How Obama Can Recover...

IMHO, last night's losses to Republicans were indeed a referendum on President Obama--who is being punished because he has not kept his campaign promises, as Arianna Huffington argued the other day.

To turn the situation around, the Democrats need to go back to basics, and to the principles upon which the President campaigned, as Arianna noted: "Change We Can Believe In" and "Yes, We Can!"

Some concrete steps:

1. Fire Timothy Geithner as Treasury Secretary.

2. Replace him with Paul Volcker.

3. Announce a high-level investigation into allegations of violations of securities laws by Goldman Sachs.

4. File motions in the ongoing CIT bankruptcy case to recover $2.3 billion in taxpayer bailout money before creditors are paid.

5. Put Howard Dean in charge of Health Care Reform.

American Banking News: CIT Judge Grants "Unusual" and "Unprecedented" Concessions

From American Banking News:

In what could only be considered a bizarre decision by the judge, he approved a proposed temporary restraining order from CIT Group which will keep lenders from collecting on losses coming from the CIT Group/Equipment Finance Inc. unit, which isn’t even in bankruptcy.

According to court documents, this would have led to losses of $680 million to the company. But a bankruptcy court really shouldn’t have allowed this in the opinion of lenders like Wells Fargo Bank (NYSE:WFC), which, along with others, stated CIT Group hadn’t proved in any way they should be awarded this type of extraordinary measure for a division which has not entered into bankruptcy in the first place.

This may have been allowed to keep more bailout funds being funneled into the bankrupt financial entity, stirring up more outrage from taxpayers, who are growing increasingly edgy over the money being spent on huge companies by politicians on their behalf.

An agreement between CIT Group and JPMorgan Chase (NYSE: JPM) was also approved by the judge who couldn’t say no, whereby letter of credit of $750 million would be allowed to be continually accessed by CIT, where the company alleged the funds were needed to continue to effectively operate and keep up good relationships with their customers.

Other unusual requests granted by Gropper was in allowing CIT to fund its operations with inter-company cash transfers. The company received a loan of $4.5 billion near the end of October, adding it to the $3 billion loan it received in July, 2009. Proceeds of the loans were given to subsidiaries of the company, which CIT also used the subsidiaries as collateral for the loans. The subsidiaries received liens on CIT’s assets in return.

Investor Carl Icahn, who holds over five percent of CIT’s debt, borrowed $1 billion to CIT in order to continue operations during the bankruptcy procedures. Gropper allowed CIT work out an exception for Icahn concerning using debt to increase billions in tax breaks.

Icahn is working on a deal with CIT where he could own close to 11 percent of the stock of CIT once it emerged from bankruptcy.

CIT said sub-prime mortgage losses and continuing tough credit markets as the reasons for declaring bankruptcy on November 1.

After terrible negotiations by Treasury Secretary William Geithner, taxpayers are expected to receive none of the $2.3 billion in bailout money CIT Group was given.

Italian Court Finds CIA Guilty of Kidnapping

From the Huffington Post:

MILAN — An Italian judge found 23 Americans and two Italians guilty Wednesday in the kidnapping of an Egyptian terror suspect, delivering the first legal convictions anywhere in the world against people involved in the CIA's extraordinary renditions program.

Human rights groups hailed the decision and pressed President Barack Obama to repudiate the Bush administration's practice of abducting terror suspects and transferring them to third countries where torture was permitted.

The Obama administration ended the CIA's interrogation program and shuttered its secret overseas jails in January but has opted to continue the practice of extraordinary renditions.

The Americans, who were tried in absentia, now cannot travel to Europe without risking arrest as long as the verdicts remains in place.

Read more at: http://www.huffingtonpost.com/2009/11/04/italy-convicts-23-america_n_345274.html

Arianna Huffington: Obama Afraid to Govern

Arianna's read David Plouffe's book, and come away with some questions for the President:

Indeed, reading the book, I often found myself wondering what Candidate Obama would think of President Obama. Would he look at what the White House is doing and say, "that's what I and my supporters worked so hard for?"

How did the candidate who got into the race because he'd decided that "the core leadership had turned rotten" and that "the people were getting hosed" become the president who has decided that the American people can only have as much change as Olympia Snowe will allow?

How did the candidate who told a stadium of supporters in Denver that "the greatest risk we can take is to try the same old politics with the same old players and expect a different result" become the president who has surrounded himself with the same old players trying the same old politics, expecting a different result?

How could a president whose North Star as a candidate was that he "would not forget the middle class" choose as his chief economic advisor a man who recently argued against extending unemployment benefits in the middle of the worst economic times since the Great Depression?

