what is your sense of the prospects now for stronger financial regulation, given the fact that—my understanding is now that the financial and securities firms have invested about $200 million in lobbying—in their lobbying efforts in Congress, and the halls of Congress are filled with the lobbyists now who are trying to influence the members of Congress on the new regulation of the financial system?

         WILLIAM BLACK: Well, the earliest effort is—should be a real wake-up call, because it’s horrible. Barney Frank has proposed legislation on financial derivatives that essentially exempts what are called over-the-counter derivatives from most regulation, and it is over-the-counter derivatives that have been a major cause of this crisis. So that’s utterly insane. There’s no conceivable justification for it. And he stacked the hearing. There were nine witnesses; eight of them were from the industry and, of course, testified that they were vital to the world. The ninth witness was the only person who was in the least bit skeptical, and he was promptly gaveled down, unlike the others, by the chair. So it’s not only a farce; they’re willing to have us see that it’s a farce. They are so little afraid of public opinion and outrage that they’re not even taking steps to cover up the cover-up.

      It looks like Barney Frank is trying to create the appearance of reform without doing anything that might inconvenience the Big Banks.

      'We risk consigning future generations to an irreversible catastrophe' -Barack Obama on Global Warming

      by Lefty Coaster on Mon Oct 19, 2009 at 08:29:11 PM PDT

      [ Parent ]

      •  Barney Frank see the difficulty in the effort. (8+ / 0-)

        Seriously!  Basically, every transaction outside a standard stock trade is a derivative.

        "The way to see by faith is to shut the eye of reason." - Thomas Paine

        by shrike on Mon Oct 19, 2009 at 08:38:46 PM PDT

        [ Parent ]

        •  Then tax it (11+ / 0-)

          until its no longer profitable.

          Private health insurers always manage to stay one step ahead of the sheriff - Sen. Sherrod Brown

          by Betty Pinson on Mon Oct 19, 2009 at 10:25:27 PM PDT

          [ Parent ]

        •  Barney Frank and the rest of Congress is totally (16+ / 0-)

          'bought off' by Wall Street and the Bankers, and Barney is doing absolutely nothing right now to help any kind of serious reform happen, except caving into the Blue Dogs, and the Republicans and standing in the way of protecting the American people.

             

          Financial services has been the biggest contributor in every U.S. election cycle in the last 20 years, according to the Center for Responsive Politics, a Washington research group that tracks campaign money. Its individual and political action committee donations in 2007 and 2008 totaled $463.5 million, compared with $163.8 million from the health-care industry and $75.6 million from energy companies.

          The 'only' way that Wall Street/Bankstas are going to be reformed, is through the appointment of an Independent Counsel to investigate what has taken place these past few years.  Meanwhile, I'll be waiting for my ice skates to use in hell for AG Eric Holder to find his balls and do something decent for our country on that one.  Meanwhile, legalized bribery will continue, as will the beatings we get from the Banks/Wall Street until morale improves:

          Today, members of the House and Senate routinely spend "a fourth or a third of their working hours soliciting those campaign contributions" that once would have "looked a great deal like bribes." Kaiser corroborates his findings with the observations of a host of seasoned and savvy Washington insiders. A few will suffice to make the point: — Former Nebraska Republican senator Chuck Hagel told Kaiser, "There’s no shame anymore. . . . We’ve blown past the ethical standards; we now play on the edge of the legal standards." Hagel comes to believe that "money and its pursuit [have] paralyzed Washington . . . Nothing truly important for the country [is] getting done."Leon Panetta, a former member of Congress, Chief of Staff in the Clinton White House, and Obama’s newly confirmed CIA director, says that "legalized bribery has become part of the culture." Members of Congress "rarely legislate; they basically follow the money . . . They’re spending more and more time dialing for dollars." Panetta laments the quality of people now running for Congress, echoing the conclusion reached by Hagel and other old hands: "It’s all about winning, it’s not about governing anymore."

          http://www.senseoncents.com/...

          America is the only nation in history which miraculously has gone directly from barbarism to degeneration without the usual interval of civilization.

          by Badabing on Mon Oct 19, 2009 at 10:48:08 PM PDT

          [ Parent ]

      •  I was there in the early 1990s (43+ / 0-)

        in some of the Congressional hearings on derivatives. This was back when Orange County, California was bankrupted by derivatives trading with, if I recall correctly, Bankers Trust, which is long gone. I did my "I told you so" back in November last year, so I won't repeat it here.

        But one conclusion I have reached, watching and blogging the economic and financial news these past two or three years, is that the goodness and morality of a person on these issues is pretty much determined by whether that person believes that the financial system can create wealth. The simple reality is that the financial system can never create wealth - it can only manage wealth, speculate on it, and redistribute it, mostly by looting it. People who believe that the financial system can create wealth are invariably connected to the financial markets in some way, and usually are greedy, or to put it politely, not that concerned about the general welfare. People who believe that the financial system can create wealth are going to be the opponents of real reform of the financial system; they are the obstacles that need to be overcome if we are to once again have a financial system that serves the interests of all citizens, not just the high and mighty. This is an easy litmus test to determine whether or not it's worth listening to someone on these issues; put the question to them, and if they argue that the financial system can create wealth, don't waste your time listening to them.

        A conservative is a scab for the oligarchy.

        by NBBooks on Mon Oct 19, 2009 at 09:04:53 PM PDT

        [ Parent ]

        •  The financial system (20+ / 0-)

          can redistribute wealth. Watch it all trickle up!

          Seriously, there is no way that individual investors an public servants (like those who invest for municipalities) can keep up with all the secret plans and dealings of Wall Street. Those guys rely on the little suckers not knowing all the rules of the game.

          This is why the market needs referees. Without some measure of trust between investors and salesmen of investments, the whole system breaks down. (The credit rating agencies also put in a massive fail on this count.) Not that the Wall Street fat cats care - they got (and continue to get) their huge payout. Nevermind that little people, towns, and even countries (Hello, Iceland!) were devastated financially.

          •  The basic rules of the game seem obvious now (9+ / 0-)

            as far as the 'little people' go.

            The big guys played all their games that made them rich, rich, rich
            When the crash came the little people had lost much of their only wealth...the value of their home and their retirement account....because of the big guys.
            We lost jobs, wages, security...main street economy hurt and lamed.
            Still we took on the debt to give trillions to the guys too big to fail.

            They thanked us by being very uncooperative with the federal programs to help small businesses, to help struggling homeowners. They helped by freezing up credit, by hiking up rates and minimum due on credit cards even for those who have never been late. They focused first on those with big debt and slow but faithful payments. When you jump rates from 6% to 18% and demand triple the percentage of amount due on slow payers who owe tens of thousands you can be sure you are forcing defaults. Oh it isn't their fault. Probably the term of the CDS on the bundled credit card security was expiring soon, probably they had multiple contracts on them so why not collect big time as you ruin people financially? You owe it to the stockholders...or hedge funds or whoever.

            Yep, they know how to thank us. They aren't really better but they are playing the same games where they gain wealth...
            so they ruin the little guy and flaunt their wealth in big bonuses and cooked books and the beat goes on.

            But congress shows whose side they are on. Right in front of our face they give in to the money guys. Democrats? In 2006 I read of the rush to hire Dem connected lobbyists and my heart sank a little. And it is worse than I could have imagined.

            So I don't really know the games on wall street, it just isn't hard to see how we fit.

            When Obama hired those insiders I hoped it was to use their knowledge, pick their brains and use that to turn things around.
            Nope.

            •  What happened (7+ / 0-)

              Eating our Seed Corn: How the Financial Industry Managed to Extract Equity from Just About Everybody

              One of the great illusions of late 20th century finance was that banks were profitable. On paper - investment, commercial and mortgage banks appeared extremely profitable. The percentage of total S&P 500 profits that was attributable to financial companies rose steadily from 1980 to 2000, and by 2007 reached 40%, depending on how you measured it. This meant that two out of every five dollars of profit generated by America’s 500 largest companies came from the financial function. This, by the way, understated things, since it left out the quasi-banks like General Electric and GMAC.

              The illusion comes from the fact that this paper profit was not the result of selling products that allowed businesses and consumers to be more productive and more profitable in their own right. What was really happening was that financial firms were extracting equity that had been built up over nearly a century by businesses and consumers. The financial business had become a predatory business, scavenging the land for pockets of wealth to convert into cash that would be funneled in part to the banks as fees.

              What was really happening was that financial firms were extracting equity that had been built up over nearly a century by businesses and consumers.

              Just look at what happened to Simmons Bedding Company. Just think of a 133 years of building a company, hiring employees, woking out marketing programs, perfecting the production and distribution process. 133 years. Looted and gone in one year. Any society that allows this to happen is not going to survive.

              A conservative is a scab for the oligarchy.

              by NBBooks on Tue Oct 20, 2009 at 05:51:15 AM PDT

              [ Parent ]

        •  The Fallacy of False Concreteness (13+ / 0-)

          Dollars are not wealth, they are symbolic representations of wealth. The Fallacy of False Concreteness refers to the common error of confusing a familiar (abstract) symbol with the (concrete) reality that the symbol is supposed to represent. The financial markets can certainly create dollars, but they do not create things of value for the dollars to buy.

          According to the last chart in this diary, there are $180 trillion "worth" of bizarre financial instruments out there. Hmm. The only way there could be an equivalent amount of real value to back all those notional dollars, would be if each dollar were worth nearly nothing.

        •  Can, But Doesn't (7+ / 0-)

          The financial system certainly can create wealth, by managing it. For example, lending money to selected good risks at a lower interest rate than the growth in wealth rate produced by the borrower - basic credit investment.

          But overall, it doesn't. Mostly the financial system is used to control production and consumption to exploit it for the financier's profits, not increased wealth. The growth from proper management is overwhelmed by the destruction from both creative and inane mismanagement.

          Which is why financial regulation is important. Left to themselves, financiers will wreck everything, except sometimes for themselves. The people's interest lies in protecting ourselves from bad management, while allowing good management to grow wealth faster than it would grow unmanaged. A fine balance, but with a wide range of approaches within its scope.

          If only the financiers didn't control the regulators.

