Financial Crisis Inquiry Commission Turns Up the Heat

By Greg Kaufmann
January 15, 2010

If you're not scared as hell you should be.

Two days of Financial Crisis Inquiry Commission hearings have me rattled about how little has changed about our financial system and how much is still at risk. They also have me wondering this: where the hell is the media?

For the first day of panels, reporters were squeezed together in the back rows after filling more reserved seating than I've seen at any prior hearing during this session of Congress.

Get ready for seven-foot sea level rise as climate change melts ice sheets

The IPCC's 2007 report missed out the melting of the Greenland and West Antarctic ice sheets which would be the key drivers in dramatic sea level rises. From Yale Environment 360, part of the Guardian Environment Network

Rob Young and Orrin Pilkey for Yale Environment 360, part of the Guardian Environment Network
guardian.co.uk, Friday 15 January 2010 11.57 GMT

The reports from the Intergovernmental Panel on Climate Change (IPCC) are balanced and comprehensive documents summarizing the impact of global warming on the planet. But they are not without imperfections, and one of the most notable was the analysis of future sea level rise contained in the latest report, issued in 2007.

Given the complexities of forecasting how much the melting of the Greenland and West Antarctic ice sheets will contribute to increases in global sea level, the IPCC chose not to include these giant ice masses in their calculations, thus ignoring what is likely to be the most important source of sea level rise in the 21st century. Arguing that too little was understood about ice sheet collapse to construct a mathematical model upon which even a rough estimate could be based, the IPCC came up with sea level predictions using thermal expansion of the oceans and melting of mountain glaciers outside the poles. Its results were predictably conservative — a maximum of a two-foot rise this century — and were even a foot lower than an earlier IPCC report that factored in some melting of Greenland's ice sheet.

Naomi Klein Issues Haiti Disaster Capitalism Alert: Stop Them Before They Shock Again

AMY GOODMAN: Let’s go back to Naomi Klein. We’re going to try that tape again, her commenting on what is going on in Haiti right now and who is profiting already.

NAOMI KLEIN: But as I write about in The Shock Doctrine, crises are often used now as the pretext for pushing through policies that you cannot push through under times of stability. Countries in periods of extreme crisis are desperate for any kind of aid, any kind of money, and are not in a position to negotiate fairly the terms of that exchange.

And I just want to pause for a second and read you something, which is pretty extraordinary. I just put this up on my website. The headline is “Haiti: Stop Them Before They Shock Again.” This went up a few hours ago, three hours ago, I believe, on the Heritage Foundation website.

Disadvantaged neighborhoods set children's reading skills on negative course: UBC study

A landmark study from the University of British Columbia finds that the neighbourhoods in which children reside at kindergarten predict their reading comprehension skills seven years later.

The study, published this week in the journal Health & Place, finds children who live in neighbourhoods with higher rates of poverty show reduced scores on standardized tests seven years later – regardless of the child's place of residence in Grade 7. The study is the first of its kind to compare the relative effects of neighbourhood poverty at early childhood and early adolescence.

Paul Krugman: Bankers Without a Clue

The official Financial Crisis Inquiry Commission — the group that aims to hold a modern version of the Pecora hearings of the 1930s, whose investigations set the stage for New Deal bank regulation — began taking testimony on Wednesday. In its first panel, the commission grilled four major financial-industry honchos. What did we learn?

Well, if you were hoping for a Perry Mason moment — a scene in which the witness blurts out: “Yes! I admit it! I did it! And I’m glad!” — the hearing was disappointing. What you got, instead, was witnesses blurting out: “Yes! I admit it! I’m clueless!”

O.K., not in so many words. But the bankers’ testimony showed a stunning failure, even now, to grasp the nature and extent of the current crisis. And that’s important: It tells us that as Congress and the administration try to reform the financial system, they should ignore advice coming from the supposed wise men of Wall Street, who have no wisdom to offer.

