Friday, July 31, 2009

Matt Taibbi Has A Reminder For People At His Favorite Firm
from Dealbreaker

When asked today about whether GS acutally had better people which
helped them avoid a Lehman-like end, Taibbi spelled it out in crystal
clear terms by saying,"they're not smarter than other people" and then
launched into his government consipracy theory to explain the firm's

If you've got half an hour to kill, you can listen to the Mad Max Tour
warm up music in its entirety

Health deal sparks fury on the left
By Mike Soraghan, Jeffrey Young and Jared Allen
Posted: 07/29/09 08:36 PM [ET]

A House leadership deal with Blue Dogs and an aggressive marketing
push by Sen. Max Baucus (D-Mont.) shifted the healthcare debate
sharply toward centrist positions Wednesday, sparking threats of
rebellion from the left.

The day's events left the Senate Finance Committee's emergent bill as
the most viable vehicle on Capitol Hill, but also made clear that
House Democrats are still riven by bitter disagreements. Democrats
postponed a floor vote until after the August recess, meeting a top
demand of centrist Blue Dogs.

The Blue Dogs' deal, which cut $100 billion from the healthcare reform
price tag, was instantly denounced by Rep. Lynn Woolsey (D-Calif.),
co-chairwoman of the Congressional Progressive Caucus, who said, "It's
unacceptable. We're not going to vote for anything that doesn't have a
robust public plan."

Liberals aimed to win 50 signatures on a letter to their leaders
opposing the deal to make it clear they could defeat the healthcare
bill on the floor.

"Fifty is our threshold," said Rep. Raúl Grijalva (D-Ariz.), a
co-chairman of the caucus. "That'll kill anything."

The White House and Democratic leaders moved quickly to try to quell
the liberal insurrection. Speaker Nancy Pelosi (D-Calif.) called a
group of liberals to her office in the mid-afternoon, and Democrats
postponed plans to continue a stalled markup of the bill by the Energy
and Commerce Committee until Friday. Instead, they held a caucus
meeting to answer member questions.

"It's more important to let members ask questions, raise concerns,"
said Rep. Henry Waxman (D-Calif.), the chairman of Energy and

Within hours of the liberal complaints, Obama was on the phone with
Rep. Jan Schakowsky, a fellow Illinois Democrat and Energy and
Commerce member who is in charge of the healthcare issue for the
Progressive Caucus.

He told her the bill should go forward, Schakowsky said.

The White House also released a statement from Obama that singled out
"some" Blue Dogs on Energy and Commerce for striving to find "common

"Those efforts are extraordinarily constructive in strengthening this
legislation and bringing down its cost," he said.
Baucus, the chairman of the Finance panel, moved to aggressively sell
the draft legislation he is negotiating with Republicans and Democrats
on his committee as a cost-effective way of expanding health insurance
coverage to 95 percent of U.S. residents.

Baucus said he and the five other senators working on the bill are not
ready to announce a deal, but described a preliminary Congressional
Budget Office (CBO) analysis of their work as a piece of "good news"
that could reframe the debate over healthcare reform on Capitol Hill.

"The current draft of the bill scores below $900 billion over 10
years, covers 95 percent of all Americans by 2015 and is fully
offset," said Baucus. "In fact, according to the preliminary CBO
report, the bill would actually reduce the federal deficit in the 10th
year by several billion dollars."

Those points could draw support to the bill from centrist Democrats in
both chambers, and possibly even Republicans.

But Sen. Mike Enzi (R-Wyo.), one of the senators negotiating with
Baucus, warned a deal is not yet at hand. "We still have several areas
where we haven't been able to come to a consensus," Enzi said in a

With liberal Democrats on and off the Finance Committee already
angling to pull the measure to the left when it is combined with a
rival passed by the Health Committee, Enzi indicated his support is
contingent on Democratic leaders leaving any Finance Committee
agreement intact.

"I also need commitments from Sen. [Harry] Reid [D-Nev.] and Speaker
Pelosi, as well as the administration, that the bipartisan agreements
reached in the Finance Committee will survive in a final bill that
goes to the president," Enzi said.

That's a problem, since the draft bill already promises to be a tough
sell for liberals. It eschews two central Democratic priorities: the
creation of a government-run public insurance plan option and a
requirement that most employers provide health benefits.

The other Finance Committee members involved in the talks are ranking
member Chuck Grassley (R-Iowa), Democratic Sens. Kent Conrad (N.D.)
and Jeff Bingaman (N.M.) and Republican Sen. Olympia Snowe (Maine).

Delaying a House vote was a key demand of Blue Dogs', who wanted time
to sell the bill to their constituents, particularly after some were
beat up for supporting a controversial climate change bill approved by
the House in June.

"We've achieved the victory of not having a vote on the House floor,
[which] will give every member a chance to digest what's in the bill,
whether it's in a markup that occurs in Energy and Commerce or whether
it's as the bill exists right now," Rep. Stephanie Herseth Sandlin
(D-S.D.) said.

Leaders also agreed to allow states to create health "co-ops" that
would compete with the government-run "public option" and private
insurers, which deals a blow to liberals.

To lower the bill's cost, Waxman agreed to loosen the employer mandate
so that it covers businesses with payrolls of $500,000 or more,
instead of $400,000. Rates on the "public option" will not be tied to
Medicare, but negotiated separately, as private insurers do.

The House deal split the seven Blue Dogs who had been threatening to
block the bill, and it's unclear how many of the 52-member coalition
will sign onto it. Waxman struck the deal with only four: Reps. Mike
Ross (Ark.), Bart Gordon (Tenn.), Baron Hill (Ind.) and Zack Space
(Ohio). The three who did not agree to the deal are Reps. John Barrow
(Ga.), Charlie Melancon (La.) and Jim Matheson (Utah).

Democrats now hope to have the House Energy and Commerce Committee
conclude its markup of legislation before the chamber adjourns on

Finance could still stage a markup before the Senate leaves on Aug. 7
for its recess, but negotiators seemed skeptical that would happen. "I
think it's kind of difficult to get it there," Grassley said during a
conference call with Iowa reporters Wednesday.

In Letter, House Progressives Object To Blue Dog Public Option Compromise

By Brian Beutler - July 30, 2009, 2:28PM

In a letter to be delivered to Speaker Nancy Pelosi and House health
care leaders, Congressional progressives will reject a compromise Rep.
Henry Waxman (D-CA) forged with Blue Dog Democrats to advance
legislation. "We regard the agreement reached by Chairman Waxman and
several Blue Dog members of the [Energy and Commerce] Committee as
fundamentally unacceptable," it reads.

This agreement is not a step forward toward a good health care bill,
but a large step backwards. Any bill that does not provide, at a
minimum, for a public option with reimbursement rates based on
Medicare rates - not negotiated rates - is unacceptable.

You can read the letter, the text of which was obtained by TPMDC,
below the fold. It was being circulated for signatures until early
this afternoon*, and could be released officially later today. Members
of the Congressional Progressive Caucus are hoping 50 or more members
will sign on, to prove they have enough votes to kill the final bill.
Earlier today, over 30 had added their names to it, according to one
source, but that number could have grown. We'll get you more details
as they're made available.

Late update: House Progressives have announced that they've rounded up
53 signatures--if every one of them legitimately votes against a bill
that incorporates the compromises the Blue Dogs extracted, they would
kill it.

Late, late update: * After making it to 50 signatures, progressives
will continue to seek signatures, hoping to achieve 60.

July 31, 2009

The Honorable Nancy Pelosi The Honorable Henry Waxman
Speaker Chairman

U.S. House of Representatives House Committee on
Energy and Commerce

H-232, The Capitol 2125
Rayburn House Office Building

Washington, DC 20515 Washington, DC 20515

The Honorable Charles Rangel The Honorable George Miller

Chair Chair

House Committee on Ways and Means House Committee on
Education and Labor

1102 Longworth House Office Building 2181 Rayburn House Office Building

Washington, DC 20515 Washington, DC

Dear Madame Speaker, Chairman Waxman, Chairman Rangel, and Chairman Miller:

We write to voice our opposition to the negotiated health care reform
agreement under consideration in the Energy and Commerce Committee.

We regard the agreement reached by Chairman Waxman and several Blue
Dog members of the Committee as fundamentally unacceptable. This
agreement is not a step forward toward a good health care bill, but a
large step backwards. Any bill that does not provide, at a minimum,
for a public option with reimbursement rates based on Medicare rates -
not negotiated rates - is unacceptable. It would ensure higher costs
for the public plan, and would do nothing to achieve the goal of
"keeping insurance companies honest," and their rates down.