          "When the going gets weird, the weird turn pro." - HST

          by DocGonzo on Mon Oct 19, 2009 at 11:06:34 PM PDT

          [ Parent ]

          •  What wealth does the financial system create? (2+ / 0-)
            Recommended by:
            Terra Mystica, jamess

            To see what I'm getting at, let's hypothesize the extreme of where we as a nation are headed. Assume that the only two companies left in the U.S. are JP Morgan Chase and Goldman Sachs. So, everyone has become a financier, and everyone is now well paid, being paid an average of over $300,000 a year. But there are no bus drivers, no farmers, no firemen, no auto workers, no teachers, no body producing toilet paper. Per capita income is over $300,000, but is the society really wealthy? You get sick, and who do you turn to? There are no doctors. You need to fix your sink, but there are no plumbers. You have command of millions of dollars sitting in your bank account, mutual fund, stock portfolio, whatever, but you can't for the life of you find a dentist to fill a cavity. How mcuh wealth do you really have?

            A conservative is a scab for the oligarchy.

            by NBBooks on Tue Oct 20, 2009 at 06:35:04 AM PDT

            [ Parent ]

            •  Not Just Some Nightmare (0+ / 0-)

              So, if we imagine a totally different, imaginary and absurdly unworkable financial system, that probably wouldn't create any wealth.

              But in the real world, you can imagine that a bank loans you the money to buy a computer. With which you design a chemical formula to make a hypoallergenic soap out of agricultural waste that's cheaper than regular soap. Then a bank loans you the money to pay a factory to make it. Your company and its supply chain has gained wealth from the sales, and your customers' health has improved - making them more productive at their jobs.

              The interest on the loan, which almost certainly less than doubles the amount loaned to be paid back, is less than the amount of money earned all around, which almost certainly is more than double that starting cash - and which measures the cost and the wealth created.

              Presto! The financial system has just created wealth, in partnership with the rest of you depending on that credit. And other investments, whether credit or equity, and even some more abstract deals that manage money, capital and risk also grow wealth, even if in some ways too complex to briefly describe in a DKos post.

              That's why we have a real world with banks and credit, and lots more people borrowing it and investing it, and stock and bond markets. The fact that we have even more banks, instruments, and recipients who waste or destroy wealth doesn't mean the financial system doesn't create wealth. It means the parts that don't need to be reformed.

              Or we can live as if we just awoke from your nightmare scenario thinking it was some holy vision, and go back to barter. You're not going to have enough reliable surplus value to your labor to pay your ISP every month, though.

              "When the going gets weird, the weird turn pro." - HST

              by DocGonzo on Tue Oct 20, 2009 at 07:03:10 AM PDT

              [ Parent ]

              •  Nope. The wealth arises from (3+ / 0-)
                Recommended by:
                socks, Jbeaudill, Terra Mystica

                the use of the computer and the creation of the soap. Finance takes a part of the wealth created for providing the service. That is all.

                Consider the example of a bank lending money that someone uses to buy shares of stock on margin. A week later after the share price increases, they sell the shares for a nice "profit." Has any new wealth been created?

                No. The company that issued the shares never saw a penny of the money that was lent and transacted. No new equipment was bought, no new employees hired. No new products created. The only thing that really happened was the changes in ownership in the company in the amount of the number of shares purchased then sold. Yet there was a "profit." Is this new wealth? Without a "greater fool" who was willing to buy the stock at a higher price a week later, there would not have been any "profit." But society allows that "profit" to become wealth by its willingness to accept the "profit" - the mere increase in asset prices (See The Geithner-Summers-Bernanke Plan to Prop Up Asset Prices Has Failed and consider if the increase in the Dow Jones index since it was blogged actually changes anything) - in exchange for other goods and services.

                And we actually are in a nightmare scenario as a result of your misunderstanding of wealth. Extremely important economic functions - such as rebuilding the economy on a sustainable basis, or moving the economy off a dependence on burning fossil fuels, or making sure everyone has proper health care - have been crippled or even destroyed because of the misconception of wealth that leads to the view that what the financial system is equally as important as the rest of the economy, and therefore the financial system should be hampered by as little regulation as possible in order to maximize financial innovation. Until we accept that the financial system must be subservient to the needs of the real economy, we are never going to get trillions of dollars of investment flowing into building a new, sustainable economy. Society has to decide whether it want to get 12% returns on "investment" or if it wants a new, sustainable economy.

                The role of finance and the collapse of society
                But why can’t the financial system be elevated to the same level of importance as the real economy?  What’s wrong with the financial system "creating wealth" through inventing and trading financial instruments with no connection to real economic activity? To answer these questions, we need to understand what it is the real economy does.

                Jared Diamond is rightly famous for his book Collapse: How Societies Choose to Fail or Succeed, in which Diamond examines how societies descend inexorably into collapse when they ignore environmental limitations and mismanage their natural resources. The key point that most readers of Diamond miss is that a society’s environmental limitations are defined only within a fairly specific period of time based on the prevailing technological mode of that society’s economy. Any society that remains stuck in one technological mode will eventually bump up against environmental limitations: what is considered a resource and how much of it is readily available and usable. Because all an economy really is, is how a society organizes itself to procure and process raw materials (natural resources) to create and distribute what is needed to sustain and reproduce human life. So the most important economic activity a society engages in the pursuit of new scientific and technological knowledge that allows that society's economy to avoid environmental limitations and inefficient misuse of natural resources.

                For the past century and a half, we have developed an economy based on the technological mode defined by the internal combustion engine and its use of refined petroleum as a fuel. It has been increasingly clear since the late 1970s that our society must break out of this technological mode, both because the amount of petroleum is finite, and because the deleterious effects of burning so much petroleum are so terrible.

                It is against this pressing need that we must judge the performance of a financial system: the most important thing we as a society should be doing right now is the research and development of alternatives to the fossil fuel based economy. Has the development of alternative energy technologies been adequately funded since the late 1970s? Imagine what would have been accomplished these past three decades if a like amount to the trillions of dollars that have gone to prop up the zombie banks in the past seven months, had been devoted to the research and development of alternatives to the fossil fuel based economy since Jimmy Carter installed solar panels on the roof of the White House.

                A conservative is a scab for the oligarchy.

                by NBBooks on Tue Oct 20, 2009 at 07:43:05 AM PDT

                [ Parent ]

                •  Exactly. nt (0+ / 0-)

                  The bully pulpit only works if you are willing to be a bully every now and then.

                  by Terra Mystica on Tue Oct 20, 2009 at 08:03:24 AM PDT

                  [ Parent ]

                •  Trucking and Cherrypicking (2+ / 0-)
                  Recommended by:
                  mataliandy, Jbeaudill

                  Your stock margin buying example is a straw man you've cherrypicked from all the finance I did not refer to as wealth creating. I never said that kind of finance creates wealth, so your arguing with it is worthless. Much like the contrived example you gave where everyone's a banker, and no one makes or does anything else. If that's the kind of debate you want, you don't need me, because you can have it with yourself. But it doesn't rebut the points I am making, so I'll have to accept that you agree with me.

                  I will point out that the work done on the computer could not have been done without the loan to buy the computer in my example. Which is a very common example in the real world, especially among entrepreneurs - who are the main source of innovation, high productivity, and job creation. The lender has moved money from the future to the present, which is work just as the truck drivers moving that computer from its factory to the user's workplace did work to help produce the wealth that resulted from using the computer well. Likewise, bankers also move money around and store it securely, which is just as essential as the trucking, the credit, and the computing.

                  The nightmare scenario comes not from any misunderstanding on my part. But rather from the conflation of actual wealth creating finance, which is usually closer to the basics I've mentioned than to mere bets on the future that don't pay or penalize the principals directly. And your arguments are part of that conflation, though in reverse to condemn all finance rather than the typical hype that praises it all.

                  The way out of the energy/pollution crisis will require lots of finance. Lots of credit from those who've accumulated wealth, even if most (but far from all) of that wealth was gathered by robber finance and other theft rather than fair trade in created wealth. Not just because the bankers have the system locked in, but because we don't know any alternative that will actually work. Though the crisis is making it clear that the fraudulent finance of the petroleum age that hid true costs (largely by pushing them into the environmental and political future, which is now arriving) must be reformed if we are to survive.

                  We have not only a financial system, but a political system wrapping it that uses the legitimate and necessary finance as a facade (and as a hostage) to a whole lot of destructive and wasteful finance. I'll repeat, as I have in every post in this debate, that we must reform and eliminate (or at least minimize) that finance that works against us. But to throw out the baby with the bathwater would leave us without the power to muster times and places other than the most immediate here and now to produce wealth. We can protect the future with legal systems just as we compensate the future with financial systems. But we must discern the differences, values and roles among these very different financial practices, and the political system that acts on them.

                  Otherwise we will be unable to produce enough of anything to solve any of our problems, until our civilization is reduced to struggling with only problems like basic food and shelter.

                  "When the going gets weird, the weird turn pro." - HST

                  by DocGonzo on Tue Oct 20, 2009 at 09:50:01 AM PDT

                  [ Parent ]

                  •  If I may rephase your argument (0+ / 0-)

                    "We must ensure that finance acts to assist the creation of wealth." Then we are in agreement.

                    I gave the examples I did to make that point, but was remiss in not making that part of the argument explicit: In your example of the computer and the creation of soap, finance is assisting in the creation of wealth. In my example of buying stock (and note that I did not even venture into the realm of derivatives, but chose a more basic financial activity), finance is NOT assisting in the creation of wealth. The point I want to get at is that the "value" in finance thus hinges on what uses it is put to.

                    But the point that needs to be understood perhaps can best be gotten to by my posing a question, viz: Can financial activity, in and of itself and without assisting another economic activity, create wealth?

                    A conservative is a scab for the oligarchy.

                    by NBBooks on Tue Oct 20, 2009 at 10:22:45 AM PDT

                    [ Parent ]

                    •  Then We Agree (1+ / 0-)
                      Recommended by:
                      NBBooks

                      Can financial activity, in and of itself and without assisting another economic activity, create wealth?

                      No. But there's a lot of financial activity that assists other economic activity, like all of my examples.

                      The rest, which is quite a lot, should be regulated to prove the damage its execution risks exposing the public to is at least exceeded by the damage the principals risk. In which case the regulation should disconnect any public indemnity from such finance, not just prohibition of bailouts. And perhaps require bonds, insurance, special taxes on it funding government oversight focusing on audits and investigations, fines for failures as well as malfeasance, and possibly even prohibition altogether.

                      Thanks for staying focused on this discussion. The parts we agree on are interesting enough :).