The New Storm Brewing On the Climate Front

With the cap and trade bill stalled, its foes move to block the Environmental Protection Agency from tackling greenhouse gases.

— By Kate Sheppard

Fri Jan. 15, 2010 2:59 AM PST

The cap-and-trade bill may have stalled in Congress, but its opponents aren't taking it easy. They’ve launched a new assault on the Environmental Protection Agency (EPA)—hoping to neutralize the only legal weapon the Obama administration has to curb carbon emissions if the climate legislation fails.

Last month the EPA determined that greenhouse gases are a threat to human health, meaning that the agency is now required by the Clean Air Act to regulate such pollutants. And with no-one sure when the Senate will take up the cap-and-trade bill, EPA regulation has become a do-or-die issue for both camps in the climate fight. Advocates of climate action see it as the lone tool—albeit an imperfect one—that the Obama administration can use to implement significant emissions reductions in the absence of legislation. Foes, meanwhile, decry it as a back-door maneuver that must be stopped at all costs.

Haitian Earthquake: Made in the USA

Why the Blood Is on Our Hands

by Ted Rall

As grim accounts of the earthquake in Haiti came in, the accounts in U.S.-controlled state media all carried the same descriptive sentence: "Haiti is the poorest country in the Western hemisphere..."

Gee, I wonder how that happened?

You'd think Haiti would be loaded. After all, it made a lot of people rich.

How did Haiti get so poor? Despite a century of American colonialism, occupation, and propping up corrupt dictators? Even though the CIA staged coups d'état against every democratically elected president they ever had?

‘Grassroots’ Opposition To Clean Energy Reform Bankrolled By Foreign Oil, Petro-Governments

Clean energy legislation passed by the House, now pending in the Senate, faces fierce opposition from the proprietors of fossil fuel companies, and much has been reported on how domestic oil and coal companies have flooded the debate with money, lobbying, and misinformation. These opponents of clean energy reform claim to be “standing up” for American jobs and security.

From the ancient Amazonian Indians: A modern weapon against global warming

Scientists are reporting that "biochar" — a material that the Amazonian Indians used to enhance soil fertility centuries ago — has potential in the modern world to help slow global climate change. Mass production of biochar could capture and sock away carbon that otherwise would wind up in the atmosphere as carbon dioxide, the main greenhouse gas. Their report appears in ACS' Environmental Science & Technology, a bi-weekly journal.

Losing the Internet as We Know It

How much have you already used the Internet today?

We don't think twice about how much we rely on the Internet. Imagine not being able to map directions on Google or check the weather online. A business that doesn't have a Web site? Forgettable. Or rather, unsearchable. Remember when we didn't have e-mail? Would you want to go back to those Dark Ages? Me neither.

The Internet is in the very fabric of how we communicate, learn, shop, conduct business, organize, innovate and engage. If we lost it, we'd be lost.

But did you know that we're at risk of losing the Internet as we know it? Millions of Americans don't know that a battle over the future of the Internet is being played out right now in Washington. How it ends will have deep repercussions for decades to come.

Scientists confirm link between BPA and heart disease in humans

The FDA’s new report on the safety of endocrine-disrupting chemical bisphenol A is months overdue and there is still no sign of when or if the agency will release the report. Perhaps they are waiting for that piece of “smoking gun” evidence that BPA represents a clear and present danger to human health? Well, thanks to researchers from Peninsula College of Medicine in Britain, we just may have it.

In 2008, the group looked at data from the 2003-2004 US National Health and Nutrition Examination Survey (NHANES) which included urinary BPA levels for the first time.

Bring Back Glass-Steagall

by Thomas Frank

Last month, Sens. Maria Cantwell and John McCain proposed a measure that would revive parts of the old Glass-Steagall Act, the 1933 law that separated investment from commercial banking. After having been diluted many times over the years, Glass-Steagall was largely repealed in 1999, permitting a wave of consolidation in the financial industry.