I'm referring, of course, to Larry Summers. According to a White House official I spoke with -- later confirmed by sources in the White House and on the Hill -- Summers was against the extension. And it took a lot of Congressional pushing back behind the scenes for the president to overrule him.

And, according to another senior White House official, when foreclosures or job numbers come up at the regular White House morning meeting, Summers' response is that nothing can be done. Nothing can be done about skyrocketing foreclosures or lost jobs.

Nothing can be done -- pretty much the opposite of "Yes we can," isn't it?


Read more at: http://www.huffingtonpost.com/arianna-huffington/obama-one-year-later-the_b_343209.html

CIT Bankruptcy Hearing Today in Judge Alan L. Gropper's NYC Courtroom

Here's the judge's calendar showing CIT's hearing scheduled for today, November 3rd. I sincerely hope Judge Gropper throws out the agreement with creditors, saying the US Government failed in its fiduciary responsibility to taxpayers...of course, I'm not holding my breath...

Any readers in NYC who might stop by the courtroom to see what's happening, let us know and we'll try to link to your blog/twitter posts.

UPDATE: Bloomberg reports Judge Gropper isn't making any waves, approved the deals presented to him by CIT.

U.S. Bankruptcy Judge Allan Gropper in Manhattan today approved all of CIT’s routine “first-day” motions, allowing it to borrow an interim $125 million from a total $500 million “debtor-in-possession” loan from Bank of America Corp. CIT can also pay employees and vendors who supply critical services.

“We are on a very fast track,” Gropper said, setting a Dec. 8 date to consider both a rough outline of CIT’s so-called prepackaged plan, and a final confirmation order.

Not surprising, but disappointing...

NY Times Admits Paying Taliban

Responding to charges from Michael Yon that the newspaper paid ransom to the Taliban for release of its reporter, the New York Times raised further questions about its relations with the Taliban with this statement on its blog:

Security consultants who worked on our case said cash was paid to Taliban members who said they knew our whereabouts.

I would like to see answers to three obvious questions:

1. How much was paid to the Taliban by the New York Times?

2. What did the Times get in exchange?

3. How come the New York Times has not been prosecuted under the Trading with the Enemy Act?

Everything You Ever Wanted to Know About Diplomacy But Were Afraid to Ask

...can be found in Satow's Guide to Diplomatic Practice, reviewed by Jeremy Greenstock in the current TLS:

Can a guide originally written in 1917 for a very different planet be relevant now, even with the radical revision which the new editor, Sir Ivor Roberts, decided was necessary? Is diplomacy itself the same profession it was ninety years ago, or indeed in 1969, when the present Satow editor and I sat at adjacent desks in the West African Department of the Foreign and Commonwealth Office, raw recruits struggling with the complexities of the Nigerian civil war? The smell of sealing wax in the registries, the piles of crisp pink and green telegrams on the desks, and the hiss and rattle of Lamson Tubes dispatching papers to other parts of Whitehall now seem like features of a Dickensian novel.

Reading this new edition is a chance to take a salutary lesson. The past is closer to us than we like to imagine; the advice on how to be a good diplomat from a century or three centuries ago can still be spot-on; the well-tried rules of courteous and honourable exchange can cement the bricks of international order like nothing else. Diplomacy and war remain two sides of the same coin, with a lack of professionalism in the one liable to make the other loom all the larger. We need to know what constitutes good practice.

Sir Ernest Mason Satow (1843–1929) was a member of the British Japan Consular Service who rose, through his linguistic and other diplomatic skills, to become Head of Mission in Tokyo and then Peking at the turn of the century. In 1907 he represented Britain at the Second Hague Conference on International Peace. He wrote extensively about Japan and is still warmly remembered there. In his retirement he distilled his experience into a diplomatic guide which remains the most widely used in embassies around the world.

This Sixth Edition of Satow’s Diplomatic Practice runs to 700 pages, a challenge for all but the most studious of international affairs enthusiasts, but well worth dipping into or keeping as a work of reference. It describes how diplomacy is structured and organized, how the international and regional institutions work (with much updating on the European Union), how states transact their collective business and how law works at the global level. Precedents and customs abound; and there are some engaging anecdotes. The guidance on how to write a Note Verbale or draw up a non-paper may seem abstruse in a world of emails, blogs and Twittering, but formal communications remain part of international exchange. To adhere to a standard formula, often during a tense situation, has a reassuringly businesslike quality to it. As with legal language, it sounds strange but it is effective.