To offset the increased costs incurred by adopting the provisions
advocated by the Blue Dog members of the Committee, the agreement
would reduce subsidies to low- and middle-income families, requiring
them to pay a larger portion of their income for insurance premiums,
and would impose an unfunded mandate on the states to pay for what
were to have been Federal costs.

In short, this agreement will result in the public, both as insurance
purchasers and as taxpayers, paying ever higher rates to insurance

We simply cannot vote for such a proposal.


US job cuts, foreclosures mount

By Tom Eley
31 July 2009

This week brought new indications that any economic "recovery" in the US will not be shared by the working class. Telecommunications giant Verizon announced that it would eliminate 8,000 jobs by the end of the year, new data showed that the foreclosure crisis is continuing to mount, and weekly initial jobless benefit claims rose.

What is emerging is a protracted period of extremely high unemployment and growing social misery, which will be used to further slash wages, increase productivity and lower the standard of living and social position of the working class.

Verizon will reduce its workforce by 8,000 for the second year in a row, after announcing a 21 percent decline in quarterly profits. The staff reductions will come largely through attrition, the company said, and will be focused on its land-line traditional phone service, which a growing number of consumers are abandoning.

Among other layoff announcements, some 1,000 workers will be dismissed from Ormet Aluminum in Monroe County, Ohio on September 1. Only 15,000 people live in the county, which is located close to the border with West Virginia.

The motorcycle manufacturer Harley-Davidson will lay off 398 workers in Milwaukee at the end of September.

The small business web site firm, Intuit, is carrying forward plans to lay off 120 workers nationwide. And Yahoo! CEO Carol Bartz has confirmed that her company's new search engine venture with Microsoft will lead to an as yet unknown number of redundancies.

More widespread job losses appear imminent. Bank of America CEO Kenneth Lewis said this week he intends to close over 600 branches. No time frame was given for the closures, which could affect thousands of workers.

It is anticipated that the other embattled financial giant, Citigroup, will follow suit. As the on-line business analysis journal 24/7 Wall Street reported, "[T]he financial industry is not done pruning jobs, not by a long shot."

The United States Postal Service (USPS) has said that it is considering shutting down a sizable majority, 3,105 of 4,851, of its post office branches and stations. Citing a growing operating deficit, USPS said the closures would target metropolitan areas.

It is not clear how many layoffs might result, but last year USPS said that 16,000 workers with fewer than six years experience—and hence unprotected by union seniority rules—could face layoffs. If carried forward, this would mark the first mass layoff in the history of the US postal system. Last year USPS reduced its workforce by 41,000 through attrition and a hiring freeze.

A number of industries are likely to pile on further layoffs in the coming months. The biggest blow could come from the retail sector, which continues to be punished by low levels of consumer confidence, which is, in turn, driven by layoffs and the threat of more to come. The Conference Board announced this week that its consumer confidence index fell to 46.6 in July. The fall was more than economists had expected, and marked the second straight monthly decline.

New US Labor Department data show that unemployment increased from May to June in 348 of 370 major metropolitan areas. The Detroit area saw the largest increase, 2.2 percent to 17.1 percent. In Monroe, Michigan, unemployment matched Detroit at 17.1 percent, after the city experienced the third-sharpest increase in the country. One exception was El Centro, California, where unemployment fell by 1.2 percent to 27.5 percent—still the highest rate in the country.

This week's Labor Department number of initial jobless benefit claims, 584,000, exceeded economists' projections and far surpassed the 300,000 to 350,000 threshold required to maintain steady national employment levels. At the same time, the number of people receiving unemployment insurance decreased for the third consecutive week. This is largely attributable to a growing number of workers exhausting their benefits.

While economists anticipate that the rapidity of layoffs will decrease, they agree that a wave of hiring is unlikely. There is a consensus that the official unemployment rate will rise past 10 percent by the beginning of 2010—pushing the real unemployment rate toward 20 percent—and that high unemployment will characterize the US economy for years to come.

Bill Gross, founder of the world's largest bond fund manager, Pacific Investment Management Co. (PIMCO), wrote in a recent newsletter that nominal gross domestic product must grow at an annualized rate of 5 percent to avoid permanent high unemployment. If not, "employment levels become unsustainable, retail shopping centers unserviceable, automobile production facilities unprofitable, and the economy itself heads toward a new normal where unemployment averages 8 percent instead of 5 percent, housing starts total 1.5 instead of 2 million, and domestic auto sales 12, instead of 16 million annual units," he said.

Foreclosures continue to mount, no longer driven by the subprime mortgage market, but by layoffs and wage cuts to homeowners with prime loans. RealtyTrac Inc., which monitors US foreclosure activity, said that foreclosure activity rose to a record level in the first half of the year, when over 1.5 million homeowners received a default or auction notice or had their homes appropriated by lenders.

Obama's plan to reduce foreclosures, the Home Affordable Modification Program (HAMP), aimed to encourage banks to modify loans for a small section of qualified buyers by offering servicers and banks incentives. HAMP offered nothing for millions of homeowners substantially "under water"—those owing more than 105 percent of market value on their mortgages—and it did nothing to reduce principal on loans.

Even its modest aims have failed. This is because banks and mortgage service companies, which process and manage mortgages on behalf of investors, find the delinquency and foreclosure process lucrative due to various fees they exact from homeowners.

Economists have been cheered by some data that suggests the housing market may have hit bottom. Home prices leveled off in May, with the S&P/Case-Shiller index increasing by 0.5 percent. Newly constructed home sales increased by 11 percent in June, according to data from the Commerce Department, while existing home sales increased for the third consecutive month.

Still, the S&P/Case-Shiller index reveals that the year-over-year decline of home values in 20 major metropolitan areas for May was 17.1 percent, and analysts have pointed out that a significant share of the increased home sales were comprised of foreclosed homes bought by speculators.

"If you want a truer picture of the economy's health, you should trust the [declining] consumer confidence figure rather than the new homes sales data," concluded. "New homes that are being sold are not being bought by you and me; they are being bought by investors because prices are rock-bottom and interest rates are still low."

Speaking Wednesday at a town hall meeting in North Carolina, where the official unemployment rate is over 11 percent, President Obama said that the US "may be seeing the beginning of the end of the recession."

Obama was basing himself on two new reports issued earlier in the day. A Commerce Department durable goods report suggested business spending on investment may have hit bottom. "Big-ticket" durable goods orders fell by 2.5 percent in May. However, excluding transportation orders such as aircraft, durable goods orders rose by 1.1 percent. This, economists believe, signifies a leveling-off in the collapse of manufacturing and may indicate a growth in GDP for the second half of the year.

The second was the Federal Reserve's "beige book," which is based on economic conditions analyzed by its twelve district banks. However, the report was hardly cheering for workers. As the Wall Street Journal's "Real Time Economics" noted, "[t]he tone of the beige book was more upbeat this month, unless, of course, you're looking for a job, a raise or a loan."

The Fed beige book, for example, explained that "weakness of labor markets has nearly eliminated wage pressure and wages [and] compensation are steady or falling in most districts."

The Fed cited a range of methods firms are using to limit compensation, including "cutting or freezing wages or benefit contributions, deferral of future salary increases, trimming bonuses and travel allowances, reducing hours, temporary shutdowns, periodic furloughs, and unpaid vacations." In all twelve districts "labor markets remain slack, with most sectors either reducing jobs or holding them steady and aggregate employment continuing to decline."

The banks, which have been awarded trillions in cash infusions and guarantees from the Obama administration, continue to hoard cash through "ongoing tightening in credit standards," the Fed report concludes. This confirmed a Wall Street Journal analysis published earlier in the week, which found that lending at top banks had contracted by 2.8 percent in the second quarter.

The Fed survey also found that freight and shipping volumes had declined further. Commercial real estate was described as weak in all 12 districts.

"There are a number of factors which suggest that the pace of recovery will be considerably slower than usual," Bill Dudley, president of the Federal Reserve Bank of New York, said in a speech before the Fed release, citing pressures on household incomes and wealth.

Overall, the new data reveals an economy deep in recession with little prospect of a return to normal for a protracted period. The pace of decline has slowed, but this is not unusual in a serious recession or even depression, and the stabilizing tendencies are very fragile.