                      "When the going gets weird, the weird turn pro." - HST

                      by DocGonzo on Tue Oct 20, 2009 at 11:50:14 AM PDT

                      [ Parent ]

        •  These Institutions were created to fund real ente (7+ / 0-)

          enterprises.

          Instead:

          Their product inovation was to stop investing in American Manufacturing and start labor and Capitol arbitrage with the developing world. Actively using the funds placed with them for investment to buy American companies, loot their treasuries and pension funds and send the manufacturing off shore.

        •  Great comment! nt (0+ / 0-)

          The bully pulpit only works if you are willing to be a bully every now and then.

          by Terra Mystica on Tue Oct 20, 2009 at 07:59:04 AM PDT

          [ Parent ]

      •  Barney Frank should lose his chairmanship (19+ / 0-)

        and his seat in Congress, I hope, if his constituents are smart enough to see what he did.

        I know he's popular around here, but this man is largely responsible for that bail out bill, with all his empty promises about how he put in protections for Main Street.

        He's beholden to Wall Street.  Look where all his funding comes from:
        http://www.opensecrets.org/...

        He's done great harm to the party and to the country, and he just continues.  He talks a good game, but betrayed the American people.  

    •  and how does Spitzer fit in here? (19+ / 0-)

      are we believing he was silenced? This is going to be a good one.

      So what happened at PBS? It seems as soon as Moyers got back on they began actually reporting news again.... I can't figure out or i missed how he got back on the air. Anybody?

      "And the dream lives on" Edward M. Kennedy

      by boatsie on Mon Oct 19, 2009 at 08:58:02 PM PDT

      [ Parent ]

      •  Frontline in particular never stopped (13+ / 0-)

        doing a good job. During the Bush years, they were all over the disastrous Bush/Cheney wars, Cheney's extraconstitutional power grab, spying on Americans, Katrina, torture, etc...

        •  Frontline has been one of the only real examples (2+ / 0-)
          Recommended by:
          Leap Year, jamess

          of serious journalism for a long time now.  Frontline is why I am ususally disappointed in Michael Moore's "work."

          Single Payer is the Moral Option. Educate for single payer today.... Visit Physicians for A National Health Plan www pnhp com

          by divineorder on Tue Oct 20, 2009 at 06:07:09 AM PDT

          [ Parent ]

          •  I think they may be (0+ / 0-)

            addressing different audiences --

            or at least using different styles,
            to reach overlapping audiences.

            Sometimes a good laugh,
            can make a point "stick".

            remember Fahrenheit 9/11
            that movie woke a LOT of People up,
            in a way Frontline didn't.

            In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

            by jamess on Tue Oct 20, 2009 at 06:25:56 PM PDT

            [ Parent ]

      •  Great two observations, boatsie (9+ / 0-)

        You're getting at the still WORSE underground insidiousness of it all by power brokers in all arena -- from investment banks, to Fed, to President, to Congress, to the power of the Messaging Machine to find dirt and then firehose it out into mainstream America.. It creates a useful distraction, and rids key players off the grid.

        As for Moyers, he WAS on the air during Bush era under the show "NOW" -- before he trained a replacement and then moved on, presumably, to  show he could so more with.

        I may be wrong (probably am) but i thought i recalled that Moyers was looking to exit gracefully as an elder statesman of all that is good in journalism, but the manure was so thick from the Bush end-to-end series of planned and unplanned debacles that he felt a sense of duty to come back and focus on what hardly anyone else will focus on: The motivations and stories behind the news headlines. ...again, I could be wrong. But I would bet your hunches are correct that BushCo pulled the constraints tighter and tighter on the Corp for Public Broadcasting, which starved PBS of its resources, at the time they were needed most. ... (maybe...)

        --
        -- FEEDBACK: CHANGE.gov - empty "marketing" of citizen access, or real idea-submit mechanism?

        by rhfactor on Mon Oct 19, 2009 at 10:00:55 PM PDT

        [ Parent ]

      •  Spitzer was on this morning: (9+ / 0-)

        What I can't figure out is this: Why is Alan Greenspan all of a sudden coming out like Paul Volckner is (speaking out against the Obama Administration, i.e., Geithner and Bernanke?) - there is something going on here behind the scenes, and I'm trying to figure out if Ben Bernanke is being 'set up' or something. Both the former Fed Chairs are 'screaming' get rid of too big to fail, and get rid of the credit derivative swaps....why now?  What the fuck is going on?

        So former Fed chief Paul Volcker yesterday was spouting off about how nuts it is that certain "too big to fail" commercial banks that receive mountains of public money are allowed to run around acting like high-risk hedge funds. In a haymaker that seemed to have been designed to land right between the figurative eyes of year-old commercial bank holding companies Goldman Sachs and Morgan Stanley, who have amped up their risk profiles and continued their investment banking businesses basically in unchanged form since their conversions to more "conservative" commercial bank status, Volcker barked:

           "I do not think it reasonable that public money — taxpayer money — be indirectly available to support risk-prone capital market activities simply because they are housed within a commercial banking organization," Volcker, 82, said at a financial conference in Los Angeles.

        This would be meaningful if the Economic Recovery Board that Volcker runs for Obama were actually a chief policymaking center for the president. But the reality is that the Volcker group is a kind of show-pony the Obama administration kept on as a way to give consolation jobs to the more progressive economic advisers who led them through the campaign season, people like University of Chicago professor Austan Goolsbee.

        http://trueslant.com/...

        WTF is going on with Greenspan and Volcker now? This is weird. Anybody getting a feeling about this?

        America is the only nation in history which miraculously has gone directly from barbarism to degeneration without the usual interval of civilization.

        by Badabing on Mon Oct 19, 2009 at 11:01:22 PM PDT

        [ Parent ]

        •  uh, "more progressive" (8+ / 0-)

          and "University of Chicago professor" in the same sentence?

          Anyone who doesn't see the incongruity should google on:

          "the chicago boys" economics

          Looking for intelligent energy policy alternatives? Try here.

          by alizard on Mon Oct 19, 2009 at 11:36:21 PM PDT

          [ Parent ]

        •  Volcker was speaking out. (4+ / 0-)
          Recommended by:
          Bluehawk, DorothyT, Badabing, elwior

          Greenspan is just starting.  When they can't be fired and move their money offshore, they find their tongue.  Obama is just continuing Reagan's trickle down and what the rich do is fine economic policy.    At this critical juncture in the dismantling of the middle class, we needed an honest and strong politician to "change" our direction and put this country back on the "right" track.  Instead, we got Obama. If the grass roots doesn't wake up and smell the gourmet coffee that has become the Democratic Party, then there is no hope for what is left of our country.

          They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich

          by dkmich on Tue Oct 20, 2009 at 02:00:02 AM PDT

          [ Parent ]

          •  Obama is the Grandson of a banker (4+ / 0-)

            His grandmother was a bank vice president.

            He would naturally give them the benefit of the doubt, even though there is a world of difference between the Bank of Hawaii and Goldman Sachs.

            I just don't think he has come to terms with the looting reality of the actions of the investment Banks and prime brokers.  

            •  You may be right..................... (6+ / 0-)

              .............. about Obama not realizing how far the middleclass has slumped. But I doubt it.

              Tho, with the people he has surrounded himself with, that message might have a hard time getting into the room.

              I suggest he spend one day with an ordinary 5 year school teacher, and see how well off middle America is doing. (Don't forget the credit card rape of America either).

              In fact, it might be fairly eye opening if Congress took a day off and went to their home states and followed an ordinary school teacher around and found out how middle America lives right now, warts and all. And most school teachers have union protections, that other Americans don't have.

              Corporate money for campaigns does not equal free speach, it is legalized bribery.

              by socks on Tue Oct 20, 2009 at 03:46:22 AM PDT

              [ Parent ]

          •  I keep thinking back to the campaign (1+ / 0-)
            Recommended by:
            divineorder

            when I read comments like this. I can't number the diaries I read during the campaign that said things like "Obama is blowing it! Oh no, he can't win now!" or "Obama shouldn't do it like this, he should do it like that. He doesn't know what he is doing! Oh we are going to lose."

            Then a day or a week later. "Wow, I can't believe how he pulled that out! He was setting them up the whole time." or "After learning more about what was going on in the background, what he did makes sense.".

            I am not an Obama worshipper. I too have bones to pick with him. But if you think he was elected KING or has some magic wand that he could wave on day one and it would all be fixed so there would never be another problem ever again, you are the one deluded. Bitter comments of disappointment like this, at least imply that you held some unjustified expectations.

            Did you ever wonder about why he kept the foxes in the chicken coop? Perhaps because if he had not, he would not have the inside information of what truly happened? If he let the foxes out the front door, the foxes could have just disappeared into the night without exposing how they got into the chicken coop in the first place.

            Yes, just speculation. But so is your comment. It is too soon to tell. I am not saying that I know, I am saying that I know you don't.

            As if we could make things better without making them worse.

            by A Voice on Tue Oct 20, 2009 at 03:41:14 AM PDT

            [ Parent ]

            •  If you are right..................... (3+ / 0-)
              Recommended by:
              Badabing, elwior, obiterdictum

              ....................... it seems way past time for him drop the demagog screen saver and to fire the lot of Wall Street/Fed/banking robbers and start making some inroads into demanding reforms that he can sign into law.

              Corporate money for campaigns does not equal free speach, it is legalized bribery.

              by socks on Tue Oct 20, 2009 at 03:54:16 AM PDT

              [ Parent ]

            •  He kept the foxes because he works for them. (2+ / 0-)
              Recommended by:
              socks, Badabing

              Sorry, but why should it have cost us all those trillions of dollars to enable Obama to figure out what the hell happened to the chicken coop? He could have, say, listened to Brooksley Born, right? ... or, e.g., Reich, Krugman, Roubini, or any of their many fellow economists who were identifying the problem and predicting the crash for years before it happened.

              Who were not in there actively working to achieve complete deregulation of the financial markets, like Clinton and Obama's Goldman Sachs hitmen Rubin and Summers.

              Proud member of the fringe left.

              by obiterdictum on Tue Oct 20, 2009 at 05:07:59 AM PDT

              [ Parent ]

        •  Volker was shut out from the beginning (5+ / 0-)

          by Summers et al.  It is not surprising to see him speaking out now.  Greenspan is probably just diverting attention in an attempt at CYA.  Volker is rightly miffed, Obama should have listened to him from the beginning.

          ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

          by Kristina40 on Tue Oct 20, 2009 at 05:44:22 AM PDT

          [ Parent ]

    •  Born awarded JFK Profiles in Courage Award (17+ / 0-)

      In 2009 Born was awarded the John F. Kennedy Profiles in Courage Award in recognition of the political courage she demonstrated in sounding early warnings about conditions that contributed to the current global financial crisis. According to the John F. Kennedy Presidential Library, "...Brooksley Born recognized that the financial security of all Americans was being put at risk by the greed, negligence and opposition of powerful and well connected interests... The catastrophic financial events of recent months have proved them [Born and Sheila Bair] right. Although their warnings were ignored at the time, the American people should be reassured that there are far-sighted public servants at all levels of government who act on principle to protect the people’s interests."

      Timely that Frontline is bringing the story forward given momentum toward major Financial Reform ...

      Yes. We. Did. ... Begin.

      by understandinglife on Mon Oct 19, 2009 at 10:35:48 PM PDT

      [ Parent ]

    •  Derivatives = Economic Casinos (4+ / 0-)
      Recommended by:
      Badabing, jamess, divineorder, dark daze

      First axiom of gambling?  The house never loses.

      Derivatives are a gamble, a calculated risk that cannot identify individual winners and individual losers.  But taken as a whole, derivatives (like the casino's house) will never lose.

      Thanks for the heads-up and a great diary, albeit a tad alarmist.

      •  How is that different from investing? (0+ / 0-)

        I put money into a stock and wager that it won't go down.  Where's the difference? (you remind me of Ned Flanders, thinking that insurance is gambling)

        We are building a team that is continuously being built. - Sarah Palin

        by burrow owl on Tue Oct 20, 2009 at 05:13:25 AM PDT

        [ Parent ]

        •  Seriously, you can't see the difference? (3+ / 0-)
          Recommended by:
          jamess, dark daze, fernan47

          It is akin to buying fire insurance on your neighbors house, then burning it down.  See the difference now?  You have no vested interest in the underlying asset but you are betting that it will fail.  Not only that, if you are a big investment house (say GS) you can short said entity into the ether and voila!  Self fulfilling prophecy realized!  Neighbors house burnt down.

          ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

          by Kristina40 on Tue Oct 20, 2009 at 05:47:05 AM PDT

          [ Parent ]

        •  Burrow, take a basic Statistics & Probability (0+ / 0-)

          course at a Junior College.

          Insurance IS gambling.  Insurance is analyzed  by people called actuaries.  Actuaries are educated to look at the demographics and statistics to determine whether or not they win and collect premiums/money from you (or the collective you - business) or lose money and have you pay you.

          You pay.  Insurance company's win and make big $$$.
          Insurance company's pay.  You win.
          Insurance company's need people to analyze the risk in taking your money, so they define the conditions under which they will take your money.  When insurance companies take your money, they are betting that you will pay them indefinately and they will not have to pay you.

          So, I think your friend Ned Flanders is a smart man. ;)  Here's the wiki for actuaries, who are the professional mathematicians that define the game of insurance.  http://en.wikipedia.org/...

    •  Byron Dorgan the oracle saw this as well (0+ / 0-)

      back when the republicans were looking to do away with Depression era regulations on the banks he predicted th whole system would melt down.

      If only we had listened to these people then.

      This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

      by DisNoir36 on Tue Oct 20, 2009 at 04:42:04 AM PDT

      [ Parent ]

    •  Delighted that Brooksley B is finally getting (3+ / 0-)
      Recommended by:
      Jbeaudill, jamess, divineorder

      her due from dkos and Frontline.

      Kudos on your in-depth diary, jamess.

      I was so discouraged that my diary on Geithner and the risk of lax regulation [with references to Brooksley Borne] got 12 comments.

      One excerpt of what I wrote six months ago:

      De-Fanging the CFTC

      As many readers of kos already know, Obama's choice of those who opposed former CFTC chair Brooksley Borne is troubling.

      Writing on the 'Profiles in Courage' Kennedy Awards recently given to Sheila Bair and Brooksley Borne, Investment Daily News reminded readers that The head of the FDIC and former chief of the CFTC tried to avert and then reverse the economic crisis

      Geithner colleague Larry Summers – who with other Clinton-era de-regulation proponents, our deservedly maligned former Fed Chairman, ad a deregulation obsessed Republican Congress – all conspired to strip Brooksley Borne of her power in trying to regulate credit default swaps at Commodities [F]utures exchange {CFTC).  

      I ended up writing three more diaries on Geither's new battle against Sheila Bair - saving big Banks [with his buddy from New York, the OCC head who 'revolved in' from representing big banks to "regulating" them] at the expense of the rest of America's Banks - many of whom had done nothing wrong - they simply could not compete with the bigger banks' siren calls for cheap credit

      I wrote threemorediarieson this internal war within the current administration - which recapitulates these men's prior war against Borne - including on the bogus "stress test" and Summers/Gethners's newest war against Elizabeth Warren and Sheila Bair [today's version of Borne]

      If anyone wants a recap of the run up to our current problems at the FDIC [which has been gutted financially by Geithner's refusal to make the big banks pay their share into the FDIC's coffers] and the lukewarm support of Elizabeth Warren feel free to catch some of the news links that I provide in those four diaries

      We will restore science to its rightful place....We will harness the sun and the winds and the soil .... All this we can do. And all this we will do.

      by puffmeister on Tue Oct 20, 2009 at 05:58:45 AM PDT

      [ Parent ]

      •  Keep up the great work! (3+ / 0-)
        Recommended by:
        elwior, jamess, puffmeister

        Single Payer is the Moral Option. Educate for single payer today.... Visit Physicians for A National Health Plan www pnhp com

        by divineorder on Tue Oct 20, 2009 at 06:18:21 AM PDT

        [ Parent ]

        •  Thanks but probably not, divine; better diarists (4+ / 0-)
          Recommended by:
          Jbeaudill, elwior, jamess, divineorder

          than I have given up doing frequent diaries under the weight of huge efforts complete with links and analysis, that sink without notice

          plus -

          diarists such as Jamess, here -

          and especially

          bobswern

          have taken on the often-thankless task of calling folks attention to this area.

          kudos to all who shoulder the burden.

          We will restore science to its rightful place....We will harness the sun and the winds and the soil .... All this we can do. And all this we will do.

          by puffmeister on Tue Oct 20, 2009 at 07:36:26 AM PDT

          [ Parent ]

          •  puffmeister (1+ / 0-)
            Recommended by:
            puffmeister

            the vast majority of my work here,
            goes mostly unnoticed.

            but the work, is still needed.

            I look at it as adding to the "reference library".

            Just as your links show,
            instance references for the current audience.

            thanks for the feedback, and the links.

            if we don't do it, who will?

            In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

            by jamess on Tue Oct 20, 2009 at 06:35:27 PM PDT

            [ Parent ]

    •  Thank you, disgusted by Summers, Rubin, Clinton.. (1+ / 0-)
      Recommended by:
      jamess

      Thanks for the heads up!

      "War is the health of the state." Randolph Bourne "Patriotism is the last refuge of a scoundrel."Samuel Johnson

      by american pastoral on Tue Oct 20, 2009 at 06:54:36 AM PDT

      [ Parent ]

    •  $90 trillion in assets? (2+ / 0-)
      Recommended by:
      jamess, dark daze

      The assets of JP Morgan Chase are six times bigger than the entire GDP of the United States!?!

      <whistle>

      The vast majority of those assets are zany derivatives contracts!?!

      Whoa. (and not in a Fonzie kind of way)

    •  Thanks for the heads up. (1+ / 0-)
      Recommended by:
      jamess
    •  Great work, Jamess! (2+ / 0-)
      Recommended by:
      Jbeaudill, jamess

      I have no doubt in my mind this was carefully choreographed.

      Now we have what appears to be a 25% reduction in wages, monopolies controlling what we can find to eat, wear, or use to repair, and little to no ability to organize labor.

      We are living the Milt Friedman dream (our nightmare) - The Shock Doctrine.  Actually, we are in the last throws of it as it began during the Clinton admin.

      There is one component I would like to add to your diary.  I have been writing about it for over a year.

      The mortgage derivatives debacle needed an electronic highway in order to facilitate the speedy transfer and distribution of mortgage debt.

      If you would like, I have this information regarding Merscorp and Mortgage Electronic Registration System, the electronic highway created by what appears to be all the major players in the "housing boom".

      Let me know if you would like the link and I will provide it.  I just updated it last week, btw.

      I am disgusted that these players thought nothing of profiting from homes they planned to steal back from unsuspecting "homeowners" in plain view of Congress and the Justice Department, neither of which stopped them.

      The Biggest White Collar Crime in history, and it continues unabashed.

      Poverty does not mean powerless. Unite!

      by War on Error on Tue Oct 20, 2009 at 08:44:35 AM PDT

      [ Parent ]

    •  I'm so sorry I missed this AWESOME diary... (0+ / 0-)
      ...when it was originally published. It's really quite outstanding. Unfortunately, I've been preoccupied with real-world work for the past 24 hours, give or take. I hate it when I don't get to participate in the discussion in diaries such as this. Won't happen again, though. You're now on my subscribe list.

      I'll be reading all your stuff from this point forward. Many thanks for your time and effort.

      Truly outstanding!

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Tue Oct 20, 2009 at 08:27:07 PM PDT

      [ Parent ]

    •  $590 Trillion in derivatives! (0+ / 0-)

      What does this mean, jamess?

      This is the figure stated on Frontline.

      $590 Trillion!

      Where is this money?

      Poverty does not mean powerless. Unite!

      by War on Error on Tue Oct 20, 2009 at 09:21:08 PM PDT

      [ Parent ]

  •  I know from personal experience (46+ / 0-)

    how much the "Cassandras" are reviled by bosses and co-workers.  Doesn't matter if they are right ninety-nine times out of a hundred and the others are always wrong.  In real time, when their warnings could make a difference, they are hardly ever heard.

    "Dulled conscience, irresponsibility, and ruthless self-interest already reappear. Such symptoms of prosperity may become portents of disaster!" FDR - 1937

    by Marie on Mon Oct 19, 2009 at 07:25:31 PM PDT

  •  So of the five monsters (8+ / 0-)

    which is currently out of business?

    Several of the "non-players" are now under, aren't they?

    You have to wonder if the monsters got rewarded and ate their prey?