To the layman, nevertheless, those are diplomatic niceties. The fundamental purpose of the book is serious: humans are a contentious and destructive species and so the opportunities for peaceful interaction must be maximized. Here is an essential aid to doing so at the highest levels of professional effectiveness. Nor is Satow relevant only for British, or even anglophone, practitioners: diplomats of any nationality can draw huge benefit from it. I particularly commend the section at the end on Advice to Diplomats: listen more than you talk; stay calm in every circumstance; don’t show off that you are privy to secrets. The same mistakes are made today as many generations ago; and no practising diplomat should feel too proud to be reminded of them.

"Color Revolutions" Were Media Hype...

An article by Katya Kalandadze of Syracuse University and Mitchell A. Orenstein of Johns Hopkins University in the journal Comparative Political Studies (ht Democracy Digest) finally admits:

The sight of thousands of people demonstrating for clean elections and an end to corrupt postcommunist regimes led many observers to declare that the so-called color revolutions had finally brought democracy to Serbia, Georgia, Ukraine, and Kyrgyzstan. But how successful have these electoral revolutions actually been? The authors analyze all cases of electoral revolutions worldwide since 1991, distinguishing between failed and successful electoral revolutions, to conclude that even successful electoral revolutions have shown insignificant or no democratic progress in their wake. Electoral revolutions are ineffective at advancing democratization because they place too great an emphasis on elections and do not address other fundamental obstacles to democratization in hybrid and authoritarian regimes. International influences have proven more successful in promoting democratization in countries of postcommunist Europe.

Do You Know Any White House Visitors?

Search this handy-dandy database to find out...(ht Huffington Post)

White House Visitor Records Requests

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CIT Bankruptcy Shakes Asia

From Channel News Asia:

HONG KONG - Asian markets tumbled Monday as a heavy loss on Wall Street at the end of last week was compounded by the bankruptcy of US bank CIT at the weekend, hitting confidence for a global economic recovery.

Tokyo lost 2.31 percent, Sydney 2.21 percent and Seoul 1.37 percent as dealers went into selloff mode. Hong Kong lost 0.61 percent, after having been almost three percent lower at one point.

Wall Street had plummeted 2.51 percent on Friday as confidence whipped up by the gross domestic product data was wiped out by worries that CIT Group, one of the largest small-business lenders in the United States, was in trouble.

Those fears were realised on Sunday when the bank filed for Chapter 11 bankruptcy with its board approving a "prepackaged" restructuring plan to shed 10 billion US dollars in debt.

This comes after a $2 billion US-taxpayer bailout...I want my money back!

IMHO, the bankruptcy judge ought to make darn sure all the CIT execs refund their bonuses as part of any workout.

UPDATE from TechTicker at Finance.Yahoo.com:

The prepackaged plan allows CIT to restructure its debt while trying to keep badly needed loans flowing to thousands of mid-sized and small businesses. The plan keeps CIT's operations alive and makes it possible for the company to exit bankruptcy by year's end.

But here's the bad news: While senior debt holders will only lose 30% of their investment, we, the U.S. taxpayer, will lose the entire $2.3 billion we lent the company this summer.

William Black, professor at the University of Missouri-Kansas City School of Law is dumbfounded. "We put ourselves on the hook in a completely inept way where we lose first. We lose entirely as the taxpayers."

Black, a former top federal banking regulator, blames Treasury Secretary Timothy Geithner for negotiating such a bad deal on behalf of the American public.

His argument goes as follows:

The government was in no way obligated to lend the struggling CIT money and, in fact, initially refused to provide it bailout funds. More importantly, being the lender of last resort, the government should have guaranteed we'd be the first to get paid if CIT eventually filed Chapter 11. By failing to do so, "it's like he [Geithner] burned billions of dollars again in government money, our money, gratuitously," says Black.

Here's a link to William Black's book at Amazon.com:

Did New York Times Pay Ransom to Taliban for Afghan Reporter?

The National Review Corner quotes Michael Yon's tweets to that effect:

I have been told by very close sources that ex-CIA officers helped pay off release for Rohde. I knew this while it was ongoing.about 3 hours ago from web...

...Numerous very well placed sources have told me New York Times/associates paid millions to get Rohde release.about 3 hours ago from web

More at the Huffington Post.

Goldman Sachs "May Have Violated Securities Laws"

According to Greg Gordon of McClatchy Newspapers (ht Huffington Post):

WASHINGTON — In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.

Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws...