Nothing has been done or is being done to address the underlying problems in the US and world economy that produced the crash of 2008. The current crisis is an expression not merely of conjunctural tendencies, but rather of a systemic crisis of the world capitalist system.

Meanwhile, the recession is being used to drive down the living standards of the broad mass of the population and effect a vast redistribution of wealth to the financial elite. No one is even suggesting that wages and living standards will return to pre-crisis levels in the so-called "recovery" that Obama and others are touting.

When Obama and the media speak of recovery, they are referring to the profit margins of the big banks and the share values of the financial elite. The S&P 500 and the Dow Jones Industrial Average have each risen 12 percent since July 10, spurred by rising profit margins of major corporations. These profits are based largely on various cost-cutting measures, chief among them layoffs and wage cuts.


International banks exploit the crisis to reap massive profits

31 July 2009

At the start of this week, German-based Deutsche Bank announced a huge increase in its profits. The bank reported a net profit of €1.1 billion in the second quarter of this year, nearly doubling its earnings over the same period last year (€645 million).

The massive increase in Deutsche Bank's profits follows record earnings for US-based Goldman Sachs. Two weeks ago, the US investment bank posted profits of $3.44 billion (€2.44 billion) in the three months to June.

Less than a year after the eruption of a financial crisis that has devastated economies across the globe and wiped out an estimated 40 percent of the world's wealth, a number of major banks and investment houses are posting record profits and setting aside sharply higher—in some cases, record—sums for salaries and bonuses to their employees.

In 2008, Deutsche Bank recorded the biggest losses in its history—€3.9 billion ($5.5 billion). How is this turn-around to be explained?

A recent article in Der Spiegel magazine entitled "The Return of Greed—Banks Reopen Global Casino" provides some insight. The article cites a former leading financier, who declares, "A few years ago, the investment banks got rich on their customers' money. When that resource became too small, they fell back on their shareholders' money. Now they've got hold of the biggest pool the world can offer: taxpayers' money."

The article quotes the head of German operations of an international investment bank, who declares, "The taxpayer is paying for the chips at the casino. It doesn't get any better."

Following the collapse of Lehmann Brothers in September 2008, the American government intervened with a massive bailout package. Since then, the US government has initiated programs that could potentially allocate up to $23.7 trillion to support the financial system—a sum equal to 1.7 times America's gross domestic product.

The measures adopted by Washington were copied by governments around the world.

At the behest of bankers, in particular, Josef Ackermann, CEO of Deutsche Bank, the German government drew up a €500 billion rescue program for German banks at the end of last year. Since then, it has pledged additional hundreds of billions to the financial community as part of its "bad banks" scheme.

It is estimated that since the outbreak of the financial crisis in September 2008, governments have committed a total of $18 trillion in public funds to recapitalise the banking system—an amount equivalent to nearly 30 percent of world GDP. In virtually all major industrial countries, major banks and financial institutions deemed to be "systemically relevant institutions" have been given blank cheques by their respective state treasuries.

The bailout measures adopted by national governments represent a huge safety net for the banks, enabling them to once again engage in highly speculative forms of financial trading. The levels of debt resulting from the bank bailout packages and other forms of economic stimulus have assumed gigantic dimensions and will be paid for by generations to come.

At the same time, the rapid accumulation of debt by governments opens up vast and lucrative opportunities for the banks. Trading in government loans bound up with financial rescue packages is emerging as a central activity of the big banks.

Average government debt in the European Union is expected to rise to 80 percent of GDP this year and even higher in 2010. In Britain, government debt is expected to reach 100 percent of GDP in 2009. Japan's government debt is headed for 200 percent by 2011, and government debt in the US is expected to reach 100 percent of GDP by the same time.

As the levels of debt rise across the globe, rating agencies are downgrading the lending status of individual countries, which then have to pay increased interest rates to the banks in order to service their loans. For the banks, it is a classic "win-win" situation.

At the same time, banks are refraining from investing in businesses because, as they note euphemistically, "in the current financial climate" the prospects for ordinary companies and industrial enterprises are "too risky." Confronted with the refusal of the banks to extend credit, industrial and commercial companies are forced to sell corporate bonds at much higher levels of interest. The banks make further profits by speculating in the trading of these bonds.

The article in Der Spiegel comments, "It is a deep irony that the current crisis, which began in the capital markets, is now strengthening the capital markets once again. The volume of bond issues has exploded. In continental Europe alone, companies—not including banks—have borrowed $318 billion [through the sale of bonds] in the first six months of this year...a roughly 50 percent increase over the average of the last three years."

Concomitant with the huge increase in bank profits is an explosion in salaries for bank personnel. According to an estimate by the consulting firm Johnson Associates, salaries throughout the banking industry are expected to rise by an average of 20 to 30 percent this year.

Reimbursement for employees at Goldman Sachs is on track to reach an average of $770,000 this year, the highest annual compensation in the bank's history.

Citigroup, which has received $45 billion in cash from the US government on top of more than $300 billion in government guarantees on its assets—and which is now 34 percent owned by the government—plans to increase salaries by 50 percent this year to offset lower bonuses. Other banks, including UBS and Morgan Stanley, are also giving their employees hefty pay raises of between 30 and 60 percent.

In Germany, Michael Kemmer, the head of the Bavarian State Bank (BayernLB), which has received tens of billions in state aid to avoid bankruptcy, has defended his plans to pay out huge "motivation" bonuses to his bank's employees.

These staggering compensation packages go disproportionately to top executives and traders, who stand to get salaries and bonuses in the millions and tens of millions of dollars.

Presented with unprecedented possibilities for making money, the biggest banks, such as Goldman Sachs, JPMorgan Chase and Deutsche Bank, are going on the offensive and carrying out a deliberate strategy to eliminate their competitors.

In Wednesday's Financial Times, Deutsche Bank head Ackermann pays tribute to the measures taken by governments around the world on behalf of the banks and calls upon them to intensify their efforts to secure the interests of the world's major financial players.

Ackermann sweeps aside the charge that the banking community bears responsibility for the present crisis and declares that any moves toward creating smaller banks would be unproductive. Instead, he calls for new measures to protect the interests of "complex global financial institutions," i.e., major banks such as Deutsche Bank.

A leading investment banker with Deutsche Bank, Anshu Jain, told the British magazine Euromoney in May that in future, "What we will see is five to six formidable global players in investment banking."

This elite of investment banking giants will constitute, according to Der Spiegel, a new financial "oligopoly," with unprecedented access to state treasuries and the taxpayers' purse. The banks, more than ever, dictate state policy, regardless the particular political coloration of the government. It is the bankers and their lobbyists who call the tune in Washington, Berlin and London.

The CEOs of Goldman Sachs, JPMorgan Chase and Deutsche Bank regard the current crisis, for which they are largely responsible, as an opportunity, and they are ruthlessly exploiting it. For the working class, this means an immense intensification in the exploitation of labour and the destruction of all that remains of social gains won in more than a century of struggle.

In capitals across the world, governments are preparing a social counterrevolution. This is the significance of the Obama health care scheme and the White House's intervention to restructure the auto industry in accordance with the profit interests of Wall Street.

Confronted with a federal election in a few months, the German government is forced to be more circumspect. Nevertheless, it is already clear that the grand coalition of conservative parties and the Social Democratic Party is quite prepared to allow major industrial companies, such as Opel, to go bankrupt, while plans are already being drawn up for a massive onslaught on the country's welfare and pensions systems—to be implemented as soon as the election date is passed.

The global financial casino poses the danger of even more catastrophic economic and social shocks. If control of the world economy is left in the hands of Ackermann and company, mankind confronts a disaster. Never has there been a more pressing case for the democratic ownership and control of the major financial institutions by the international working class as an integral component of a planned socialist economy.

Stefan Steinberg

Pelosi: Health Insurance Companies the Real "Villains"


By Jeff Muskus, Huffington Post
Posted on July 30, 2009, Printed on July 31, 2009

Forget the Blue Dogs, House Speaker Nancy Pelosi told reporters Thursday. The real "villains" in the fight for health care reform are insurance companies.

Work on the legislation resumed Thursday morning after more than a week of delays to accommodate conservative Blue Dog Democrats on the Energy and Commerce Committee.

The Blue Dogs won significant concessions and also forced delay of a full House floor vote on the final bill until after Congress returns from its upcoming month-long recess.

But Pelosi on Thursday cast the blown deadline as a positive, arguing that the process is further along than it would have been with no date set. Meanwhile, her blistering attacks against health insurers offered a good preview of what to expect from Democrats trying to rally support for reform back at home.

