How the Feds Imprison the Innocent

If you are targeted by a U.S. Attorney, you are pretty much out of luck. Innocent? That's no defense.

Just ask Wisconsin's Keith Roberts and Georgia Thompson.

From Paul Craig Roberts' How the Feds Imprison the Innocent:

Harvey Silverglates’ Three Felonies A Day focuses on how federal prosecutors invent creative interpretations of statutes, sometimes creating new felonies out of vague language or thin air, felonies never legislated by Congress. Federal criminal law is today so vast and so poorly worded that Silverglate reports, truthfully, that each of us, every American, commits three felonies every day without knowing it. ...

Federal judges, an increasing number of whom are former federal prosecutors, permit the prosecution of Americans for crimes that the defendants did not know were crimes, crimes that never before existed until the federal prosecutor brought the charge. The invention of crimes by prosecutors violates every known legal principle in Anglo-American law. Yet, it has become commonplace. Defense attorneys, a group that also increasingly consists of former federal prosecutors, as Silverglate accurately reports, have lost confidence that it is possible to defend a client from a federal prosecution and see their role, not as the defense, but as negotiators of a plea bargain that reduces the charges and prison time of the defendant, no matter how innocent. Silverglate shows that many of the plea bargains create precedents that prosecutors can exploit to trap more innocent victims. ...

This is the way America works today. Just as state and local police cannot stand up to the FBI, elected state and local officials are powerless in the face of their pursuit by corrupt federal prosecutors.

Silverglate himself was the attorney in some of the landmark cases that he reports. The reader, even one with the usual illusions and delusions that blind Americans to their predicament, will be scared by Silverglate’s documented account, case by case, of how easy it is in 'freedom and democracy' America to frame the totally innocent.

In Silverglate’s concluding chapter, 'For Whom the Bell Tolls,' the answer is obvious even to a naif: 'It tolls for all.'

Obama Should Reject Neocon Lies on Iran

Few think that President Obama will actually carry through on his posturing on Iran and support an Israeli attack.

The repercussions could be devastating, to us.

For some sanity on the Iran situation, see:

- More Lies, More Deceptions

- Should any Iraq lessons be applied to Iran?

What Economy?

This morning, I was reading about Fond du Lac, Wisconsin praying to hell Mercury Marine keeps going and stays in Fondy.

"Merc," I grew up hearing the term Merc, a life entity as solid and predictable in Fondy as the Packers, beer, deer hunting in November, and Lake Winnebago.

I read about a national panel's mission to determine what caused the financial meltdown, and then I came to the prescient Paul Craig Roberts in CounterPunch.

Roberts, a Secretary of the Treasury in the Reagan administration and prolific writer, has been spot-on for the last decade, seemingly alone in predicting (several years ago) this economic disaster in which now we find ourselves.

His current piece is not reassuring unless you are vested in the Dow reaching 6,500. Here's an excerpt but read the whole thing. From Roberts:

There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical ‘New Economy.’

The ‘New Economy’ was based on services. Its artificial life was fed by the Federal Reserve’s artificially low interest rates, which produced a real estate bubble, and by ‘free market’ financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.

The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.

The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.

And now suddenly Americans can’t borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.

Meanwhile the US government’s budget deficit has jumped from $455 billion in 2008 to $2,000 billion this year, with another $2,000 billion on the books for 2010. And President Obama has intensified America’s expensive war of aggression in Afghanistan and initiated a new war in Pakistan.

There is no way for these deficits to be financed except by printing money or by further collapse in stock markets that would drive people out of equity into bonds. ...

The X Economy - It's Bad at Best

Update: Christian Menegatti in RGE Monitor: "The United States is in the 20th month of a recession that has been by far the longest and most severe of the post-war period." See also The Next Big Bad Thing? and Next Shock Coming: Commercial Real Estate.

"The American economy has gone away. It is not coming back until free trade myths are buried six feet under."

The quote above is from Paul Craig Roberts in CounterPunch (Feb. 24, 2009), an impolitic newsletter and political site that regularly tells the world hard truths about the economy and public policy.

Roberts has been warning about the dangers of hollowing out our economy through outsourcing (offshoring), big finance capturing the regulatory bodies, and the legislative branches becoming a sick joke, for years.

Roberts is now conventional wisdom.

From Robert Reich's candid piece in Talking Points Memo, dismissing the optimistic talk about a U-shaped recession, Reich writes that the global economic crisis is an X file:

The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't 'recover' because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin.

How about ditching the empire, peace instead of war, dismantling prisons and replacing them with schools, sustainability initiatives in energy, environmentally-friendly everything, legalizing most drugs; you know what the left has been advocating for the last several decades.