    "In politics, what begins in fear usually ends in folly." ---- Coleridge

    by captainlaser on Mon Oct 19, 2009 at 07:27:32 PM PDT

  •  Government Sachs (26+ / 0-)

    Greenspan and Levitt and Rubin and Summers -- the same Larry Summers who is now a key economic adviser to President Obama.

    Apparently, the U.S. government didn't have enough Goldman Sachs executives in key financial and regulatory positions, so the following happened this week:

    A Goldman Sachs executive has been named the first chief operating officer of the Securities and Exchange Commission's enforcement division.

    The market watchdog says Adam Storch, vice president in Goldman Sachs' Business Intelligence Group, is assuming the new position of managing executive of the SEC division.

    The move comes as the SEC revamps its enforcement efforts following the agency's failure to uncover Bernard Madoff's massive fraud scheme for nearly two decades despite numerous red flags.

    A Goldman executive as COO of the SEC's enforcement division.

    http://www.commondreams.org/...

    Bipartinship means "Yes we can! As long as the Republicans agree to let us."

    by William Domingo on Mon Oct 19, 2009 at 07:33:37 PM PDT

  •  Derivatives destroyed AIG, no doubt. But- (8+ / 0-)

    Poor risk analysis destroyed Lehman, Bear, Merrill, and depository banks who pushed or bought dubious loans.

    Nice diary - we need to regulate certain derivatives like MINE already are.... yes I trade options - which are the same exact thing.

    "The way to see by faith is to shut the eye of reason." - Thomas Paine

    by shrike on Mon Oct 19, 2009 at 07:37:12 PM PDT

    •  There is a legitimate need (7+ / 0-)

      for some Future Derivatives -- to even out Seasonal Markets.

      OTC Credit Derivatives, designed just to offload Risk,
      without creating any Value-added Products,
      really need some serious re-examination, imo.

      How are such OTC Credit Derivative, any different than Gambling?
      And SO how are they Good for an Economy?


      The OTC Market (Over The Counter) is the one that "No One" officiates; as opposed to the Exchange Traded Market -- where "legit" commodity-based Futures Contracts are traded. Commodities like sugar, coffee, rubber, porkbellies, and a barrel of Oil -- stablizing seasonable swings in the price of "goods" like these, was the reason why "Future Derivatives" were invented in first place.

      However "Exchange Traded" Derivatives only make up a small fraction of the Derivative bets these days.

      In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

      by jamess on Mon Oct 19, 2009 at 07:54:45 PM PDT

      [ Parent ]

      •  Well a Credit derivative is not much different (3+ / 0-)
        Recommended by:
        PsychoSavannah, greenearth, jamess

        than a commodity derivative.

        As you note - WILDLY speculative in 2008.

        Crude oil went from $147 to $35!

        About the same range as mortgages!

        And YES - it becomes gambling at that stage.  

        "The way to see by faith is to shut the eye of reason." - Thomas Paine

        by shrike on Mon Oct 19, 2009 at 08:01:22 PM PDT

        [ Parent ]

      •  And a stupid concept. (2+ / 0-)
        Recommended by:
        PsychoSavannah, Jbeaudill

        Even out seasonal markets? You mean let's just make it summer all the time? Look at the parallel. What ever happened to saving up part of your profits to deal with the lean times? You don't need to be a weather man to know that winter is coming. Oh no, we must grow every day and forever.

        Futures may have been created to "even out seasonal markets", although that sounds like a way to make it palatable to the shills, but that is not what they are being used for.

        As if we could make things better without making them worse.

        by A Voice on Tue Oct 20, 2009 at 03:57:24 AM PDT

        [ Parent ]

    •  AIGs stock price doesn't look too (1+ / 0-)
      Recommended by:
      jamess

      destroyed, someone is making money here!

      "In Youth We Learn...In Age We Understand"

      by Jbeaudill on Tue Oct 20, 2009 at 10:24:41 AM PDT

      [ Parent ]

  •  I will watch (7+ / 0-)

    And I will..but I will likely be bummed out after I do, I wish someone would take on GS.

    If you want others to be happy, practice compassion. If you want to be happy, practice compassion. Dalai Lama

    by ohcanada on Mon Oct 19, 2009 at 07:43:25 PM PDT

  •  Thanks for the heads up! (7+ / 0-)

    Excellent diary. I will be sure to watch this tomorrow night.

  •  Rocket Science Catastrophe Built on Arithmetic (16+ / 0-)

    Too much income, too fast, for the individuals who run and own the top end of the economy.

    At an income a few times the national median, progressive increases in income taxation need to begin kicking in, to extremely high percentage somewhere around 5-7 x median income. So shoot me, maybe 10x.

    If we don't do that --and we never will, ever, again-- there's no end to the number and variety of schemes that will be conceived to wring national wealth out of the bottom 99%.

    Monkeys, typewriters, eternity --we can try the approach of regulating every scheme in every market and every business-- or we can go back to bending the playing field everyone uses so there's once again no point running out of bounds.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Oct 19, 2009 at 07:51:20 PM PDT

  •  I remembered this from 1994 (7+ / 0-)

    It was the first time I had heard of derivatives and never did really understand the concept. In the early 90's. Orange Co., Ca. and Mound, Mn. both suffered losses over derivatives.

    From the Washington Monthly 1994
    http://findarticles.com/...

    Last spring, when the stock market took its hair-raising ride, in one corner of Wall Street there was more than the usual anxiety. In fact, there was stockbrokers-looking-for-upper-floor-windows kind of fright. In April, clients of the giant Bankers Trust New York Inc.--including Procter & Gamble--took multimillion dollar losses on a kind of trading most Americans had never even heard of, called "derivatives." A rumor went around the Street: Maybe something truly sinister was brewing. Maybe this was a ... derivatives collapse.

    "The human eye is a wonderful device. With a little effort, it can fail to see even the most glaring injustice." Richard K. Morgan

    by sceptical observer on Mon Oct 19, 2009 at 08:06:07 PM PDT

  •  Why aren't people being put in jail? (17+ / 0-)

    Worse -- why are some of them still in change of stuff?   Why isn't Obama putting smarter people (like those who were right) in charge of things?  

    If I can sit here in my underwear eating cheetos, 3000 miles away from DC -- and know that Geitner is the wrong man for the job -- Why doesn't Obama know?  

    •  sometimes (3+ / 0-)
      Recommended by:
      sceptical observer, poligirl, ruscle

      sometimes it's more about "Image"

      than Results.


      Hopefully the Results side of the Equation,
      will start to tip the scales pretty soon.

      In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

      by jamess on Mon Oct 19, 2009 at 08:10:11 PM PDT

      [ Parent ]

      •  yeah, but (5+ / 0-)

        define whose image and whose results we're talking about here.

        It's enough to make your head explode, thinking about it too much.

        Necessity is the mother of revolution...

        by o the umanity on Mon Oct 19, 2009 at 08:17:09 PM PDT

        [ Parent ]

        •  Not saying it's right (6+ / 0-)

          just trying to explain the pragmatism.

          I'd rather see the Sweeping Change, we were promised!

          I'd rather see the "Results",
          that finally "put People, ahead of Profits"!

          In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

          by jamess on Mon Oct 19, 2009 at 08:19:48 PM PDT

          [ Parent ]

          •  Oh, me either (7+ / 0-)

            I guess my hope has dwindled a bit more than yours, is all. How many times can we look back at promises made for "sweeping change", without having the urge to puke over the "more of the same" which is ahead of us, plain as day? My God, all you have to do is look at the stats in this diary. And you haven't even seen the show yet!

            I mean, really--just follow the money, loop-de-looping back and forth, between Treasury and the new administration (and the one before that, and the one before that, and...), all the way back to...Wall Street. Skippety-doo-dah, and whaddaya know, all the fat old rich guys are richer this year than they were last year. And You're Not.

            So, well...thanks for the heads-up, but I think I may be skipping this edition of Frontline. All's the pity for me, really--I usually try not to miss it, it's first-rate. But I'm not sure I can take much more of this crap....

            (sorry, I'm just doing the work of three people these days, with no end in sight, and my ass is just tired. And cynical....)

            Necessity is the mother of revolution...

            by o the umanity on Mon Oct 19, 2009 at 08:47:53 PM PDT

            [ Parent ]

  •  so let's not give the culprits (3+ / 0-)
    Recommended by:
    ksecus, greeseyparrot, jamess

    any more "benefit of the doubt" when it was clear from the get go this scheme was going to screw many people for untold amounts of money...and basically kill our economy.  It was greed, greed, greed.

    Every time I hear that Alan Greenspan has made another pronouncement  I want to go buy a gun.

    Dennis Kucinich was right

    by lisastar on Mon Oct 19, 2009 at 08:10:59 PM PDT

    •  buy some land (16+ / 0-)

      instead, lisastar. Plant a Garden.


      Greenspan IS the Chief Weasel of the Plutomony:

      Ooops! ... that makes everything OK now, eh?

      Greenspan admits he made a mistake (NBC News coverage)

      http://www.youtube.com/...

      Greenspan's Mistake

      http://www.youtube.com/...

      Waxman: Where do you think you made a mistake then?

      Greenspan: I made a mistake in presuming that the self interest of organizations, specifically Banks and others, were such, as if they were best capable of protecting their own shareholders."


      SO much for the Wisdom of the self-regulating Capital Market!

      I think he forgot to factor in GREED!

      In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

      by jamess on Mon Oct 19, 2009 at 08:16:59 PM PDT

      [ Parent ]

      •  That's essentially saying his whole career as (8+ / 0-)

        Fed Chairman was a failure.

        But, it's not like he's losing sleep over it you can bet.

        To whom it may concern. Waterboarding is torture. Torture is illegal. Sincerely, A. No Brainer.

        by Pescadero Bill on Mon Oct 19, 2009 at 08:23:22 PM PDT

        [ Parent ]

      •  I had our steep slope out back (7+ / 0-)

        terraced this summer and and have lots of room for veggies etc now. Other than being with my husband and friends nothing makes me happier than being in my garden.

        Dennis Kucinich was right

        by lisastar on Mon Oct 19, 2009 at 08:24:21 PM PDT

        [ Parent ]

      •  Greenspan (3+ / 0-)
        Recommended by:
        socks, jamess, blueocean

        Business would self-police in order to protect their own shareholders? How sweet! Seriously, has he been living under a rock? Shareholders have been getting screwed for quite a while now, and the current meltdown is just one extreme example.

        Perhaps Greenspan has never heard of Nell Minow of The Corporate Library. She is an unabashed capitalist who has been working for years to point out the ways in which CEOs and management are ripping off shareholders and endangering capitalism.