"They are the villains in this. They have been part of the problem in a major way," Pelosi said of the insurance industry after her weekly press conference. "It's almost immoral, what they are doing," she said, referring to industry lobbying against a public insurance plan option. "Of course, they've been immoral all along. They are doing everything in their power to stop a public option from happening, and the public has to know about it."


The current system works so well for insurers that they don't even want subsidies, Pelosi claimed. "They've had a good thing going for a long time at the expense of the American people and the health of our country," she said, adding that it will be tough to keep them from getting their way. "This is the fight of our lives."

Pelosi referred to the health insurance industry's campaign against reform -- specifically, the public option -- as "carpet bombing" and "shock and awe" during the press conference. She also sought to present a unified Democratic front, dismissing complaints from progressives that they have been shut out of negotiations dominated by swing Blue Dogs on Energy and Commerce.

"Progressives have been well represented," she said, noting that all three House committees that have worked on health care bills are chaired by progressives.

The public option currently outlined in the Energy and Commerce Committee is significantly weaker than the other two House committee bills, and more closely resembles that of the Senate health committee, in that it unlinks the plan from Medicare rates, leaving negotiation to the Secretary of Health and Human Services. Pelosi reiterated her desire for a stronger public plan Thursday, but did not commit to it.

"I am for the strongest possible public option," she said. The Senate health committee bill "is one that I think would be okay. It's not my preference. My preference is a stronger bill. But it meets the test of having an effective public option."

© 2009 Huffington Post All rights reserved.
View this story online at:

Nobody's Talking About the Silver Bullet That Could Heal the Economy and Cure Most Social Ills


By Jeff Ritterman, M.D., AlterNet
Posted on July 31, 2009, Printed on July 31, 2009

Imagine a guidebook on formulating social policy, with instructions on how to extend life expectancy, decrease infant mortality, improve child well-being, reduce obesity, lower homicide rates, decrease school dropout rates, lower teen pregnancy, increase levels of civic trust, improve voter turnout, decrease drug abuse, lower incarceration rates, decrease rates of mental illness, and improve social mobility based on merit.

There's convincing evidence for all of this and more in The Spirit Level: Why More Equal Societies Almost Always Do Better, by Richard Wilkinson and Kate Pickett (Allen Lane). To learn more, go to their Web site,

The core message is that the countries that distribute their incomes the most equally have the longest life expectancy and the highest quality of life.

The same is true for states within the U.S.; the more income equality, the longer the life span. Unfortunately, the United States is now the most unequal of the wealthy countries, with the exception of Singapore.


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As income inequality increases, we trust one another less. For those concerned that I am confusing correlation with causality, I refer you to the thoughtful discussion of this in The Spirit Level. The authors review the extensive data on civic trust and make a convincing argument that causality is the best fit.

Increasing income inequality puts us on a pathway toward a less trusting, more individualistic and less community-minded society. As community cohesion erodes, we all suffer.

The graphic below shows just how much the U.S. is lagging behind other wealthy countries due to our highly unequal income distribution.


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The leading countries in life expectancy, Sweden and Japan, are also among the most equal of the wealthy nations. Interestingly, they have accomplished this relative equality in completely different ways: In Sweden, the tax system redistributes income; in Japan the income is given out relatively equally before any tax adjustments. Combinations of the two methods are also possible.

We in the U.S. are becoming more and more unequal. Our poor showing in life expectancy and quality of life is a direct result. It wasn't always this way, and it does not need to remain so. Income distribution has varied widely.

In the Gilded Age of the robber barons, income distribution in the U.S. was very unequal (see the graphic below). This was one of the causes of the Great Depression. FDR's New Deal can be interpreted, in large measure, as a program to reverse income inequality.

In a stunningly short time, called the Great Compression by economic historians Claudia Goldin and Robert Margo, America underwent a significant redistribution of income. While historians offer a variety of explanations for the Great Compression, what is clear is that income was much more fairly distributed.

This relative equality produced the middle class America that I grew up in. Of course, there were rich and poor people, but nothing like the extremes of wealth and poverty that we see today. This middle-class America lasted until the late 1970s, when the trend toward greater inequality began to accelerate.

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Today, we are faced with the same degree of income inequality as existed during the Great Depression. We can take our cue from FDR. It's time for another great compression. It's time to put folks back to work, to strengthen and help rebuild our labor unions, and to protect our most vulnerable community members.

Policies that lessen income inequality lead to an improvement in life expectancy and social well-being. Such policies would include raising the minimum wage, improving worker pensions and benefits, strengthening labor unions, passing progressive tax reform, adequately funding education, passing universal health-care coverage and guaranteeing a minimum standard of living for everyone. The vast majority of society benefit from more equality, as greater social cohesion improves life for us all.

Lessening income inequality should be our main organizing principle. If a policy leads to more equality, it is likely to lead to greater social well-being and longer life expectancy.

As we face the challenge of climate chaos, some have argued that there is no time to worry about luxuries like equity and equality. I agree wholeheartedly with the urgency of our situation, but equality and equity are indeed highly relevant.

The more equal the country, the greater the likelihood of recycling. People who live in more equal societies tend to care more about the earth. Addressing climate change and social equity simultaneously is likely to provide the best outcome. We need a Green New Deal.

We can learn a valuable lesson from societies less developed than our own that have attained equivalent life expectancies. Costa Rica, for example, has a life expectancy close to ours with less than one-seventh the carbon footprint. The new Economics Foundation has declared Costa Rica to also be the happiest country on earth. Clearly, long and happy lives are possible without causing climate change.

The issue of income inequality is largely invisible, but there is a widespread sense of unease about the direction we are headed and a feeling that life is not fair.

The data on the deleterious effects of inequality can help us understand our unease and what we need to do about it. Greater equality results in improvement in health and life expectancy and reduces many of the social ills that currently seem intractable. Making this knowledge widespread is a prerequisite to developing the political will to move toward greater equality and a healthier society for us all.

Jeff Ritterman is a cardiologist practicing in Richmond, Cali., and a member of the Richmond City Council.

© 2009 Independent Media Institute. All rights reserved.
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How Lou Dobbs Scared Rush Limbaugh Off the Birther Story


By Eric Boehlert, Media Matters for America
Posted on July 31, 2009, Printed on July 31, 2009

I can think of three (inadvertent) positives that came out of Lou Dobbs' ill-advised embrace of the birther movement:

1) The CNN host has permanently tarnished his reputation

2) The birther movement is officially kaput (like, stick-a-fork-in-it done)

3) Rush Limbaugh is afraid to talk about birthers.

Talk about a win-win-win.

It's true that Dobbs irresponsibly mainstreamed radical right-fringe players by championing their half-baked claims that Barack Obama isn't a natural born citizen and is ineligible to serve as president of the United States. Dobbs, at least indirectly, lent the birther movement some fleeting credence as he dragged its misbegotten detective work into the spotlight. And it's still vitally important to monitor Dobbs and call out CNN management for its dreadful hypocrisy on the birther issue (i.e. The story is "dead" but it's OK for Dobbs to keep flogging it on national TV).

But there was some good news last week, and it came from watching Dobbs' slow motion train wreck unfold on the airwaves. It came from seeing how eagerly -- how convincingly -- the birther claims were debunked, not only online by progressives, but within the mainstream press as well -- the same mainstream press that's often reluctant to show up high-profile media players such as Dobbs, no matter how badly it has botched the facts. And let's not forget conservatives, who dismissed and ridiculed the birther claims.

In the case of the birthers, though, Dobbs' corporate media colleagues were utterly relentless in their fact-checking. I still don't think Dobbs knows what hit him. And frankly, I'm not sure I've ever seen such a well-deserved media pile-on. It's hard to see how Dobbs' career survives the humiliation.

Of course, it's always dangerous when hateful and cuckoo conspiracy theories are ushered into the mainstream and right-wing critics are given a platform to peddle their hateful whodunits about Obama's nationality the way Dobbs did. But, in this case, I almost think it was worth running that risk in order to watch the tidal wave of media disapproval that Dobbs' fearmongering unleashed.

Because in retrospect, the birthers, who had spent months lurking on the sidelines, needed to be called out on national TV; they needed to be ridiculed mercilessly and have their cheerleaders thoroughly mocked. They needed to be turned into the butt of a joke, and thanks to Lou Dobbs, last week they were.

