(For previous posts in this series, see here.)

It is not just Geithner who is a slave to Wall Street interests. Key economic advisor in the Obama administration Lawrence Summers, although he comes from academia, is also enmeshed in that world. In just 2008 alone, Summers received $5.2 million from the hedge fund firm D. E. Shaw. Mind you, he was still a full-time professor at Harvard at that time, so this was for just part-time work. (Jonathan Schwarz breaks down the links to all his financial dealings.)

Summers also received $135,000 as a speaking fee for two speeches given at Goldman Sachs, the company that has been, and continues to be, a huge beneficiary of the bailout. (Recall that the previous Treasury Secretary Henry Paulson and before that Robert Rubin also used to head that same firm). At that time, Summers was already heavily involved in the Democratic campaign and it was clear that he would be a major player in either the Obama or Clinton administration. So Goldman Sach was likely buying “insurance” or, as Glenn Greenwald says, paying an “advanced bribe”, making sure that a friendly face would be in a major decision making position in the new Democratic administration, since they could not pay him once he joined the administration.

Here’s another examination by David Sirota of the close-knit and like-minded people from both parties who control economic policy.

At the top is Lawrence Summers, the director of Obama’s National Economic Council. As Bill Clinton’s Treasury secretary in the late 1990s, Summers worked with his deputy, Tim Geithner (now Obama’s Treasury secretary), and Clinton aide Rahm Emanuel (now Obama’s chief of staff) to champion job-killing trade deals and deregulation that Obama Commerce Secretary-designate Judd Gregg helped shepherd through Congress as a Republican senator. Now, this pinstriped band of brothers is proposing a “cash for trash” scheme that would force the public to guarantee the financial industry’s bad loans. It’s another ploy “to hand taxpayer dollars to the banks through a variety of complex mechanisms,” says economist Dean Baker—and noticeably absent is anything even resembling a “rival” voice inside the White House.

This financial oligarchy makes sure that those who are not with the program of letting the big financial firms have unfettered control over the economy get shut out of power. The story of Brooksley Born, former head of the Commodity Futures Trading Commission, is illustrative. She describes how her efforts in the 1990s to bring the wild derivative markets that caused the current crisis under regulation was vigorously opposed and defeated by a coalition of Alan Greenspan (then head of the Federal Reserve), then Treasury Secretary in the Clinton administration Robert Rubin (who used to head Goldman Sachs), and Lawrence Summers. Her story shows the bi-partisan nature of the protection given to Wall Street’s interests.

As chairperson of the CFTC, Born advocated reining in the huge and growing market for financial derivatives. Derivatives get their name because the value is derived from fluctuations in, for example, interest rates or foreign exchange. They started out as ways for big corporations and banks to manage their risk across a range of investments. One type of derivative—known as a credit-default swap—has been a key contributor to the economy’s recent unraveling.
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Back in the 1990s, however, Born’s proposal stirred an almost visceral response from other regulators in the Clinton administration, as well as members of Congress and lobbyists. The economy was sailing along, and the growth of derivatives was considered a sign of American innovation and a symbol of the virtues of deregulation. The instruments were also a growing cash cow for the Wall Street firms that peddled them to eager takers.

Ultimately, Greenspan and the other regulators foiled Born’s efforts, and Congress took the extraordinary step of enacting legislation that prohibited her agency from taking any action. Born left government and returned to her private law practice in Washington. (my italics)
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Speaking out for the first time, Born says she takes no pleasure from the turn of events. She says she was just doing her job based on the evidence in front of her. Looking back, she laments what she says was the outsized influence of Wall Street lobbyists on the process, and the refusal of her fellow regulators, especially Greenspan, to discuss even modest reforms. “Recognizing the dangers . . . was not rocket science, but it was contrary to the conventional wisdom and certainly contrary to the economic interests of Wall Street at the moment,” she says.

All this occurred during Bill Clinton’s administration during which Republicans controlled both houses of Congress for most of the time. So the concept of ‘divided government’ applies only as long as Wall Street interests are not involved. We see that all these people from across the political spectrum, so-called conservatives and so-called liberals, Democrats and Republicans, united to give Wall Street a free hand by removing restrictions from the financial institutions and thus sowed the seeds of the current crisis, showing how the financial oligarchy maintains continuity even though political parties come and go.