As for President Obama: Don't tell the world to go shopping and watch your neighborhood for terrorists as Bush did. We need an acknowledgement of the scale of the crisis and a declaration that only real change change can save the economy.

Perhaps heeding the advice of Seymour Melman, Ralph Nader, Jeffrey St. Clair, deep ecologists, radical economists ... hell, anyone who was under FBI surveillance in the 1960s-70s would help. As Noam Chomsky says: Hegemony or Survival.

Cockburn Skewers Geithner and Others

Update: John Judis ask in TNR "Are Banks Controlling Obama?" Sure seems that way. Let's call for an accounting of what went wrong, again. The culprits are greed, political complicity, and no safety net for the great mass of people who comprise our country.

Alexander Cockburn seems to blast everyone in this weekend's posting on CounterPunch (though Cockburn calling Paul Krugman or anyone else stylistically "pompous" is ridiculous).

Worthy of mention is the fact that CounterPunch is among the very few journals that tells the ugly truth about the global financial meltdown, and Cockburn points out that Krugman is almost uniquely positioned in the corporate media to offer ongoing analyses.

...In his official obituary for the bank bail-out scheme, published in the Times on (last) Monday – the same day as the scheme’s official birth -- Krugman announced somberly that 'This is more than disappointing. In fact, it fills me with a sense of despair.'

Yes, this does sound a bit pompous, even though Krugman is a crisp columnist. As connoisseurs of the Financial Times’ Martin Wolf and other prominent economic Cassandras down the decades know well, there’s nothing like a widely-read economics column to induce a tone of self-importance in the author. 'I’m concerned about Europe,' Krugman began a column grandly a few weeks ago.

By this week’s end Krugman was conclusive in judgement. 'I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.'

Far more acrid have been CounterPunch’s A-team of economic commentators – starring former assistant Treasury Secretary Paul Craig Roberts, Michael Hudson, Pam Martens, Michael Whitney, Peter Morici and other contributors too numerous for individual mention.

Matt Taibbi on the Global Economic Crisis

Trying to comprehend the Global Economic Crisis, a diligent lay reader can construct some broad narrative of the scale and motives of the financial sectors' machinations and the political and regulatory duplicity by reading Paul Craig Roberts, Nouriel Roubini's Global EconoMonitor, Paul Krugman, CounterPunch, among several other sources late at night.

But the undertaking is still like trying to understand the mathematics of SuperString Theory. We are not equipped.

Matt Taibbi's 8,700-word piece in Rolling Stone puts together the most coherent piece that I have read yet.

Check Taibbi's piece out, and bear it in mind as you read of the next attempt by the Obama administration (and the GOP pushback and its alleged concern for the everyday American) to try to contain this seeming black hole that appears to have come from nowhere and is somehow aligned with strange forces in our society, equipped with properties that transform our government into some vaguely malevolent entity. Sounds like science fiction.

Most Americans harbor vague notions that our country is run by a few powerful interests looking out for themselves. Most Americans appear to have been correct.

An excerpt from Taibbi:

So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: 'The marketplace is a pretty crummy place to be right now,' he said. 'When the world catches pneumonia, we get it too.' In a pathetic attempt at name-dropping, he even whined that AIG was being 'consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down.'

Paul Craig Roberts Warns Things Could Fall Apart

In his When Things Fall Apart (CounterPunch) former Assistant Secretary of the Treasury in the Reagan administration, Paul Craig Roberts warns "If the US government is forced to print money to cover the high costs of its wars and bailouts, things could fall apart very quickly."

Just an idea, but how about we halt these two bullshit wars in Iraq and Afghanistan like right now.

Operation Iraqi Freedom and Operation Enduring Freedom can no longer be sustained by the U.S. Treasury and can no longer be endured by the populations that were supposed to be freed.

Not one more dead!

Bailout Questions

Paul Craig Roberts has an annoying habit of being right.

So, his piece in CounterPunch today, "Was the Bailout Itself a Scam?" is a bit unsettling.

Hyper Power Corrupts

In December 2000, the Clinton administration announced projections that “the United States is on course to eliminate its public debt within the next decade.”

Then George W. Bush took over.

Discussion ensued over the next two years about the consequences of paying off the public debt in toto. It was stirring to hear the Federal Reserve Chair talk about the ramifications of this scenario before Senate committees.

Attending a critical meeting in the Bush administration in November 2002, Treasury Secretary Paul O’Neill warned of impending fiscal crises as he objected to a new round of regressive tax cuts that O’Neill saw as locking in fiscal debt were Bush to tack in the same fiscal direction. O’Neill was fired one month later.