The latest crisis has provoked a new debate over the old regulatory regime. Nobel laureate economist Joseph Stiglitz has argued that the repeal of Glass-Steagall had an "especial role" in making the financial calamity of 2008 possible. Former Fed Chairman Paul Volcker, currently the head of the President's Economic Recovery Advisory Board, has called for a new separation between commercial banking and riskier financial activities.

Any discussion about breaking up the financial industry, however, runs into a powerful stereotype: the overwhelming consensus belief in the risible backwardness of Glass-Steagall.

Moral Bankruptcy: Why Are We Letting Wall Street Off So Easy?

by Joseph E. Stiglitz

It is said that a near-death experience forces one to reevaluate priorities and values. The global economy has just escaped a near-death experience. The crisis exposed the flaws in the prevailing economic model, but it also exposed flaws in our society. Much has been written about the foolishness of the risks [1] that the financial sector undertook, the devastation that its institutions have brought to the economy, and the fiscal deficits [2]that have resulted. Too little has been written about the underlying moral deficit that has been exposed-a deficit that is larger, and harder to correct.

One of the lessons of this crisis is that there is a need for collective action, that there is a role for government. But there are others. We allowed markets to blindly shape our economy, but in doing so, they also shaped our society. We should take this opportunity to ask: Are we sure that the way that they have been molding us is what we want?

Lobbyists aided Alaska's Murkowski in writing EPA limits bill

By Erika Bolstad | McClatchy Newspapers

WASHINGTON — Two lobbyists had a hand in writing language proposed by Sen. Lisa Murkowski that could curtail the Environmental Protection Agency's ability to regulate major emitters of greenhouse gases.

Their involvement, first reported Monday by The Washington Post, came at the request of a staffer on the Senate Energy and Environment Committee, where the Alaska senator is the top Republican. Both of the lobbyists, Jeff Holmstead and Roger Martella Jr., represent a number of high-profile energy clients. Both had top positions in the EPA during the Bush administration.

The Case For A Supertax On Big Bank Bonuses

The big banks are pre-testing their main messages for bonus season, which starts in earnest next week. Their payouts relative to profits will be “record lows”, their people won’t make as much as in 2007 (except for Goldman), and they will pay a higher proportion of the bonus in stock than usual. Behind the scenes, leading executives are still arguing out the details of the optics.

As they justify their pay packages, the bankers open up a broader relevant question: How much bonus do they deserve in this situation? After all, bonus time is when you decide who made what kind of relative contribution to your bottom line – and you are able to recognize unusually strong achievement.

Thank You, Wall Street. May We Have Another?

Americans are angry at the financial crisis—just not at the fat cats who caused it.

— By David Corn

LAST JANUARY, shortly before President Obama took office, veteran Democratic pollster John Marttila conducted a series of focus groups on a range of issues in the Philadelphia and Baltimore areas. When the conversations turned to the economy, Marttila was shocked. In the middle of the financial collapse, these people—men and women of different ages, incomes, races, and political affiliations—were predictably ticked off. But, he recalls, the "dominant emotional dynamic was self-criticism. They really felt that they had failed. They had spent too much on things they didn't need." The pollster had expected rage at Wall Street and George W. Bush, but the people in the groups barely mentioned Bush. And though they were upset by the shady and incomprehensible machinations of big banks, they were not revved up for revenge. "Their intellectual criticism was directed at the financial world," Marttila says, "but their emotional criticism was directed at themselves." Bottom line: They were not reaching for the pitchforks.

Regime change in Tehran? Don't bet on it

By Dilip Hiro

The dramatic images of protestors in Iran fearlessly facing - and sometimes countering - the brutal attacks of the regime's security forces rightly gain the admiration and sympathy of viewers in the West. They also leave many Westerners assuming that this is a preamble to regime change in Tehran, a repeat of history but with a twist. After all, Iran has the distinction of being the only Middle Eastern state that underwent a revolutionary change - 31 years ago - which originated as a mild street protest.