Alan Greenspan was such a die-hard Ayn Rand devotee that he even told Bonds that he did not think there should be any laws against fraud because the market would take care of things. We saw how well that turned out. The problem is that in an oligarchic system as currently exists, market forces only apply to powerless people. When the markets turn against the big financial interests, they have the power and influence to get the government to use taxpayer money to bail them out. Oligarchies never lose unless there is a popular revolt.

POST SCRIPT: The need for strong oversight

Jon Stewart has an excellent two-part interview with Elizabeth Warren, chair of the Congressional Oversight Panel on TARP (Troubled Asset Relief Program), who has been charged with overseeing the current bailout.

Part 1 explains what is going on now and part 2 explains clearly how we got into this mess and what we need to do in the future.

Part 1:

The Daily Show With Jon Stewart	M – Th 11p / 10c
Elizabeth Warren Pt. 1
thedailyshow.com
Daily Show Full Episodes Economic Crisis Political Humor

Part 2:

The Daily Show With Jon Stewart	M – Th 11p / 10c
Elizabeth Warren Pt. 2
thedailyshow.com
Daily Show Full Episodes Economic Crisis Political Humor

My concern is that because Warren seems to be honest and smart, she may be seen as a thorn in the side of the oligarchy which will try to make her serve as the usual window dressing to make it look as if there is accountability when in reality there is none. It seems clear that she is already being slowly frozen out of the information loop by the Obama administration. I wonder how long it will be before she quits in frustration, like Brooksley Born.

For some reason that I cannot figure, the last half-dozen or so comments disappeared, including some of my own. My apologies.

The second annual Ask an Atheist forum on February 5 was quite well attended. There were four of us on the panel answering questions. One question dealt with how it came to be that each of us did not believe in god’s existence, and the answers were pretty much the same, that although we had all been brought in religious families, we each realized at some point that it was silly to believe in something which violated all the laws of science and for which there was no evidence.

During my answer, I said that I was somewhat embarrassed that I had arrived at this realization so late in life (in my thirties) while my fellow panelists, two of whom were students, had figured this out while still in their teens. It still amazes me that I did not come to my realization sooner. After all, I had atheist friends in my teens and we argued about god and religion. But their arguments did not convince me then and that makes me wonder how I could have been so oblivious for so long.

I think I have discovered the answer. My atheism was caused by Mac computers.

I began disbelieving in the mid-1980s, around the same time that the Apple Macintosh computers were introduced. I remember the sense of excitement about using the first Macs when they came out in 1984 when Drexel University installed a lab of them and I had so much fun with them. I immediately realized that these were the computers I wanted to use, even though I did not get my own until 1989.

My realization that Macs were the true causes of my conversion to atheism was triggered by this page of the website of an outfit called Objective Ministries that clearly lays out the case of how Apple is the agent of Satan. Little did I know that I was being seduced by the revolutionary new ‘point and click’ operating system into giving up my god-fearing ways, whereas my young fellow panelists had grown up in the age of Macs and thus were indoctrinated much earlier in their lives.

So it is clear that the Macintosh line of computers is deliberately turning people to atheism. This raises an interesting question. If Macs are the tools of the Devil, is Steve Jobs the anti-Christ? Does that make Bill Gates the second coming of Jesus? The incomprehensibility of the old DOS operating system does remind one of religious doctrine. Is Armageddon already here, except that the fight is over market share for personal computers?

Actually, the Objective Ministries website linking Macs to the Devil is a parody but is so well done that initially I was fooled and thought it was real, yet another product of the paranoia of religious people seeing dark plots against religion in all kinds of unlikely places. Another page on this same site that also initially fooled me says that Objective Ministries is seeking to launch an expedition to find living pterosaurs in order to disprove the theory of evolution which says that humans and dinosaurs did not live contemporaneously. It was only when I started researching into who “Dr. Richard Paley” was and the “Fellowship University” where he supposedly taught something called “theobiology” that I discovered the truth.

That I was almost completely taken in by these hoaxes is because religious websites are often so weird and illogical in their message that it is hard to distinguish the real thing from a clever parody. The websites of the religious are so irrational as to make ripe targets for parodists and some are having a lot of fun doing so.

Not all seeming parodies are really so. The website of the Westboro Baptist Church is so over-the-top in its anti-gay bile that it seems like a parody. But the numbers of real people it gets out for its demonstrations seem to suggest that it is either real or has a huge numbers of performance artists working for it for a long time, which seems unlikely. Similarly the counting down to Armageddon of the Rapture Ready site is not known as a parody but its premise is so absurd that it would not surprise me if it was.
Conservapedia is not a parody (as far as I know) but its Wikipedia-modeled open editing platform has led to suspicions that many of the entries are by parodists actually mocking religion, while seeming to be earnest supporters of its 6,000 year old world view.