        •  It is all just "a game" to the super Wealthy (3+ / 0-)
          Recommended by:
          PsychoSavannah, Jbeaudill, Leap Year

          Greenspan Blinders:

          Accordingly the Federal Reserve Board sees no reason why these markets should be encumbered with a regulatory structure devised for a wholly different type of market process, where supplies of underlying assets are driven by the vagaries of weather and seasons. Inappropriate regulation distorts the efficiency of our market system and as a consequence impedes growth and improvement in standards of living.
          ...

          Instead, the Federal Reserve believes that the fact that OTC markets function so effectively without the benefits of the CEA provides a strong argument for development of a less burdensome regulatory regime for financial derivatives traded on futures exchanges. To reiterate, the existing regulatory framework for futures trading was designed in the 1920s and 1930s for the trading of grain futures by the general public. Like OTC derivatives, exchange-traded financial derivatives generally are not as susceptible to manipulation and are traded predominantly by professional counterparties.

          Testimony of Chairman Alan Greenspan
          The regulation of OTC derivatives
          Before the Committee on Banking and Financial Services, U.S. House of Representatives
          July 24, 1998

          http://www.federalreserve.gov/...

          That Testimony was on whether or not it wass appropriate to apply the Commodity Exchange Act (CEA) to over-the-counter derivatives (and, indeed, to financial derivatives generally)

          Greenspan, had argued strongly for NO!


          But later ... look at his stunning reversal:

          Greenspan shaken by crisis
          House panel hammers former Fed chief over run-up to financial turmoil
          By Edmund L. Andrews
          NEW YORK TIMES NEWS SERVICE

          October 24, 2008

          "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief," he told the House Committee on Oversight and Government Reform.
          ...
          "You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others," said Rep. Henry Waxman of California, chairman of the committee. "Do you feel that your ideology pushed you to make decisions that you wish you had not made?"

          Greenspan conceded: "Yes, I've found a flaw. I don't know how significant or permanent it is. But I've been very distressed by that fact."
          ...
          As far back as 1994, Greenspan had staunchly and successfully opposed tougher regulation on derivatives.

          But yesterday, he agreed that the multitrillion-dollar market for credit default swaps, instruments originally created to insure bond investors against the risk of default, needed to be restrained.

          "This modern risk-management paradigm held sway for decades," Greenspan said. "The whole intellectual edifice, however, collapsed in the summer of last year."

          Waxman noted that the Fed chairman had been one of the nation's leading voices for deregulation, displaying past statements in which Greenspan had argued that government regulators were no better than markets at imposing discipline.

          "Were you wrong?" Waxman asked.

          "Partially," the former Fed chairman reluctantly answered  ...

          http://www.signonsandiego.com/...

          In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

          by jamess on Mon Oct 19, 2009 at 10:15:52 PM PDT

          [ Parent ]

          •  In a Society, Self-Interest DOES NOT Govern (6+ / 0-)

            Lord.

            Someone rose to be the Fed chairman and they believe that self-interest is a governing principle for affairs of state?

            Gibbon's ultimate conclusion about the fall of the Roman Empire was:

            It occurred because great men stopped acting in the public interest.

            As I wrote below, Ayn Rand was a repudiation of the entire Enlightenment, the philosophical system our country was founded on.  It's no surprise that when we put her acolytes in power, they destroyed the country.

            I won't tell anyone that Reagan was a turd.

            by bink on Mon Oct 19, 2009 at 10:23:07 PM PDT

            [ Parent ]

          •  I doubt Greenspan is (4+ / 0-)
            Recommended by:
            socks, PsychoSavannah, jamess, blueocean

            actually that stupid - he's no George W Bush - so I must conclude that he's simply a dishonest turd.

            Judging from the first blurbs you quoted, he seems to have a very different definition of "efficiency" when it comes to markets than I do. If "efficient" means engineering a massive collapse and impoverishing untold numbers of honest investors, then yeah, I guess he's right. And I'm so sorry that poor Alan is feeling distressed.

          •  I have to wonder if almost one full year later... (1+ / 0-)
            Recommended by:
            jamess

            ...he has figured out just how "significant and permanent" that flaw is.

            Perhaps we should include those statements in our children's textbooks.  Maybe if we teach these lessons starting in 9th grade we will not have to face another chairman who fails to learn the lessons of history.

            Probably not.  There will always be a slick salesman to come along and explain why it really is different this time around.

            Nobody held a wake for America's manufacturing industry, and now we are supposed to give a fuck about these assholes in the insurance business? - Playon

            by blueocean on Tue Oct 20, 2009 at 07:16:11 AM PDT

            [ Parent ]

  •  I read an article about a year ago, where (5+ / 0-)

    the author suggested that if you owed significantly more on your house than it was worth, perhaps you should just walk away..just make it a "business decision".

    According to two recent studies, these so-called "strategic mortgage defaulters," an innocuous name for deadbeats who can afford to pay off their mortgages but choose not to, make up a far greater share of the market's woes than we generally assume.

    some 18 percent of those who defaulted on a mortgage as recently as the fourth quarter of 2008 could afford their loans but simply decide to walk.

    Most of these defaulters share a few common characteristics, most notably that they stay current on all of their debts and then suddenly without warning stop paying only their mortgages

    http://www.realclearmarkets.com/...

    It seems like a lot of people are taking her advice.  Now if the Federal government would just make that same type of "business decision" about the derivatives and other bets the financial markets have made.  Stay current on the neccessary things, but just walk away from the casino.

    Justice, if not pursued, does not exist.

    by phonegery on Mon Oct 19, 2009 at 08:12:46 PM PDT

  •  Thank you! for the heads up (3+ / 0-)
    Recommended by:
    CWalter, sceptical observer, jamess

    Seems worth viewing and/or taping - but beyond worthy, to essential, if Brooksley Born is speaking!

    "The required presence of health professionals did not make interrogation methods safer, but sanitized their use" Physicians for Human Rights

    by Catte Nappe on Mon Oct 19, 2009 at 08:13:28 PM PDT

  •  Frontline is the best hour on television (7+ / 0-)

    Hands down the number one informative show on tv.
    I also love Nova.

  •  There's lot's of problems here (8+ / 0-)

    The real estate bubble perpetrated by the federal reserve and politicians to cover up a teetering debt pyramid. The main purpose to fraudulently inflate earnings and "coverup" massive coruption.

    Is anybody being indicted and wisked away to prison? Hell no! Why not? Because there are no clean hands in this mess, from the very top on down.

    Wait till this echo bubble ponzi scheme rehash ends. This time we lose our society!

  •  OK, I'll ask (16+ / 0-)
    I don't want people to be put in jail necessarily, but why, at the very least, is Larry Summers working in our government again?
    •  I believe the original rationale (4+ / 0-)

      was "continuity"
      between the old mess, and the new mess.

      Perhaps, it's time for a New Rationale,
      given that the Super Crisis was averted

      by giving away Trillions in Free Money!

      (I think that solution,
      would have solved MOST Crises, lol)

      In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

      by jamess on Mon Oct 19, 2009 at 08:43:57 PM PDT

      [ Parent ]

      •  Oh, I thought it was because he is so smart. (1+ / 0-)
        Recommended by:
        fasteddie9318

        You know, like, we need really smart foxes to guard that chicken house.

        Boy, Obama and his people clearly have a low opinion of the intelligence of the people who worked so hard to elect him. Now that I think of it, you can kind of see why. We were easy marks.

        Proud member of the fringe left.

        by obiterdictum on Tue Oct 20, 2009 at 04:36:08 AM PDT

        [ Parent ]

    •  Because Ayn Rand Rules Our World (2+ / 0-)
      Recommended by:
      jamess, fasteddie9318

      And Summers is one of her biggest disciples.

      Remember that Rand was essentially a repudiation of the Enlightenment thought that created our country.  Not surprising that when you put her acolytes in power, they destroy it.

      I won't tell anyone that Reagan was a turd.

      by bink on Mon Oct 19, 2009 at 10:17:06 PM PDT

      [ Parent ]

    •  working in our government again (1+ / 0-)
      Recommended by:
      PsychoSavannah

      Why is Larry Summers working in our government again and not in jail? Maybe because Obama wants to look foreward and not back?

      Bipartinship means "Yes we can! As long as the Republicans agree to let us."

      by William Domingo on Mon Oct 19, 2009 at 11:12:35 PM PDT

      [ Parent ]

  •  But, they couldn't have succeeded without help (11+ / 0-)

    from ratings services like Moody's, Standard and Poors, etc.

    Citing insider sources, McClatchy Newspapers reported today that analysts and executives at Moody's Investors Service who warned about inaccurate ratings between 2000 and 2007 were purged and replaced with inexperienced personnel willing to participate in a pay-for-ratings scheme. Despite the mayhem caused by ratings that led investors to put faith in flimsy investments, the firms claim no legal responsibility and claim their faulty ratings are merely "opinions" that are protected as "free speech."  Yes, you read that correctly!

    Was that predictable, too?  You betcha!  McClatchy informs us that the problems had their roots in the 1970s, when "ratings agencies were allowed to switch from having investors pay for ratings to having the issuers of debt pay for them." Then, Moody's went public in 2000 and gave stock options to mid-level executives, giving them an incentive to increase Moody's profits and their own at the expense of accuracy in ratings.  With ratings agencies transformed into "conflicted gatekeepers," Wall Street and its raters were positioned to rake in obscene profits at the expense of misinformed Main Street investors.

  •  great post (6+ / 0-)

    Did you mention that that the ARM Mortgages (coupled with the recession) that triggered the collapse are continued to mature through 2013?  How much bad paper can the FED possibly buy?  I guess we are going to find out.

  •  Thank you (9+ / 0-)

    for the heads up.  I love Frontline, and will be watching tomorrow night.  Back in the day when you had to start at the bottom of a company and work your way up is when the top 1% respected and understood the bottom 99%.  That ladder's rungs were ripped out starting in the late 70's and now there isn't even a ladder.  

    I still have college books that talk about social upward mobility, the great hope of the middle class.  Sad, really.

    Born, like so many whistle blowers, was so easily silence by power.  Unregulated power that is still destroying our country.  Greenspan should be in jail.