Vice President Dick Cheney cut O’Neill off in the meeting, saying "Reagan proved deficits don't matter. We won the midterms (congressional elections). This is our due" (Ron Suskind, The Price of Loyalty; Simon and Schuster, 2004).

But Reagan had proved no such thing.

As Reagan presided over the catastrophic October 1987 stock market crash, Walter Isaacson noted:

What crashed was more than just the market. It was the Reagan Illusion: the Idea that there could be a defense buildup and tax cuts without a price, that the country could live beyond its means indefinitely. ... As he shouted Hooverisms over the roar of his helicopter ... or doddered precariously through his press conference, Reagan appeared embarrassingly irrelevant to a reality that he could scarcely comprehend. Stripped of his ability to create economic illusions ... he elicited the unnerving suspicion that he was the emperor with no clothes. [Time Magazine, November 2, 1987
pp. 20-21. Quoted in Haynes Johnson, Sleepwalking Though History, pp. 385-386; W.W. Norton, 1991] (It's worth noting that assertions that Reagan was a deregulator of markets is a myth, though he did share with George W. Bush a profound ignorance of policy, and though Reagan had neocon aspirations, they were knocked down after Iran-Contra blew. His true heir is George W. Bush who took the first term of Reagan's and streched it to its absurd and destructive conclusion.)

Now, eight years after the Clinton announcement projecting the end of public debt, we have a $10 trillion national debt and $500 billion projected annual fiscal deficit.

Many wonder whether foreign investors might decide to find greener pastures than twenty-first century America, resulting in dire consequences to the American way of life should this occur.

As “old Europe” and Latin America and indeed most of the world engage in schadenfreude, many mainstream intellectuals in America now openly wonder if America is "A Power That May Not Stay So Super."

Greed-and-crony finance, deregulation, corruption, and eight years of nihilistic politics may spell the beginning of the end of America as a hyper power and the launching of something new, something better.

As American citizens something new is our due.

We should have listened to warnings issued before. We can listen now.

From September 26, 2005 in CounterPunch, an excerpt from a piece by Paul Craig Roberts:

George W. Bush will go down in history as the president who fiddled while America lost its superpower status. Bush used deceit and hysteria to lead America into a war that is bleeding the US economically, militarily, and diplomatically. ... Once China completes its acquisition of US capabilities, it will no longer have a reason to support the dollar. ... When the dollar goes, it will affect costs, profits, interest rates and living standards in dramatic ways. Costs and interest rates will soar, and profits, living standards, equity values, bond prices and real estate will plummet. ...
These unpleasant events await only Asia's decision to curtail its support for US red ink. That will happen when this support no longer serves Asia's interest. ...
Time is running out for Republicans and Democrats to escape from the distraction of a pointless war and to focus on the real threats that endanger the United States of America.

Risk of Severe Global Depression

One does not need to be a Cassandra to suggest that the "world is at severe risk of a global systemic financial meltdown and a severe global depression," but RGE Monitor's site warning of just that is worth giving a read in light of recent financial market developments.

RGE Monitor "delivers ahead-of-the-curve global economic insights that financial professionals need to know. (Their) analysts define the key geostrategic debates and continuously distill the best thinking ... ."

At Counterpunch, Paul Craig Roberts offers an outline of a possible solution to the crisis suggesting: Refinancing the troubled mortgages, carefully re-regulated financial markets, addressing US budget and trade deficits, halting the Bush wars, cutting the extravagant US military budget, among other fiscal and regulatory reversals.

Roberts on Wall Street: Bush Loosed Greed onto Imprudence

Update II: 'Fear' Index at All-time Intraday High
Update: Five percent down and dropping

Paul Craig Roberts ought to be required reading for all policy makers during this apparently long period of multiple crises.

Holding the Clinton and the George W. Bush administrations accountable for the financial crises currently (as in right this second) shaking the world, Paul Craig Roberts points to three extraordinary culprits:

- The repeal of the repeal of the Glass-Steagall Act [known as the Financial Services Modernization Act of 1999], repealing the separation of commercial from investment banking, that was signed into law during the Democratic Clinton Administration in 1999

- The exclusion of derivatives and credit default swaps from regulation in 2000

- And most importantly:

The greatest mistake was made in 2004, the year that Reagan died. That year the current Secretary of the Treasury, Henry M. Paulson Jr, was head of the investment bank Goldman Sachs. In the spring of 2004, the investment banks, led by Paulson, met with the Securities and Exchange Commission. At this meeting with the New Deal regulatory agency tasked with regulating the US financial system, Paulson convinced the SEC Commissioners to exempt the investment banks from maintaining reserves to cover losses on investments. The exemption granted by the SEC allowed the investment banks to leverage financial instruments beyond any bounds of prudence.
In place of time-proven standards of prudence, computer models engineered by hot shots determined acceptable risk. As one result Bear Stearns, for example, pushed its leverage ratio to 33 to 1. For every one dollar in equity, the investment bank had $33 of debt!