It was a good thing MSNBC viewers got to see right-wing radio host G. Gordon Liddy feebly attempt to make sense of the birther crusade. And let's face it, if it weren't for Dobbs' high-profile, albeit irresponsible, birther cheerleading last week, Chris Matthews never would have booked Liddy for the show, nor would he have been discussing the topic.

Indeed, the rhetorical media beat down that Dobbs suffered seemed to reach every conceivable media forum, with reporters and pundits, anchors and TV hosts all lining up to smack the birther piñata Dobbs had so proudly hung.

Watch again as Jon Stewart pummels the piñata and scoops up the treats:

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
The Born Identity
Daily Show
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Political Humor Joke of the Day

Watching clips like that convinced me that Dobbs last week inadvertently, yet effectively, buried the birther movement as we know it. Despite its extraordinary resiliency (didn't the Obama campaign first try to debunk this story exactly 12 months ago?), I think by shining a spotlight on the birther conspiracy, Dobbs, rather than helping get questions answered, and rather than legitimizing the lost souls peddling the birther certificate nonsense, helped drive a stake through its heart. The media backlash that Dobbs set off made sure of that, and it made sure that nobody will ever take the birthers seriously again.

Think about it, without Dobbs suddenly out front leading the stragglers who make the birther parade, do you think NBC would have devoted four minutes of its Nightly News to thoroughly debunk the story? I doubt it. And that's why I think everyone now owes Dobbs a hearty round of applause. Because let's face it, he did in one week what nobody else had been able to do during the previous 51: put an end to the birther movement.

And while we're patting Dobbs on the back, I'm pretty sure Dobbs scared Limbaugh off the birther story -- or, more precisely, the pummeling Dobbs received scared Limbaugh off the birther story. And that's a big deal within the Republican Noise Machine. Birthers had been courting Limbaugh for months and cheered in June when the turbo talker at least made a birther joke on the air: "Barack Obama has one thing in common with God. Do you know what it is? God does not have a birth certificate either."

As David Weigel at The Washington Independent reported:

On June 16, after Limbaugh joked about the president's citizenship, WorldNetDaily editor-in-chief Joseph Farah appeared on the Web-based Recharge Radio to thank the host for spreading the "birther" message. "What that did is beyond Rush's impact," said Farah. "It also gives other talk show hosts license to talk about this issue ... Rush is kind of the standard of talk show hosts. A lot of people emulate what he does. He crossed the Rubicon on that show, and I'm very proud of him for doing it."

Earlier this month, just as the Dobbs circus was setting up shop, Limbaugh returned to the topic in a far more serious vein, saying: "Barack Obama has yet to have to prove he's a citizen. All he'd have to do is show a birth certificate."

That was July 20, around the same time Dobbs waded into the birther pool and just days before the CNN host ignited massive media blowback. But here's the tell: Have you noticed Limbaugh's deafening silence about the birthers since July 20th? Have you noticed how the birther movement was in the news virtually every day last week, how the mainstream press was debunking it and calling out the right-wing nonsense, how NBC's Nightly News referred to Limbaugh in its birther report, yet Limbaugh remained mum? Rather than step forward in his natural role as a birther defender and attacker of all-things Obama, Limbaugh has sat out the birther controversy and watched its members get mowed down in the press.

Limbaugh's scared to talk about the birthers and won't defend them because he has seen how Dobbs and the movement got manhandled by the press -- including by conservative commentators. In fact, Limbaugh himself took some friendly fire from Philip Klein at the far-right American Spectator who, under the headline, "Shame on Rush," announced: "To any sane human being, there is no controversy."

Limbaugh saw how the press was sticking to the birth certificate facts and wasn't shy about knocking down high-paid radio hosts who tried to traffic in that nonsense.

And guess what? If Limbaugh won't back the birthers, that means most right-wing AM hosts won't either. Because that business is built upon a very simple (lemming) rule: Do whatever Rush does. And if Limbaugh won't line up on the side of the birthers, than means most AM talkers won't either, which means the birthers are going to be pushed back to the fringes where they belong.

And for that, we have Lou Dobbs to thank.

© 2009 Media Matters for America All rights reserved.
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Health Care Realities

At a recent town hall meeting, a man stood up and told Representative Bob Inglis to "keep your government hands off my Medicare." The congressman, a Republican from South Carolina, tried to explain that Medicare is already a government program — but the voter, Mr. Inglis said, "wasn't having any of it."

It's a funny story — but it illustrates the extent to which health reform must climb a wall of misinformation. It's not just that many Americans don't understand what President Obama is proposing; many people don't understand the way American health care works right now. They don't understand, in particular, that getting the government involved in health care wouldn't be a radical step: the government is already deeply involved, even in private insurance.

And that government involvement is the only reason our system works at all.

The key thing you need to know about health care is that it depends crucially on insurance. You don't know when or whether you'll need treatment — but if you do, treatment can be extremely expensive, well beyond what most people can pay out of pocket. Triple coronary bypasses, not routine doctor's visits, are where the real money is, so insurance is essential.

Yet private markets for health insurance, left to their own devices, work very badly: insurers deny as many claims as possible, and they also try to avoid covering people who are likely to need care. Horror stories are legion: the insurance company that refused to pay for urgently needed cancer surgery because of questions about the patient's acne treatment; the healthy young woman denied coverage because she briefly saw a psychologist after breaking up with her boyfriend.

And in their efforts to avoid "medical losses," the industry term for paying medical bills, insurers spend much of the money taken in through premiums not on medical treatment, but on "underwriting" — screening out people likely to make insurance claims. In the individual insurance market, where people buy insurance directly rather than getting it through their employers, so much money goes into underwriting and other expenses that only around 70 cents of each premium dollar actually goes to care.

Still, most Americans do have health insurance, and are reasonably satisfied with it. How is that possible, when insurance markets work so badly? The answer is government intervention.

Most obviously, the government directly provides insurance via Medicare and other programs. Before Medicare was established, more than 40 percent of elderly Americans lacked any kind of health insurance. Today, Medicare — which is, by the way, one of those "single payer" systems conservatives love to demonize — covers everyone 65 and older. And surveys show that Medicare recipients are much more satisfied with their coverage than Americans with private insurance.

Still, most Americans under 65 do have some form of private insurance. The vast majority, however, don't buy it directly: they get it through their employers. There's a big tax advantage to doing it that way, since employer contributions to health care aren't considered taxable income. But to get that tax advantage employers have to follow a number of rules; roughly speaking, they can't discriminate based on pre-existing medical conditions or restrict benefits to highly paid employees.

And it's thanks to these rules that employment-based insurance more or less works, at least in the sense that horror stories are a lot less common than they are in the individual insurance market.

So here's the bottom line: if you currently have decent health insurance, thank the government. It's true that if you're young and healthy, with nothing in your medical history that could possibly have raised red flags with corporate accountants, you might have been able to get insurance without government intervention. But time and chance happen to us all, and the only reason you have a reasonable prospect of still having insurance coverage when you need it is the large role the government already plays.

Which brings us to the current debate over reform.

Right-wing opponents of reform would have you believe that President Obama is a wild-eyed socialist, attacking the free market. But unregulated markets don't work for health care — never have, never will. To the extent we have a working health care system at all right now it's only because the government covers the elderly, while a combination of regulation and tax subsidies makes it possible for many, but not all, nonelderly Americans to get decent private coverage.

Now Mr. Obama basically proposes using additional regulation and subsidies to make decent insurance available to all of us. That's not radical; it's as American as, well, Medicare.

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Swisher Stars for Yankees, but Is Upstaged in the 9th

Swisher Stars for Yankees, but Is Upstaged in the 9th

CHICAGO — In the finale of his brief and joyless cameo with the Chicago White Sox last season, Nick Swisher sat on the bench as DeWayne Wise started in left field in the playoffs. On Thursday, when Swisher returned to U.S. Cellular Field for the first time since his trade to the Yankees, Wise upstaged him again.

Swisher struck out three times before belting a game-tying homer with two outs in the top of the ninth inning. But in the bottom of the ninth, Wise slashed a single up the middle off Phil Coke, scoring the pinch-runner Scott Podsednik with the game-winning run in a 3-2 victory for the Chicago White Sox.

It was another big moment for Wise, who saved Mark Buehrle's perfect game with an over-the-wall catch last Thursday. The moment is captured on the fence with "The Catch" written in white where Wise leaped. This time, batting .185, he won the game with his bat.