***

...To piece together Goldman's role in the subprime meltdown, McClatchy reviewed hundreds of documents, SEC filings, copies of secret investment circulars, lawsuits and interviewed numerous people familiar with the firm's activities.

McClatchy's inquiry found that Goldman Sachs:

*Bought and converted into high-yield bonds tens of thousands of mortgages from subprime lenders that became the subjects of FBI investigations into whether they'd misled borrowers or exaggerated applicants' incomes to justify making hefty loans.

*Used offshore tax havens to shuffle its mortgage-backed securities to institutions worldwide, including European and Asian banks, often in secret deals run through the Cayman Islands, a British territory in the Caribbean that companies use to bypass U.S. disclosure requirements.

*Has dispatched lawyers across the country to repossess homes from bankrupt or financially struggling individuals, many of whom lacked sufficient credit or income but got subprime mortgages anyway because Wall Street made it easy for them to qualify.

*Was buoyed last fall by key federal bailout decisions, at least two of which involved then-Treasury Secretary Henry Paulson, a former Goldman chief executive whose staff at Treasury included several other Goldman alumni.

The firm benefited when Paulson elected not to save rival Lehman Brothers from collapse, and when he organized a massive rescue of tottering global insurer American International Group while in constant telephone contact with Goldman chief Blankfein. With the Federal Reserve Board's blessing, AIG later used $12.9 billion in taxpayers' dollars to pay off every penny it owed Goldman.

Happy Halloween!

1976 Swine Flu Vaccine May Still Protect Against Current Pandemic

Someone I know saw a link to this September 2009 Scientific American article in a Reuters item, and wondered why it isn't getting more play--as action based on these findings could make available 43 million doses of needed H1Ni flu vaccine to those who really need it. Money quote:

One of the NEJM studies also showed that many older Americans as well as recipients of the 1976 swine flu vaccine may already be protected against the new virus. In that study, researchers from the U.S. Centers for Disease Control and Prevention (CDC) report that tests of serum taken from 1976 swine flu vaccine recipients showed a strong protective immune response against today's pandemic virus. The findings may help to explain why the virus sickens children and young adults more than older people, the authors wrote. The preexisting immunity may also prime 1976 vaccinees to respond vigorously to the new pandemic vaccine.

"It would certainly be something very interesting to look at," says Jackie Katz, senior author of the study. "That's why we did these studies originally, to help inform the public health response."

Adults appear protected

Since the new H1N1 virus emerged earlier this year, health officials have noted how it has disproportionately struck children and young adults and conspicuously spared older people worldwide. The disparity is most dramatic in the U.S.: 79 percent of laboratory-confirmed cases have been in people under 30 years old, whereas only two percent of cases have been in adults over 60. The U.S. median age of pandemic infections so far is 12, but somewhat higher in other countries. The median age of confirmed cases in Australia is 21, for example.

Since May, Katz, who is chief of the CDC National Influenza Division's Immunology and Pathogenesis Branch, has been testing stored serum samples to look for existing immunity to the new virus in the U.S. population. Her group's latest report shows that serum from adults born before 1930, including survivors of the 1918 pandemic, possesses antibodies that recognize and respond powerfully to the novel H1N1 virus.

With an antibody concentration of 40 or more considered protective (immunologists describe antibody responses in terms of serum dilution ratios, such as 1:40), the tests showed that 100 percent of subjects born between 1910 and 1929 mounted antibody levels of 80 or more. Only 34 percent of subjects born before 1950 mounted comparable levels, suggesting that exposure to the 1918 pandemic virus or its immediate descendents in the 1920s and 1930s conferred the strongest protection against the new flu.

The original swine flu

The CDC group also started over the summer to test 83 samples of serum drawn in 1976 from adults who received a single dose of the swine flu vaccine as well as a handful of samples from children who got the 1976 vaccine. The study found that the serum from 52 (63 percent) of the adult subjects produced antibody levels of 160 or more when exposed to the novel H1N1 virus. That number was nearly as many (59) of those whose serum demonstrated a strong response when exposed to the 1976 swine flu itself.

The NEJM report notes that a Japanese study recently reported finding protective antibody responses against the novel H1N1 virus in Japanese adults exposed to the 1918 pandemic virus, but not in subjects born after 1920. Serum from older Europeans tested by the CDC also showed lower response levels than the U.S. samples, possibly indicating a greater level of protection among Americans from the 1976 vaccine, which was given only in the U.S.

I got my shot in 1976, as did someone I know, so we won't be getting it again...freeing up at least two doses for some kids with asthma or those with weakened immune systems.