Although the cover of Objective Ministries has not been completely blown yet, there are some well-known parodies of religious websites that are fun even though, and perhaps because, you know they are parodies. Jesus’ General, Landover Baptist Church, Betty Bowers, America’s Best Christian, and the Church of the Flying Spaghetti Monster are some examples.

But coming back to the issue of the link between atheism and computer preference, Objective Ministries may be on to something, when it asserts in jest that there is a correlation, even a weak one, between using a Mac and religious disbelief. One interesting study might be to see if Mac users are more likely to be unbelievers than Windows or Linux users. Maybe the Pew Research Center should add this question when it conducts its next survey of the religious beliefs of people.

POST SCRIPT: Cookie Monster does not quite get the library concept

In response to the Israeli attack on Gaza, the US and UK governments and the mainstream media in those countries have been as usual almost unanimous in their support for the Israeli actions and in condemning the Palestinians.

Paul Craig Roberts comments on the underlying reasons why Gaza is being strangled and the hypocritical reactions of especially the US and UK governments.

Israel’s excuse for its violence is that from time to time the Palestinian resistance organization, Hamas, fires off rockets into Israel to protest the ghetto life that Israel imposes on Gazans. The rockets are ineffectual for the most part and seldom claim Israeli casualties. However, the real purpose for the Israeli attack is to destroy Hamas.

In 2006 the US insisted that the Palestinians in Gaza and the West Bank hold free elections. When free elections were held, Hamas won. This was unacceptable to the Americans and Israelis. In the West Bank, the Americans and Israelis imposed a puppet government, but Hamas held on in Gaza. After unheeded warnings to the Gazans to rid themselves of Hamas and accept a puppet government, Israel has decided to destroy the freely elected government with violence.
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For the US and UK governments, Israel can do no wrong. Israel doesn’t have to stop withholding food, medicine, water, and energy, but Hamas must stop protesting by firing off rockets. In violation of international law, Israel can drive West Bank Palestinians off their lands and out of their villages and give the stolen properties to “settlers.” Israel can delay Palestinians in need of emergency medical care at checkpoints until their lives ebb away. Israeli snipers can get their jollies murdering Palestinian children.

The Great Moral Anglo-Americans couldn’t care less.

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The more accurate parallel for what is happening in South Ossetia is not Iraq but Kosovo.

But mention of Kosovo is largely absent from the current discussions because the parallel between what happened there and what is happening in South Ossetia undercuts the basis for the west’s anger at Russia. So Kosovo must be made to disappear. As Aldous Huxley said, “Great is truth, but still greater, from a practical point of view, is silence about truth. By simply not mentioning certain subjects… totalitarian propagandists have influenced opinion much more effectively than they could have by the most eloquent denunciations.” Justin Raimondo, in an essay that traces the origins and resurgence of Russophobia says that “Official censorship simply isn’t necessary in the West, because everyone knows what to say – and, more importantly, what not to say.
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In addition to watching 2001: A Space Odyssey recently, I also indulged in a personal mini-Arthur C. Clarke festival, re-reading his novels Childhood’s End and Rendezvous with Rama, and reading for the first time his short story The Sentinel that contains as its central idea a key plot element that reappeared in 2001.

One of the interesting things about Clarke’s books is how for him, it is the science that is the most interesting element. That, and his vision of what future society will be like, are what moves his stories along. He tends to eschew traditional storytelling devices such as love, intrigue, violence, and all the other strong emotional factors. His stories focus less on fleshing out the characters and more on how normal human beings might react when they encounter an astounding new piece of information, such as making contact with intelligent life from elsewhere in space.
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(For previous posts in this series, see here.)

The most basic problem with almost any religion is the fact that they raise ‘faith’, which is the irrational acceptance of things in the absence of, or even counter to, credible evidence and reason, to the level of a virtue. This is simply asking for trouble. Once you have said that you believe something just because some book says so or some inner voice tells you to do so, you have lost all standing to condemn others whose own inner voices (or the voices of their priests, rabbis, or imams) tell them to do unspeakable acts in the name of obeying god’s will.