Swisher hit .219 last season for the White Sox, who did not put him in the lineup for three of their four division series games against Tampa Bay. Revitalized with the Yankees, he pulled an 0-1 fastball from the left-hander Matt Thornton for his 17th homer, raising his arm as he rounded first base.

"Early in the game, I was wanting to do so much, it took me out of my game," Swisher said, adding later: "I was going to get a good fastball and try to swing, see what happens. I just calmed down, totally took everything out of the equation and tried to block everything out."

The Yankees' new life did not last long. Phil Hughes (4-3) had retired five hitters in a row to run his scoreless innings streak to 25, the longest by a Yankee since Mariano Rivera closed 1999 with 30 2/3 innings. But with one out in the ninth, Jim Thome bounced a single up the middle, and Paul Konerko singled to left.

Thome's hit would have been a routine groundout to second had the Yankees not shifted him so severely in the infield. Podsednik ran for him and scored after Wise's single nicked Coke's right index finger, which was sticking out of his glove, on its way to center field.

The Yankees, who had won 11 of their last 13, lost a game off their American League East lead. The Yankees are two and a half games up on the Boston Red Sox, who won at home, 8-5, against the Oakland A's.

It was the first home game for the White Sox since Buehrle's gem against Tampa Bay. He was honored before the game — Gov. Pat Quinn declared it "Mark Buehrle Day" in Illinois — but for all the good vibes, the team has struggled.

Coming off a 1-6 trip, the White Sox limped home with a 51-51 record, third place in the American League Central. Only three teams in the league had scored fewer runs — Kansas City, Oakland and Seattle — and the team was mostly punchless off Andy Pettitte.

Pettitte looked crisp for the third start in a row, pumping strikes after a 64-minute rain delay. He gave up one earned run in six and a third innings, striking out eight without a walk. But he still has not won since July 1.

"I'm just looking for wins," Pettitte said. "We've been playing so good, I want to keep it going. I feel like I'm the one now who's not keeping it rolling."

The White Sox' Gavin Floyd was stingy, taking advantage of the plate umpire Ted Barrett's wide strike zone. The Yankees could not adjust, taking a called third strike seven times and fanning 14 times in all.

Floyd matched a career-high with 10 strikeouts, allowing one run in seven and two-thirds innings, on a single by Johnny Damon that scored Jose Molina, who had doubled. It tied the score at 1-1 in the sixth inning, but an error by Pettitte helped the White Sox take the lead in the seventh.

Thome led off and checked his swing on a dribbler up the first base line, but Pettitte fell on the wet grass as he tried to field it. Thome reached first on the error.

"I should have got over there and got the ball Thome hit," Pettitte said. "My feet slipped out from underneath me when I went to plant and tag him, and that ended up being a huge play in the game."

With one out, A. J. Pierzynski slapped a ball just to the left of a diving Alex Rodriguez for a single. First charged an error, it was changed to a hit and ended Pettitte's night.

Hughes came in to get another ground ball to third. Rodriguez fired to Robinson Cano at second, but with Pierzynski almost on top of him, Cano bounced his throw to first, wide of Mark Teixeira, who scrambled after it as Thome rumbled home on the second error of the inning.

"If I had a good grip, I bet it would be right in his mouth, but I had four fingers on the ball," Cano said, referring to Pierzynski. "That's a clean play. But now I know for when he comes again. Anybody can slide the way they want. I've just got to protect myself."

Teixeira's frustration continued in the eighth. After Floyd struck out the first two hitters — looking, naturally — Derek Jeter singled to chase him from the game.

Damon served a single to left off Thornton, but Teixeira checked his swing on a third-strike slider, ending the inning with his third strikeout of the game. Swisher's homer gave the Yankees one more gasp, but that was all they had left.

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‘Cash for Clunkers’ Car-Rebate Plan Sells Out in Days

WASHINGTON — New-car shoppers appear to have already snapped up all the $1 billion that Congress appropriated for the "cash for clunkers" program, leading the Transportation Department to tell auto dealers Thursday night to stop offering the rebates.

But a White House official said the program had not been suspended, creating confusion about its status. The program offers $3,500 to $4,500 for people who trade in an old car for a new one with higher fuel economy.

In a statement issued Thursday evening, Robert Gibbs, the White House press secretary, said: "We are working tonight to assess the situation facing what is obviously an incredibly popular program. Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored."

The program, formally known as the Car Allowance Rebate System, was scheduled to be offered until Nov. 1, or as long as the money was available. But the program was so successful that it has exhausted all the money allocated within the first week. Dealers have submitted applications on behalf of consumers seeking rebates on about a quarter-million vehicles.

The National Automobile Dealers Association surveyed its members in recent days and warned the Transportation Department on Thursday that it had a very large backlog of applications, said Bailey Wood, a spokesman for the association.

Late in the day, the group said the Transportation Department had responded by telling it to stop taking applications at midnight. The government and the dealers were concerned that buyers would close trade-in deals to buy new cars assuming they had a big rebate coming only to discover later that money was not available.

The dealers' group said late Thursday night that it had not heard about the White House policy reversing the decision. Mr. Wood said that his group would ask Congress and the White House to add money to the plan.

Transportation Secretary Ray LaHood has already been making calls to members of Congress, telling them about the situation. The Michigan delegation was planning a meeting Friday morning to discuss the situation, a Congressional aide said.

On Thursday evening, the government Web site describing the program,, still showed a chart shaped like a fuel gauge that indicated $779 million was available for trade-ins of cars and light trucks. Earlier Thursday, the Transportation Department issued a news release that said that applications for fewer than 23,000 vehicles had been submitted as of Wednesday, with a rebate value of just under $100 million.

The Transportation Department had begun accepting applications for the rebates on Monday, when rules putting the program in place took effect. But car dealers had been accumulating the applications since July 1, when Congress put the law into effect.

The program had two goals: aiding the ailing car industry and improving fuel economy of the vehicles on the road.

Cars submitted under the program were to be junked. They had to be less than 25 years old and have a fuel economy, as rated by the window sticker, of 18 miles a gallon or less.

The size of the rebate depended on the fuel economy of the replacement vehicle. Consumers were also supposed to receive the scrap value of their trade-ins.

From the dealers' point of view, the program was a resounding success.

"Two hundred and fifty thousand vehicles in four weeks?" Mr. Wood said. "One word comes out of my mouth: Wow."

As word spread unofficially on Thursday night, car dealers were suddenly unsure of what to tell would-be buyers.

A Ford dealership in Paramus, N.J., did not know of the apparent suspension until a reporter called seeking comment.

Other dealers said they had no idea what the status of the program was, or whether the deals that they had already signed would be honored by the government. Some said they were notified by e-mail message by fellow dealers.

The dealers' association, however, had been warning that the money would go quickly.

Under the program, a buyer who picked a car with a mileage improvement of more than four miles per gallon but less than 10 were eligible for $3,500; a buyer whose new vehicle was rated 10 miles per gallon or better than the old one was eligible for $4,500.

Until the cash-for-clunkers program began, the auto industry had been on track for annual sales of about 10 million units, down from the peak of about 16 million units a year.

Katharine Q. Seelye contributed reporting from New York.

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When Auto Plants Close, Only White Elephants Remain

WIXOM, Mich. — The sheer size of the sites has inspired grand visions for redevelopment — a $1 billion football stadium, a huge Hollywood movie studio, even the world's largest indoor tennis complex.

But for the communities saddled with a huge, empty auto plant, the reality is dismal.

Abandoned car factories, sprawling over hundreds of acres, often stand vacant for years awaiting demolition, environmental cleanup and a willing developer.

Since 2004, General Motors, Ford and Chrysler have closed 22 major auto plants in the United States. Only eight of those have found buyers. And in the wake of the G.M. and Chrysler bankruptcies, another 16 plants will be shut by 2011.

The most optimistic redevelopment proposals, like a football stadium for the Atlanta Falcons or a movie studio in the small Michigan town of Wixom, a Detroit suburb, are long shots at best.

"The plants, whether they're still standing or reoccupied, are always going to be a haunting reminder of what we were, what we've gone through, and where we still need to go," said Representative Thaddeus McCotter, Republican of Michigan, whose district includes an old Ford plant in Wixom and a G.M. plant that will soon close.

Even sites in attractive locations are hard to sell in the weak economy. With so many companies being squeezed financially, there is a glut of available commercial real estate.

"Even if you only go back three or four years, it was easier than today," said Phil Horlock, head of Ford's land development division.