    Sometimes when life throws you a curve ball, throw a spit ball back at it.

    by zaka1 on Mon Oct 19, 2009 at 08:54:23 PM PDT

  •  The same people that "shut her down" (22+ / 0-)

    are now running Obama's economic team.
     Just like they ran Clinton's economic team.

    "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

    by gjohnsit on Mon Oct 19, 2009 at 08:54:46 PM PDT

  •  Derivative and other transactions--tax them (8+ / 0-)

    along with Dark Pool transactions.  Regulate but also tax each and every financial transaction on Wall Street to raise 100bn and more per year to apply to social needs, such as health care.  If the financial industry is 40+ % of GDP and doing so well as to allow for billion dollar bonuses, then it's healthy enough to tax each and every one of the financial industry's transactions.

    Also note that Rubin, an Obama campaign advisor is featured in the Frontline story as being against regulation.  Larry Summers was against regulation, and bragged that regulation had been significantly reduced when the Gramm Act was signed by Clinton in the waning hours of the last Congressional session in 1999.   These are Obama's prime economic people!  

    In the years to come we will experience a fuller impact of what has happened at the hands of the Fed, the Treasury and Bush's and Obama's economic people as well as at the hands of Congress.  I say, just wait if you think all this was just a little blip that didn't matter.

  •  Never, ever will Americans say again (6+ / 0-)

    "We trust Wall Street and the government regulators."

    the regulators might earn some future respect, but corporations under US law are the ENEMY.

  •  I posted a diary about her in April (5+ / 0-)
  •  Nuff said (7+ / 0-)

    Her efforts to stop that from happening ran afoul of some of the most influential men in Washington, men with names like Greenspan and Levitt and Rubin and Summers -- the same Larry Summers who is now a key economic adviser to President Obama.

    She was the head of a tiny government agency who wanted to regulate the derivatives. They were the men who stopped her.

    "Take whatever you can, Steal whatever you can't take, Kill what you can't steal so no one else can have it." - Republican Business Philosophy

    by Pen on Mon Oct 19, 2009 at 09:49:24 PM PDT

  •  I'm reminded... (4+ / 0-)

    I am reminded of a fascinating report on PBS's program NOW about a year ago.

    (from the web site:)

    CREDIT AND CREDIBILITY
    What role did the credit rating agencies play in the current economic crisis?  Frank Raiter, a former managing director at Standard and Poor's, speaks out on U.S. television for the first time about how he was pressured to compromise standards in a push for profits.

    Watch the report here.  Highly recommended.
    http://www.pbs.org/...

  •  A Trillion Dollars isn't THAT much (4+ / 0-)

    Zimbabwe has thousands and thousands and thousands of
    $100 TRILLION banknotes in circulation

    http://1.bp.blogspot.com/...

    mere MILLION dollar notes are being used as toilet paper

    http://moneytipcentral.com/...

    •  hmmmm how much IS a Trillion? (3+ / 0-)
      Recommended by:
      srkp23, PsychoSavannah, Jbeaudill


      How much is a Trillion anyways?  Let's start will a Million as a frame of reference. We all have some grasp of how big that is -- many hope to earn that much in their lifetimes.

      $1,000,000 ...  a Million, is a Thousand, Thousands -- aka. quite a few workweeks!


      $1,000,000,000 ...  a Billion, is a Million, Thousands


      and a Trillion:

      $1,000,000,000 ...  a Trillion, is a Billion, Thousands

      Or as I like to think of it:

      $1,000,000,000 ...  a Trillion, is a Million, Millions


      The next closest star, after the Sun, is in that neighborhood (Trillions):

      Alpha Centuari is 4.4 light years away. We are talking about 44 trillion km (44,000,000,000,000 km) away.

      http://wiki.answers.com/...


      That's BIG! and that's the Bankers Playground. That's their Mad Money, so to speak. Their unregulated Credit Derivatives trading betting, financed their climb to these astronomical heights. Tens of Trillions!

      Meanwhile us mere Humans, quibble about whether 10 years of Health Reform will cost us 800 or 900 Billion, Over the Next TEN YEARS! ... Looks like Small Change, when compared to what the Bankers do every year.


      Quite astounding when you consider ...
      considering the Real Wealth of the entire planet:

        GWP (gross world product):
        $65.61 Trillion
        (2007 est.)

      http://www.dailykos.com/...


      WHERE DO those Bankers get their Play Money, anyways?

      Who is running this Casino, really?

      In a time of universal deceit, telling the truth becomes a revolutionary act -- George Orwell

      by jamess on Mon Oct 19, 2009 at 10:03:27 PM PDT

      [ Parent ]

      •  A Trillion dollar deficit is nothing when bread (2+ / 0-)
        Recommended by:
        wgard, jamess

        costs $100 million a loaf.

        And I suspect THAT is the 'solution' to all this.

        Any other nation that has incurred such overwhelming debt found that the ONLY way to get out from under it was to INFLATE their way out.

        Nobody wants the $US to fall off a cliff - at least not so fast.  But you can bet that there will be an attempt to gradually devalue the dollar - despite all the talk of keeping it 'strong'

        Our debt holders are reducing their holdings and the price of gold is heading up as people seek hard assets.  The DOW is heading up as holders of $US convert their paper holdings into equity stakes in US businesses.

  •  Why isn't anyone in jail yet? (11+ / 0-)

    Seriously, there has been little fall out in the surviving banks.  Why?

    Why is Summers still Pres. Obama's top economic advisor?

    Does anyone have any real answers to those questions?

    •  I too am waiting for that answer. I really get (8+ / 0-)

      pissed when I am told that I really shouldn't be asking that question.

    •  I think about 1,000,000 people on Obama's (4+ / 0-)

      campaign data base are wondering too. Maybe there was some kind of trade off made to the Clintons.

    •  real answers? (3+ / 0-)
      Recommended by:
      PsychoSavannah, jamess, banger

      Sure, but they aren't answers anyone involved in electoral politics want to hear.

      It may well be too late for peaceful collective political action to make any sort of difference in a political process that is run exclusively for the benefit of the super-wealthy and in which our interests are simply not considered

      If this is true, we all need to concentrate on survival strategies at the individuals / families / small group level for dealing with the disaster we have been lead into. For instance, getting our asses and our assets out of the US economy before it goes down for the last time.

      Looking for intelligent energy policy alternatives? Try here.

      by alizard on Tue Oct 20, 2009 at 12:11:05 AM PDT

      [ Parent ]

      •  exactly (0+ / 0-)

        you're on the right track. Obama was/is a fraud as far as representing the American people. There is no "people's party" as many thought the Democratic Party was or could become. That's clearly out of the question. Welcome to the new neo-fuedal order.

    •  For the same reason Rubin headed up his economic (4+ / 0-)
      Recommended by:
      joanneleon, PsychoSavannah, banger, ruscle

      team since the beginning of the campaign? Same reason he's DOING A DNC FUNDRAISER WITH WALL STREET BIG DOGS THIS AFTERNOON?  

      It's impossible to tell, from here, whether Obama really didn't need us or whether he just thinks he didn't. Obama's Wall Street's guy. We need to recognize that, and then we need to raise mortal hell about it.

      Proud member of the fringe left.

      by obiterdictum on Tue Oct 20, 2009 at 04:30:00 AM PDT

      [ Parent ]

      •  Incumbents don't need the grassroots (1+ / 0-)
        Recommended by:
        Jbeaudill

        Insurgent candidates are the ones who need the money and support of the grassroots.  After they become incumbents, it seems that most of them forget about who helped them get elected.  They give out some jobs to people from the grassroots organizations, those people get "assimilated," and that's it.

        From what I have observed, politicians believe that money = election.  They believe that if you can overwhelm your opponent with your campaign coffers, election if virtually guaranteed.

        Democrats, in today's situation, believe that their base has no better choice at the election booth, so they're going to "come home" regardless of how they've been treated during the previous term.  

        IMHO, this may have been a good bet during somewhat normal economic times, but when things get really bad for a very large number of people, I think the rules change and that's when people are more likely to vote for the person they trust to help them.  Betrayals are not forgotten easily when people are really hurting.  And people are really hurting, in growing numbers every day.

        •  Check out where Obama is today - (1+ / 0-)
          Recommended by:
          Jbeaudill

          http://www.huffingtonpost.com/...

          I could have used the money I sent to the Obama campaign. If he'd been at all forthright about who he was and who he was obligated to, I would still have worked and voted for him - he wasn't McCain, what can you do - but he didn't need my money and I did; and I resent the hell out of the purposefully dishonest campaign he ran.

          And I REALLY resent the up-yours to the American citizens who are homeless and jobless that today's victory lap/fundraiser represents.

          I think the most disgusting, if not the most frightening, thing about this administration is that - like the Bush criminal enterprise - they clearly believe - and probably know for sure - that they don't have to care how they look.

          Obama sounded WORD FOR WORD like Bush in New Orleans last week. Did he care? Why, no. "I wish I could write a check?" "But unfortunately there's this little thing called the Constitution"? How stupid does this man think we are? Um, Mr. President? what was that multi-trillion bailout you and your Wall Street owners are celebrating today, a popcorn ball?

          Which reminds me - who was that, a few nights ago,  up there on the podium with the Dark Prince of Planet Evil Poppy Bush, flogging - wait for it - volunteerism?

          The hell with it. He's not McCain. I'm just saying, I could have used the money.

          Proud member of the fringe left.

          by obiterdictum on Tue Oct 20, 2009 at 09:53:00 AM PDT

          [ Parent ]

          •  The foreclosures (1+ / 0-)
            Recommended by:
            jamess

            are what bother me the most.  I can't stand the thought of families losing their homes.  I especially can't stand the thought of children losing their homes.  I came very close to it myself a few years ago.  My kids were traumatized by it.

            And it doesn't have to be this way.  The "capital injections" to the banks who caused this mess in the first place anger me so much I can hardly express it.  Money could have been used instead to save the underlying mortgages, and presumably there could have been a solution based on this concept.

            Instead, the banks continued to foreclose.  People were thrown out of their homes.  Many of the properties now sit empty.  Others are scooped up by vultures.  It's just not right.  It's not what a government who protects its people from enemies foreign and domestic should do.

            The financial industry has become a domestic enemy.

            As for the New Orleans thing -- I was pretty upset by that too.  It's not like the guy was asking for a luxury item.  He was asking for one functioning hospital.  I was aghast.  And when people started laughing at Obama's response, I felt it, viscerally, like the man who asked the question probably felt.