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Dean Baker (co-director of the Center for Economic and Policy Research in Washington, DC) argues that the US is heading towards a recession, if not already in one, and he says that the main cause is the collapse of the housing bubble and not the spending on the Iraq war, though that is not helping either.

The villains in this story are the economists who somehow couldn’t see an $8 trillion housing bubble, the banks that fueled the bubble with bad and often predatory loans, the regulatory institutions that did nothing to prevent the growth of the bubble and the spread of predatory loans, and most of all, Alan Greenspan and the Fed who blessed the whole thing.

We have to hold these folks responsible for their bubble economics. The best place to start would be to remove them from positions where they are still making economic policy.

On Tuesday, we saw the Federal Reserve decide to pump $200 billion into the financial system to try and alleviate the crisis and it sent stock prices soaring that day.

I didn’t understand exactly what they did or how it was supposed to work because the news was reported in a very obscure way. Fortunately for people like me, in another article Baker explains clearly what is going on here and argues that the media is not characterizing this action for what it really is: a federal bailout of the banks that were partly responsible for this mess.

Can’t the media find any economists who don’t think that handing hundreds of billions of taxpayer dollars to the big banks and the incredibly rich people who own and manage them is a good idea? Apparently not, given the coverage so far to the Fed’s proposal to lend $200 billion to the banks using mortgage backed securities as collateral.

The workings of the Fed and the financial markets can appear complicated, so let’s simplify matters a bit to make it more clear what is going on here. Suppose that it was suddenly discovered that much of the wealth held by the country’s leading financial institutions was in fact counterfeit. Instead of having hundreds of billions of dollars of real currency in their vaults, institutions like Citigroup, Merrill Lynch, and Bears Stearns actually had hundreds of billions of dollars of counterfeit currency. Suppose further that the public did not know exactly who held what in terms of counterfeit currency, only that all of them had a lot of it. (The point here is that these banks hold mortgage backed securities, many of which are only worth a fraction of their face value, and therefore can be viewed as the equivalent of counterfeit currency.)

In such circumstances, investors would be very reluctant to accept the credit of any of the major financial institutions. They couldn’t know whether most of their assets were in fact counterfeit, and they were dealing with a bankrupt institution, or whether the counterfeit currency was only a limited share of the wealth, which would not jeopardize the institution’s ability to meet its obligations.

This is in fact the credit squeeze that we’ve have recently witnessed. The spread between the interest rates on a wide variety of assets and the interest rate on safe assets (U.S. government debt) has soared. As a result, the Fed’s effort to stimulate the economy, by lowering the federal funds rate, has been largely unsuccessful because other interest rates have remained high.

In response to this situation the Fed today announced that it would lend $200 billion to banks and other financial firms, accepting mortgage backed securities as collateral. This is effectively the same as saying that the Fed is going to lend money to banks and accept the counterfeit currency as collateral, treating it just as though it were real money.

The intended effect of this policy is to convince other investors that the counterfeit currency is in fact real currency, or at the very least that there is a really huge sucker out there (the Fed) which is prepared to treat the counterfeit currency as real currency.

So how does this story play out? Well, insofar as the Fed is successful, the counterfeit currency retains its value for a while longer. This allows Citigroup, Merrill Lynch, Bears Stearns and the rest of the big boys more time to dump their counterfeit currency on suckers who haven’t figured out how the game is played.

It is possible that they won’t be able to find enough suckers, in which case these banks will end up defaulting on their loans and the Fed (i.e. the government) has lost tens or hundreds of billions dollars paying good money for counterfeit currency. Alternatively, perhaps the big boys are successful and can offload enough of their counterfeit money to restore themselves to solvency before the music stops. Then the Fed is repaid, but the counterfeit money now sits in the hands of other, less informed, or less inside, investors.

You should really read the whole of this excellent article.

Baker shows how once again, we have the Federal Reserve colluding with the government to use taxpayer money to protect and enrich the wealthiest people in the country.

POST SCRIPT: The work of Satan

Almost everyone has had encounters with those annoying little plastic containers of milk that always seem to squirt onto your clothes when you try to open them. Stephen Fry and Hugh Laurie deal with this menace appropriately.

In the current race for the presidency, it has become clear that among the candidates who might be suitable, the Villagers are supporting Hillary Clinton and Barack Obama on the Democratic side and Mitt Romney, Rudy Giuliani, and John McCain on the Republican side. All of them have made the proper obeisance to the Village gods.
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