The loss to the local community when a plant closes goes well beyond jobs. Tax revenue evaporates and related businesses vanish.

Industry analysts estimate that each job in a plant helps create another five to seven jobs.

"Some of those are direct suppliers, but then there are places that workers spend money, like grocery stores, restaurants and day care," said Kristin Dziczek of the Center for Automotive Research in Ann Arbor, Mich.

Ford's 4.7-million-square-foot Wixom factory, which closed in 2007, was the company's largest assembly plant in the United States. More than six million cars were built there over 50 years.

At its peak in the late 1980s, the factory employed nearly 4,000. Now it's an empty shell of rusting corrugated metal, surrounded by desolate parking lots and a barbed-wire fence.

The plant fronts an Interstate highway, and stretches almost a mile along Wixom Road. It once provided 40 percent of the town's property taxes, but now accounts for less than 15 percent.

The town has about 13,000 residents, and relied heavily on the paychecks of plant workers.

"When it closed, a lot of businesses around us closed too," said Moe Leon, owner of the Bullseye Sports Bar and Grill on Wixom Road. "We're fighting night and day to stay above water."

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Living in Tents, and by the Rules, Under a Bridge


The chief emerges from his tent to face the leaden morning light. It had been a rare, rough night in his homeless Brigadoon: a boozy brawl, the wielding of a knife taped to a stick. But the community handled it, he says with pride, his day's first cigar already aglow.

By community he means 80 or so people living in tents on a spit of state land beside the dusky Providence River: Camp Runamuck, no certain address, downtown Providence.

Because the two men in the fight had violated the community's written compact, they were escorted off the camp, away from the protection of an abandoned overpass. One was told we'll discuss this in the morning; the other was voted off the island, his knife tossed into the river, his tent taken down.

The chief flicks his spent cigar into that same river. There is talk of rain tonight.

Behind him, the camp stirs. Other tent cities have sprung up recently around the country, but Rhode Island officials have never seen anything like this. A tea kettle sings.

A heavily pierced young person walks by without picking up an empty plastic bottle, flouting the camp compact that says everyone will share in the labor. The compact may be as impermanent as this sudden community by the river, but for now it is binding. The chief speaks, the bottle is picked up.

The chief, John Freitas, is 55, with a gray beard touched by tobacco rust. He did prison time decades ago, worked for years as a factory supervisor, then became homeless for all the familiar, complicated reasons.

Layoffs, health problems, a slip from apartment to motel room. His girlfriend, Barbara Kalil, 50, lost her job as a nursing-home nurse, and another slip, into the shelter system. A job holding store-liquidation signs beside the highway allowed for a climb back to a motel, but it didn't last.

Weary of shelters, the couple pitched a pup tent in Roger Williams Park, close to a plaque bearing words Williams had used to describe this place he founded: "A Shelter for Persons in Distress." But someone complained, so Mr. Freitas set off again in search of shelter. The March winds blew.

Down South Main Street he went, past the majestic court building and the upscale seafood restaurant, over a guardrail to a gravelly plot beneath a ramp that once guided cars toward Cape Cod. Foul-smelling and partially hidden, a place of birds and rodents, it was perfect.

He and Ms. Kalil set up camp with another couple in early April. Word of it spread from the shelters to Kennedy Plaza downtown, where homeless people share the same empty Tim Hortons cup to pose as customers worthy of visiting that doughnut chain's restroom. The camp became 10 people, then 15, then 25. No children allowed.

"I was always considered the leader, the chief," Mr. Freitas says. "I was the one consulted about 'Where should I put my tent?' "

By late June the camp had about 50 people. But someone questioned the role of Mr. Freitas as chief, so he stepped down. Arguments broke out. Food was stolen.

"There was no center holding," recalls Rachell Shaw, 22, who lives with her boyfriend in a tidy tent decorated with porcelain dolls. "So everybody voted him back in."

The community also established a five-member leadership council and a compact that read in part: "No one person shall be greater than the will of the whole."

It is now late afternoon in late July, a month after nearly everyone signed that compact. The community remains intact, though the very ground they walk on says nothing is forever. Here and there are the exposed foundations of fish shacks that lined the river long ago.

Some state officials recently stopped by to say, nicely but firmly, that everyone would soon have to leave. The overpass poses the threat of falling concrete, and is scheduled for demolition. The officials have shared the same message with a smaller encampment across the river.

For now, a game of horseshoes sends echoing clanks, as outreach workers conduct interviews and raindrops thrum the tent tops. The chief lights another cigar and walks the length of the camp to tell residents to batten down, explaining its structure as he goes.

Here at the end, nearest the road, are the tents of young single people and substance abusers; this way, rescue vehicles won't disrupt the entire compound.

Here in the center are a cluster of couples, including two competing for the nicest property, with homey touches like planted flowers. Here too are the food table, the coolers, the piles of donated clothes — what can't be used will be taken by camp residents to the Salvation Army — and the large tent of the chief. Plastic pink flamingos stand guard.

Farther on, the recycled-can area (the money is used for ice and propane); the area for garbage bags that will be discreetly dropped in nearby Dumpsters at night; and, behind a blue tarp hung from the overpass, a plastic toilet. The chief says the shared task of removing the bags of waste tends to test the compact.

Finally, near some rocks where men go to urinate, live a gay couple and some people who drink hard. Timothy Webb, 49, who says he used to own a salon in Cranston called Class Act, cuts people's hair here. Then, at night, he and his partner, Norman Trank, 45, sit at a riverside table, a battery-operated candle giving light, the moving waters suggesting mystery.

"It's what you make of it," Mr. Trank says.

Dark clouds have brought night early to Providence. Heavy drops thump against tarp. Water drips from the overpass, onto the long table of food.

In the last couple of hours the chief has resolved a conflict about tarp distribution, hugged a pregnant woman who mistakenly thought she had been kicked off the island, conferred with outreach workers and helped with dinner preparations. He is also thinking about tomorrow.

Tomorrow, an advance party for the chief will leave to claim another spot across the river that turns out not to be on public property. Many in the camp will decide it's time to move on anyway, to a spot under a bridge in East Providence. Camp Runamuck will begin its recession from sight and memory.

At least tonight there is a communal dinner: donated chicken, parboiled and grilled; donated corn on the cob; donated potatoes. People line up with paper plates.

The rain falls harder, pocking the river's gray surface, surrounding the dark camp with a sound like fingers drumming in impatience. The chief hears it, but what can he do? He finishes his dinner and lights another cigar.

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Bankers Reaped Lavish Bonuses During Bailouts

Thousands of top traders and bankers on Wall Street were awarded huge bonuses and pay packages last year, even as their employers were battered by the financial crisis.

Nine of the financial firms that were among the largest recipients of federal bailout money paid about 5,000 of their traders and bankers bonuses of more than $1 million apiece for 2008, according to a report released Thursday by Andrew M. Cuomo, the New York attorney general.

At Goldman Sachs, for example, bonuses of more than $1 million went to 953 traders and bankers, and Morgan Stanley awarded seven-figure bonuses to 428 employees. Even at weaker banks like Citigroup and Bank of America, million-dollar awards were distributed to hundreds of workers.

The report is certain to intensify the growing debate over how, and how much, Wall Street bankers should be paid.

In January, President Obama called financial institutions "shameful" for giving themselves nearly $20 billion in bonuses as the economy was faltering and the government was spending billions to bail out financial institutions.

On Friday, the House of Representatives may vote on a bill that would order bank regulators to restrict "inappropriate or imprudently risky" pay packages at larger banks.

Mr. Cuomo, who for months has criticized the companies over pay, said the bonuses were particularly galling because the banks survived the crisis with the government's support.

"If the bank lost money, where do you get the money to pay the bonus?" he said.

All the banks named in the report declined to comment.

Mr. Cuomo's stance — that compensation for every employee in a financial firm should rise and fall in line with the company's overall results — is not shared on Wall Street, which tends to reward employees based more on their individual performance. Otherwise, the thinking goes, top workers could easily leave for another firm that would reward them more directly for their personal contribution.

Many banks partly base their bonuses on overall results, but Mr. Cuomo has said they should do so to a greater degree.

At Morgan Stanley, for example, compensation last year was more than seven times as large as the bank's profit. In 2004 and 2005, when the stock markets were doing well, Morgan Stanley spent only two times its profits on compensation.