            There are some things I'm very happy about with Pres. Obama.  But there are too many other things that are very disturbing.  Really, really disturbing.  And it's not just a few things.  It's a lot of things.  And the list is growing.

    •  Because the activity wasn't illegal. (1+ / 0-)
      Recommended by:
      PsychoSavannah

      Simple questions, simple answers.

      We are building a team that is continuously being built. - Sarah Palin

      by burrow owl on Tue Oct 20, 2009 at 05:04:41 AM PDT

      [ Parent ]

    •  Because traditional liberals are part of the prob (1+ / 0-)
      Recommended by:
      joanneleon

      lem and they are in power!

      "War is the health of the state." Randolph Bourne "Patriotism is the last refuge of a scoundrel."Samuel Johnson

      by american pastoral on Tue Oct 20, 2009 at 07:03:47 AM PDT

      [ Parent ]

  •  In case anyone missed it, (11+ / 0-)

    there is also Matt Taibbi's article published in Rolling Stone.  I know it was the subject of a recent kossack diary, but for the life of me I can't remember who to give credit to.  Sorry.  

    "Rules must be binding. Violations must be punished. Words must mean something." President Obama in Prague on April 5

    by jlynne on Mon Oct 19, 2009 at 10:10:28 PM PDT

  •  The rating agencies (2+ / 0-)
    Recommended by:
    alizard, jamess

    Realistically there are several aspects that of regulation that could have been implemented.  How effective it "could have been" is questionable.  Remember the SEC audited Bernie Madoff several times and look at what he got away with.  I perceive the biggest problem was the rating agencies (Moody’s Standard & Poors, etc) "selling" inflated ratings on securities as the root of the problem.  

  •  As long s we have the same (10+ / 0-)

    incompetents running thing that drove us into this disaster it will never get fixed. Summers, Bernanke Geithner all disciples of the free market anti regulation crowd that have destroyed the lives of millions.

  •  Best doc on crash: This American Life (5+ / 0-)

    This American Life is not normally a financial show or even a news show of any kind, but they produced the best miniseries on explaining the financial collapse.
    It's a must see for anyone who wants to understand the complex financial topics produced for people who are finance professionals.
    http://www.thisamericanlife.org/...

  •  Check your premises. (0+ / 0-)

    What "aftermath"?

    So old I remember when NASA was just two drunk guys and a case of dynamite.

    by dov12348 on Tue Oct 20, 2009 at 01:47:14 AM PDT

  •  Excellemt diary. (3+ / 0-)
    Recommended by:
    PsychoSavannah, Jbeaudill, jamess

    But. it leads to a question.  Of the 15 most over-leveraged banks in your charts, why no Goldman-Sachs?  Is it because they were over-leveraged but not sufficiently so to make your list?  Is it because they were, at the time of the data, an investment bank without a retail banking operation?  Just curious and would be interested to know the answer.

    Life is not a 'dress rehearsal'!

    by wgard on Tue Oct 20, 2009 at 03:05:34 AM PDT

  •  Thank you for the reminder (1+ / 0-)
    Recommended by:
    jamess

    I will be watching.

    "People die. Strategies fail. Blame is laid. And we, as a nation, are made to look like assholes." - Brandon Friedman

    by Militarytracy on Tue Oct 20, 2009 at 05:15:48 AM PDT

  •  I don't have a DVR and I don't like show promos (1+ / 0-)
    Recommended by:
    jamess

    ...but this one looks very good. Thanks for the heads up, I will be watching tonight

    Ontogeny recapitulates phylogeny?

    by NuttyProf on Tue Oct 20, 2009 at 05:57:54 AM PDT

  •  SEC hires another Goldman alum (5+ / 0-)
    as first chief operating officer in the agency's enforcement division. All of twenty nine years old, as well. This guy better be on a friggin mission, otherwise it looks like the wolf is guarding the hen house.

    To Thine Own Self be True. Polonius in Hamlet

    by gereiztkind on Tue Oct 20, 2009 at 06:37:49 AM PDT

  •  I think it is about time (3+ / 0-)
    Recommended by:
    Tanya, american pastoral, alstradamus

    that we accept the fact that this administration is not representing the values that are represented on this blog. Obama should be disowned by the progressive community and we should stop believing there is a profound political conflict between Republicans and Democrats or between Fox and MSNBC (that shit is all show-biz).

  •  Democrats share equal responsibility for meltdown (4+ / 0-)
    Recommended by:
    Tanya, Jbeaudill, jamess, voroki

    and destruction of middle class. What was Clinton's greatest legislative achievement? NAFTA, which was Reagan's baby.

    Rubin, Summers, Tim G are direct representatives of the oligarchy that are ruling and destroying the US.

    I voted for Obama, I have high hopes, but it looks like we are in for more of the same.......

    We need economic reform, and it is not coming from the likes of Democrats like Corzine, Barney Frank, etc...

    Peter DeFazio and Alan Grayson are the kind of Democrats we need!

    If you oppose strict regulation on capitalists, you are a traitor to democracy!

    "War is the health of the state." Randolph Bourne "Patriotism is the last refuge of a scoundrel."Samuel Johnson

    by american pastoral on Tue Oct 20, 2009 at 07:00:36 AM PDT

  •  The majority are interest rate swaps... (3+ / 0-)
    Recommended by:
    Jbeaudill, jamess, Alice Olson

    ...which have nothing to do with the problem. So these charts are a little misleading.

    What killed AIG, and in turn the entire market, was the ability of large financial institutions to sell massive amounts of credit protection on supposedly low-risk assets.  If regulatory capital requirements are inadequate (which they were), a firm could theoretically take an almost infinite amount of risk and make an almost infinite return.  

    The mistake that was made was the belief that firms would act in their own interest and that common sense would trump greed to keep this from happening.
    In that respect Greenspan and Rubin were incredibly naive.

    Since Frontline is targeted at intelligent adults, I'm sure they will do a good job of explaining this.

    Sanctimony thy name is Joe Lieberman.

    by roguetrader2000 on Tue Oct 20, 2009 at 07:47:31 AM PDT

  •  The housing market meltdown was only a pustule (1+ / 0-)
    Recommended by:
    jamess

    on the derivatives market abscess that infects the financial markets. The multi-trillion dollar bailout by the Feds and the TARP bailout have only been a band-aide solution.

    The cause of this abscess is rooted in the US$ as the world's reserve currency coupled with the intimate ties between the Feds and the investment banks. No other country in the world would have been allowed to run the financial markets in the way they were/are without outside interference.

    The US dollar is, in and of itself, nothing more than a highly over-leveraged, over-manipulated derivative.

    Removal of the US$ as the world's reserve currency is going to have nasty repercussions in the financial markets around the world. But it is inevitable.

  •  Too bad Buffet didn't get a little more active (2+ / 0-)
    Recommended by:
    Tanya, jamess

    in controlling the ratings of these investments. He owned, by some reports, more than 20% of Moody's all the while it was giving these WMDs triple A ratings.  And, he made yet another fortune -- as if he didn't have enough already.  He has only just recently divested himself of a small portion of this holding -- seeing unwanted (yet essential?) government regulation coming down the pike.

    http://www.thedeal.com/...

    Grab a Mop! -- Barack Obama

    by Alice Olson on Tue Oct 20, 2009 at 08:07:44 AM PDT

  •  True Grapevine Story (1+ / 0-)
    Recommended by:
    jamess

    During July of 2008, I was talking to a neighbor while walking my dog.  He heads up the Development office of a well-known CUNY college.  He was obviously shaken, and had to talk to somebody.  

    This man TOLD me that he had just left a meeting with one of his board members, a woman with "mega-millions,"  a woman who held a major bank position, who was a prominent college board member, to him and his development board, that day, and said that there was going to be a banking failure within a few days that would make the Bear Stearns debacle look like a walk in the park.  She said that she expected the news of this failure to hit the papers in a matter of a few days.  She also told him that the bank failure was going to be so massive that it could bring down the entire financial system.

    Yeah, she said that in July 2008.

    The woman wouldn't tell him the name of the bank, and as we walked our dogs, we spent about a half an hour speculating as to which one it might be.  Of course, as we now know, it was Lehman Brothers.

    She was warning my friend about this because she was was giving him a heads up  should know that many of their largest donors were about to be hit hard, would not be giving much this year, which could have severe consequences for the college's Development Fund.  

    Obviously, it took longer than a few days for the news of these bank failures to hit the news.  But it DID happen, just as this woman said (and no, I have no idea who she is!)  

    So, there is absolutely no way that if I knew that something like this was coming, Paulson, Bush and others like Schumer didn't know.  But we now know that they did - they knew as early as April 2008 that Lehman Bros was in big trouble.  

  •  Fire Geithner & Summers for dissing Brookley Born (4+ / 0-)

    and her warning.

    I wrote this diary on March 16th:
    Geithner & Summers should be fired for AIG deregulation & dissing Brooksley Born

    Call your Congressman and Senators

    Toll free Capitol Switchboard: 1-800-828-0498

    and President Obama

    White House Comment line:  202-456-6213 and White House comment webpage

    and tell them to kick Timothy Geithner & Lawrence Summers (his behavior toward Ms. Born answers his own question about why women have a difficult time succeeding in male dominated fields) out of the US Treasury before our country is bled bankrupt and hire back Brooksley Born and bring in nobel laureates Joseph Stiglitz and Paul Krugman, who have good judgment and lack conflicts of interest with Wall Street, to advise us.

    Information is the currency of democracy. ~ T.J.

    by CIndyCasella on Tue Oct 20, 2009 at 09:50:37 AM PDT

    •  Obama wake up! These people destroyed America. (0+ / 0-)

      In addition to contributing money, I worked my ass off to get Obama elected, only to see him make the biggest Fing mistake of all time, i.e., to hire and appoint the off spring of greenpants and $$rubin$$. Truly, after watching this TV special why anyone can continue to trust and have faith in Obama is beyond me.  I campaigned and voted "For Change", as it turns out I've received nothing more than mccain policies and henchmen wrapped in greenpant's, ala Summers and Geithner, doubleshit speak.  After watching last night's TV special, the question is not whether there will be another revolution, only the timing of the same.

      Great Diary, it should have remained on front page for no less than a week and all kossacks should watch the video at How Greenspan, Summers and Rubin F****d America

      Dreams have a way of betraying you when you use them to escape. Ask yourself why you dream what you dream.

      by brjzn on Wed Oct 21, 2009 at 05:05:10 PM PDT

      [ Parent ]

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