We Were Told of Crisis Beforehand

Before the bailout crisis dominated the political and financial news, a high-circulation political newsletter, CounterPunch, continued its breaking analyses and exclusives on its free website, sounding alarms to which we all should have listened.

Prominent among CounterPunch writers is Paul Craig Roberts, former assistant secretary of the Treasury in the Reagan administration and former associate editor of the Wall Street Journal editorial page, and former contributing editor of National Review.

Roberts has been warning for years that America is hollowing out its labor force, and is in clear and present danger of a market crash with clearly dangerous ramifications.

Writes Roberts:

In American today the greatest rewards go to investment bankers, who collect fees for creating financing packages for debt. These packages include the tottering subprime mortgage derivatives. Recently, a top official of the Bank of France acknowledged that the real values of repackaged debt instruments are unknown to both buyers and sellers. Many of the derivatives have never been priced by the market.

Think of derivatives as a mutual fund of debt, a combination of good mortgages, subprime mortgages, credit card debt, auto loans, and who knows what. Not even institutional buyers know what they are buying or how to evaluate it. Arcane pricing models are used to produce values, and pay incentives bias the assigned values upward.

‘Richistan’ [a financial reality derided by Robert Frank as the new American world of the super-rich operating virtually unregulated] wealth may prove artificial and crash, bringing an end to the new Gilded Age.

Roberts wrote that in an August 2, 2007 piece, The Return of the Robber Barons.

Roberts also notes that the titans of American capitalism, Warren Buffet and Bill Gates, particularly Buffet, offer proressive advice on fiscal and regulatory policy. Buffet's thoughts on fiscal and tax policy in line with mainstream progressive Democratic thought, arguing for a progressive income tax structure and against rising inequality in America under neocon economic doctrine.

Some of the super rich, such as Warren Buffet and Bill Gates, have benefited society along with themselves. Both Buffet and Gates are concerned about the rapidly rising income inequality in the US. They are aware that America is becoming a feudal society in which the super-rich compete in conspicuous consumption, while the serfs struggle merely to survive.

No doubt then that Roberts is a talking head seen on every major broadcast network, achieving a celebrity as some sort of oracle and prophet to whom we all should have listened. Right?

But the reasons for excluding writers such as Roberts ought to be contemplated by every thinking American.

Roberts latest piece, Bail Out the Homeowners!, makes the argument that the American government ought work directly for the American people.

Congress should focus the bailout on refinancing the troubled mortgages as the Home Owners’ Loan Corp. [other radicals like Alan S. Blinder, professor of economics and public affairs at Princeton and former vice chairman of the Federal Reserve are on board with the idea] did in the 1930s, not on the troubled institutions holding the troubled instruments linked to the mortgages.

CounterPunch and Paul Craig Roberts--dangerous people indeed, who must be excluded from the broadcast networks of our country, lest they reach too many people.

Let's hope President Obama pays heed.

NYT v CP

For differing perspectives on Wall Street, see:

CounterPunch - "Call centers, IT operations, back-office operations, and manufacturing have long been moved offshore. Now high-value-added proprietary activities such as research and development, engineering, product development, and analytical services are being sent offshore. All that’s left is finance, and it is crumbling before our eyes."
- Paul Craig Roberts, Assistant Secretary of the Treasury in the Reagan administration, former Associate Editor of the Wall Street Journal editorial page, and former Contributing Editor of National Review.

NYT Business Page

Coming Destruction of U.S. Economy, Says Roberts

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration, Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review.

Not a man to ring alarms loudly.

Roberts is sounding the alarms now.

From CounterPunch:

On December 8, Chinese and French news services reported that Iran had stopped billing its oil exports in dollars. ...

(T)he evidence is that foreigners are not finding dollar-denominated assets sufficiently attractive. The dollar has declined dramatically during the Bush regime regardless of the fact that oil is billed in dollars. Iran is dropping dollars in response to the dollar's loss of value. This is a market response to a depreciating currency, not a punitive action by Iran to sink the dollar. ...

Offshoring interests and economic dogmas have combined to create a false picture of America's economic position. While the ladders of upward mobility are being dismantled, Americans are being told that they have never had it better.
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