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Thursday, July 30, 2009

Naomi Klein: Let's Put an End to Sarah Palin-Style Capitalism


By Naomi Klein, The Progressive

Posted on July 30, 2009, Printed on July 30, 2009

The following was adapted from a speech on May 2, 2009 at The Progressive's 100th anniversary conference and originally printed in The Progressive magazine, August 2009 issue:

We are in a progressive moment, a moment when the ground is shifting beneath our feet, and anything is possible. What we considered unimaginable about what could be said and hoped for a year ago is now possible. At a time like this, it is absolutely critical that we be as clear as we possibly can be about what it is that we want because we might just get it.

So the stakes are high.

I usually talk about the bailout in speeches these days. We all need to understand it because it is a robbery in progress, the greatest heist in monetary history. But today I'd like to take a different approach: What if the bailout actually works, what if the financial sector is saved and the economy returns to the course it was on before the crisis struck? Is that what we want? And what would that world look like?

The answer is that it would look like Sarah Palin. Hear me out, this is not a joke. I don't think we have given sufficient consideration to the meaning of the Palin moment. Think about it: Sarah Palin stepped onto the world stage as Vice Presidential candidate on August 29 at a McCain campaign rally, to much fanfare. Exactly two weeks later, on September 14, Lehman Brothers collapsed, triggering the global financial meltdown.

So in a way, Palin was the last clear expression of capitalism-as-usual before everything went south. That's quite helpful because she showed us-in that plainspoken, down-homey way of hers-the trajectory the U.S. economy was on before its current meltdown. By offering us this glimpse of a future, one narrowly avoided, Palin provides us with an opportunity to ask a core question: Do we want to go there? Do we want to save that pre-crisis system, get it back to where it was last September? Or do we want to use this crisis, and the electoral mandate for serious change delivered by the last election, to radically transform that system? We need to get clear on our answer now because we haven't had the potent combination of a serious crisis and a clear progressive democratic mandate for change since the 1930s. We use this opportunity, or we lose it.

So what was Sarah Palin telling us about capitalism-as-usual before she was so rudely interrupted by the meltdown? Let's first recall that before she came along, the U.S. public, at long last, was starting to come to grips with the urgency of the climate crisis, with the fact that our economic activity is at war with the planet, that radical change is needed immediately. We were actually having that conversation: Polar bears were on the cover of Newsweek magazine. And then in walked Sarah Palin. The core of her message was this: Those environmentalists, those liberals, those do-gooders are all wrong. You don't have to change anything. You don't have to rethink anything. Keep driving your gas-guzzling car, keep going to Wal-Mart and shop all you want. The reason for that is a magical place called Alaska. Just come up here and take all you want. "Americans," she said at the Republican National Convention, "we need to produce more of our own oil and gas. Take it from a gal who knows the North Slope of Alaska, we've got lots of both."

And the crowd at the convention responded by chanting and chanting: "Drill, baby, drill."

Watching that scene on television, with that weird creepy mixture of sex and oil and jingoism, I remember thinking: "Wow, the RNC has turned into a rally in favor of screwing Planet Earth." Literally.

But what Palin was saying is what is built into the very DNA of capitalism: the idea that the world has no limits. She was saying that there is no such thing as consequences, or real-world deficits. Because there will always be another frontier, another Alaska, another bubble. Just move on and discover it. Tomorrow will never come.

This is the most comforting and dangerous lie that there is: the lie that perpetual, unending growth is possible on our finite planet. And we have to remember that this message was incredibly popular in those first two weeks, before Lehman collapsed. Despite Bush's record, Palin and McCain were pulling ahead. And if it weren't for the financial crisis, and for the fact that Obama started connecting with working class voters by putting deregulation and trickle-down economics on trial, they might have actually won.

The President tells us he wants to look forward, not backwards. But in order to confront the lie of perpetual growth and limitless abundance that is at the center of both the ecological and financial crises, we have to look backwards. And we have to look way backwards, not just to the past eight years of Bush and Cheney, but to the very founding of this country, to the whole idea of the settler state.

Modern capitalism was born with the so-called discovery of the Americas. It was the pillage of the incredible natural resources of the Americas that generated the excess capital that made the Industrial Revolution possible. Early explorers spoke of this land as a New Jerusalem, a land of such bottomless abundance, there for the taking, so vast that the pillage would never have to end. This mythology is in our biblical stories-of floods and fresh starts, of raptures and rescues-and it is at the center of the American Dream of constant reinvention. What this myth tells us is that we don't have to live with our pasts, with the consequences of our actions. We can always escape, start over.

These stories were always dangerous, of course, to the people who were already living on the "discovered" lands, to the people who worked them through forced labor. But now the planet itself is telling us that we cannot afford these stories of endless new beginnings anymore. That is why it is so significant that at the very moment when some kind of human survival instinct kicked in, and we seemed finally to be coming to grips with the Earth's natural limits, along came Palin, the new and shiny incarnation of the colonial frontierswoman, saying: Come on up to Alaska. There is always more. Don't think, just take.

This is not about Sarah Palin. It's about the meaning of that myth of constant "discovery," and what it tells us about the economic system that they're spending trillions of dollars to save. What it tells us is that capitalism, left to its own devices, will push us past the point from which the climate can recover. And capitalism will avoid a serious accounting-whether of its financial debts or its ecological debts-at all costs. Because there's always more. A new quick fix. A new frontier.

That message was selling, as it always does. It was only when the stock market crashed that people said, "Maybe Sarah Palin isn't a great idea this time around. Let's go with the smart guy to ride out the crisis."

I almost feel like we've been given a last chance, some kind of a reprieve. I try not to be apocalyptic, but the global warming science I read is scary. This economic crisis, as awful as it is, pulled us back from that ecological precipice that we were about to drive over with Sarah Palin and gave us a tiny bit of time and space to change course. And I think it's significant that when the crisis hit, there was almost a sense of relief, as if people knew they were living beyond their means and had gotten caught. We suddenly had permission to do things together other than shop, and that spoke to something deep.

But we are not free from the myth. The willful blindness to consequences that Sarah Palin represents so well is embedded in the way Washington is responding to the financial crisis. There is just an absolute refusal to look at how bad it is. Washington would prefer to throw trillions of dollars into a black hole rather than find out how deep the hole actually is. That's how willful the desire is not to know.

And we see lots of other signs of the old logic returning. Wall Street salaries are almost back to 2007 levels. There's a certain kind of electricity in the claims that the stock market is rebounding. "Can we stop feeling guilty yet?" you can practically hear the cable commentators asking. "Is the bubble back yet?"

And they may well be right. This crisis isn't going to kill capitalism or even change it substantively. Without huge popular pressure for structural reform, the crisis will prove to have been nothing more than a very wrenching adjustment. The result will be even greater inequality than before the crisis. Because the millions of people losing their jobs and their homes aren't all going to be getting them back, not by a long shot. And manufacturing capacity is very difficult to rebuild once it's auctioned off.

It's appropriate that we call this a "bailout." Financial markets are being bailed out to keep the ship of finance capitalism from sinking, but what is being scooped out is not water. It's people. It's people who are being thrown overboard in the name of "stabilization." The result will be a vessel that is leaner and meaner. Much meaner. Because great inequality-the super rich living side by side with the economically desperate-requires a hardening of the hearts. We need to believe ourselves superior to those who are excluded in order to get through the day. So this is the system that is being saved: the same old one, only meaner.

And the question that we face is: Should our job be to bail out this ship, the biggest pirate ship that ever was, or to sink it and replace it with a sturdier vessel, one with space for everyone? One that doesn't require these ritual purges, during which we throw our friends and our neighbors overboard to save the people in first class. One that understands that the Earth doesn't have the capacity for all of us to live better and better.

But it does have the capacity, as Bolivian President Evo Morales said recently at the U.N., "for all of us to live well."

Because make no mistake: Capitalism will be back. And the same message will return, though there may be someone new selling that message: You don't need to change. Keep consuming all you want. There's plenty more. Drill, baby, drill. Maybe there will be some technological fix that will make all our problems disappear.

And that is why we need to be absolutely clear right now.

Capitalism can survive this crisis. But the world can't survive another capitalist comeback.

Naomi Klein is an award-winning journalist and syndicated columnist and the author of the international and New York Times bestseller The Shock Doctrine: The Rise of Disaster Capitalism, now out in paperback. Her earlier books include the international best-seller, No Logo: Taking Aim at the Brand Bullies; and the collection Fences and Windows: Dispatches from the Front Lines of the Globalization Debate (2002). To read all her latest writing visit

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