Viewed objectively, though, this assumption is over-optimistic. It overlooks cardinal differences between the present moment and the 1978-1979 events that led to the overthrow of the shah of Iran and the founding of an Islamic Republic under Ayatollah Ruhollah Khomeini. History shows that a revolutionary movement triumphs only when two vital factors merge: it is supported by a coalition of different social classes and it succeeds in crippling the country's governing machinery and fracturing the state's repressive apparatus.

Bottom Dollar

Conservatives claim Obama's policies are weakening the dollar. Let's examine the evidence.

By Daniel GrossPosted Monday, Jan. 11, 2010, at 11:03 AM ET

It's an article of faith among many analysts that the U.S. dollar is in trouble. The response to the financial crisis, they say, has debased the currency. The culprits are the Federal Reserve, which slashed interest rates to zero, printed money, and vastly expanded its balance sheet, and the Obama administration, which has run up huge deficits by embracing Keynesian efforts to stimulate the economy.

As early as July 2008—months before the presidential election—McCain economic adviser Douglas Holtz-Eakin blamed the weak dollar on Obama. Here's a typical piece from Conservative Daily News arguing that the administration is weakening the dollar to boost exports. Niall Ferguson, author of this declinist, anti-Keynesian Newsweek cover story, last October said the dollar could fall another 20 percent against the euro over the next few years. John Paulson, who made billions betting against subprime mortgages, as chronicled by Gregory Zuckerman in the The Greatest Trade Ever, is bearish on the dollar too.

Paul Krugman: Paul Krugman: Learning From Europe

As health care reform nears the finish line, there is much wailing and rending of garments among conservatives. And I’m not just talking about the tea partiers. Even calmer conservatives have been issuing dire warnings that Obamacare will turn America into a European-style social democracy. And everyone knows that Europe has lost all its economic dynamism.

Strange to say, however, what everyone knows isn’t true. Europe has its economic troubles; who doesn’t? But the story you hear all the time — of a stagnant economy in which high taxes and generous social benefits have undermined incentives, stalling growth and innovation — bears little resemblance to the surprisingly positive facts. The real lesson from Europe is actually the opposite of what conservatives claim: Europe is an economic success, and that success shows that social democracy works.

Actually, Europe’s economic success should be obvious even without statistics. For those Americans who have visited Paris: did it look poor and backward? What about Frankfurt or London? You should always bear in mind that when the question is which to believe — official economic statistics or your own lying eyes — the eyes have it.

Mr. Smith Rewrites the Constitution

by Thomas Geoghegan

About the Senate, a college professor of mine used to say, "One day, the Supreme Court will declare it unconstitutional." He was joking, I think.

But the Senate, as it now operates, really has become unconstitutional: as we saw during the recent health care debacle, a 60-vote majority is required to overcome a filibuster and pass any contested bill. The founders, though, were dead set against supermajorities as a general rule, and the ever-present filibuster threat has made the Senate a more extreme check on the popular will than they ever intended.

This change to the Constitution was not the result of, say, a formal amendment, but a procedural rule adopted in 1975: a revision of Senate Rule 22, which was the old cloture rule. Before 1975, it took two-thirds of the Senate to end a filibuster, but it was the "Mr. Smith Goes to Washington" filibuster: if senators wanted to stop a vote, they had to bring in the cots and the coffee and read from Grandma's recipe for chicken soup until, unshaven, they keeled over from their own rhetorical exhaust.

The Craziest Tax

Lost Your Job? The IRS Thinks You're Loaded

NEW YORK--My friend was a survivor. Until she wasn't. She'd made it through 14 rounds of layoffs at her accounting firm. Then came number 15: "I was a telecommuter. When my boss told me to come into the office for a meeting, I knew I was done for. I told her to cut the crap, save me the trip, and fire me over the phone."

I told her how to file for unemployment benefits. In New York, you can get up to $405 a week plus $25 in extra "Obama bucks" approved by the feds back during the hope and change days. (Most states pay less.) Then I warned her: "Remember, set some of that aside. Unemployment benefits are taxable." In New York, that means roughly 40 percent.

Unemployment: The 2010 Time Bomb

By John Nichols, The Nation
Posted on January 9, 2010, Printed on January 11, 2010
http://www.alternet.org/story/145048/

American employers eliminated 4.2 million jobs in 2009 and sent unemployment soaring into double digits for the first time in more than a quarter century.

Since the fall of last year, the official jobless rate has been over ten percent, while the unofficial rate (taking in the severely underemployed and those who have given up looking) has been over 17 percent.

Katha Pollitt: The Decade for Women: Forward, Backward, Sideways?

How have American women fared in what seems to be everyone's least favorite decade since the Fall of Rome, which at least was fun for the Vandals? (Well, to be fair, today's investment bankers have plenty to chortle over.) Herewith some feminist highs and lows of the era that began with the Supreme Court choosing the president and ended with hope hangovers and tempests in teabags.

Tomgram: Engelhardt and Turse, The CIA Surges

Posted by Tom Engelhardt and Nick Turse at 5:30pm,
January 10, 2010.

The Shadow War
Making Sense of the New CIA Battlefield in Afghanistan

By Tom Engelhardt and Nick Turse

It was a Christmas and New Year’s from hell for American intelligence, that $75 billion labyrinth of at least 16 major agencies and a handful of minor ones. As the old year was preparing to be rung out, so were our intelligence agencies, which managed not to connect every obvious clue to a (literally) seat-of-the-pants al-Qaeda operation. It hardly mattered that the underwear bomber’s case -- except for the placement of the bomb material -- almost exactly, even outrageously, replicated the infamous, and equally inept, “shoe bomber” plot of eight years ago.

That would have been bad enough, but the New Year brought worse.

Look for News Articles from the NRA's "Firearms Gazette" at the Washington Post

Andrew Alexander, the Washington Post's ombudsman, gave an argument about the Post's use of copy produced by the Peter Peterson funded "Fiscal Times." This argument can also be used to justify the use of "news" stories generated by any "news" service created by an advocacy group.

As background, Peter G. Peterson is a billionaire investment banker who has been using his vast fortune to try to cut back and/or privatize Social Security and Medicare for the last two decades. He recently started the "Fiscal Times" as a new news service that reports on budget issues. His son, Michael Peterson, hired the staff. Coincidentally, the Post ran their first story from Peterson's news service on New Year's eve.

When Will the White House Wake Up?

By Sam Pizzigati

Created 01/10/2010 - 12:53pm

Home Feature Box:

Congress may be gridlocked, but the Obama administration has the power, even without congressional action, to take on the CEO set — and the windfalls that are so enraging average Americans.

Congress may be gridlocked, but the Obama administration has the power, even without congressional action, to take on the CEO set — and the windfalls that are so enraging average Americans.

A year ago, movers and shakers at the upper echelons of the Democratic Party were celebrating the biggest congressional majorities for Democrats in a generation. Last week, in those same upper echelons, gloom and doom were reigning.

The immediate source of the unease: the surprise announcement that Senator Byron Dorgan from North Dakota, a popular Democrat in a heavily Republican state, would be retiring at year end.

Frank Rich: The Other Plot to Wreck America

THERE may not be a person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit. In the years since 9/11, we’ve all become counterterrorists. But in the 16 months since that other calamity in downtown New York — the crash precipitated by the 9/15 failure of Lehman Brothers — most of us are still ignorant about what Warren Buffett called the “financial weapons of mass destruction” that wrecked our economy. Fluent as we are in Al Qaeda and body scanners, when it comes to synthetic C.D.O.’s and credit-default swaps, not so much.

What we don’t know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks — secure that it can keep the bonanzas while we get stuck with the losses.