Given the current shortages of vaccine, I hope the Centers for Disease Control would try to spread the word about health benefits of the 1976 shot more vigorously.

PBS Documentary's Message: "Let Them Smoke Pot"

The other night, I came home from teaching to find someone I know watching a PBS documentary instead of the World Series. The Botany of Desire, a 1.2 million dollar program, featured our former next-door neighbor on West 110th Street in New York City, now millionaire and bestselling author, Michael Pollan. He was completely unrecognizable, now looking more like bullet-headed former Treasury Secretary Henry Paulson than the bearded, softy, Bennington graduate and protege of novelist John Gardner. As the program unfolded, it became pretty obvious that Pollan and his crew of not-so-merry Cannibis lobbyists, including New Age health guru Dr. Andrew Weil, were singing the praises of recreational hemp--their argument apparently growing (forgive the pun) out of mankind's desire for plants such as tulips and apples.

I figure, given the time it takes to produce a PBS documentary, the network brass must have green-lighted this infomercial for the multibillion-dollar marijuana industry sometime during the Bush administration. Let's call it a triumph of product placement by "Big Dope."

Eight years after 9/11, I finally was told by PBS, and my former neighbor, what the American establishment thinks we should do to cope with a world on fire with economic collapse, Islamic revolution, and terrorism.

PBS's answer:"Let them smoke pot."

Having lived through the ghastly 1970s when so many were stoned, and having benefitted from the Reagan administration's "Just Say No" turnaround, I'm glad most of America was watching the World Series the other night. I don't want to live through another Carter administration, thank you very much...

I'm rooting for the Yankees, myself.

Matthew Hoh's Resignation Letter from US State Department in Afghanistan

From the Washington Post.

A Piano-Playing Cat on YouTube... (ht Huffington Post)

Arianna Huffington: Time for Obama to Act on Economy

From today's Huffington Post:

Meanwhile, the fundamental structural problems that led to the collapse are still not being addressed. A sense of urgency and crisis was exploited when it was useful in persuading taxpayers of the need to bail out the banks. But now that the banks are no longer in crisis -- and it's just the rest of the country that is in trouble -- the sense of urgency has faded. Because nothing says lack of urgency like "convene a conference."

Elizabeth Warren sums it up ominously: "All the things we were talking about that were serious, serious problems for the financial institutions seem to me are still serious, serious problems."

And Neel Kashkari, the former overseer of the TARP program under Bush, knows a lack of change when he sees it. "I think that the way that a Democratic administration talks about certain issues is probably a little different than the way a Republican administration does, and that's appropriate," he said. "But the substance of the actions, I think, are very consistent, and that's been important."

Important for Wall Street. And tragic for the rest of us -- both in terms of what hasn't been accomplished, and in terms of how much more misery it will lead to down the road. Misery that is avoidable -- if only Barack Obama would stop acting like a pundit, egging on change from the sideline, and start acting like the president, dictating the game from the middle of the field.


Read more at: http://www.huffingtonpost.com/arianna-huffington/barack-obama-is-doing-my_b_334631.html

Captain January (1936)

Watched it the other night, rented from Netflix. Shirley Temple has 2 Daddys! Standardized testing mocked! Buddy Ebsen dances at the Codfish Ball with Shirley Temple! A great film...which no doubt led to making Shirley Temple Black a great diplomat!

From Wikipedia
The peak of Black's diplomatic career came when she was United States Ambassador to Czechoslovakia from 1989 to 1992, and witnessed the Velvet Revolution. She commented about her Ambassadorship, "That was the best job I ever had."

Five stars.

Hillary Clinton's Unprincipled Freudian Slip...

Took place Wednesday, October 21st in a speech sponsored by the US Institute of Peace dealing with nuclear weapons. The Secretary of State declared:

Pursuing these goals is not an act of starry-eyed idealism or blind allegiance to principle. It is about taking responsibility to prevent the use of the world’s most dangerous weapons, and holding others accountable as well. The policies that take us there must be up to the task: tough, smart, and driven by the core interests of the United States. As the President has acknowledged, we might not achieve the ambition of a world without nuclear weapons in our lifetime or successive lifetimes. But we believe that pursuing this vision will enhance our national security and international stability.

Secretary of State Hillary Clinton's declaration to USIP reveals that she doesn't understand the meaning of the word principle.

Did any of her speechwriters consult Merriam-Webster Online?

Main Entry: prin·ci·ple
Pronunciation: \ˈprin(t)-s(ə-)pəl, -sə-bəl\
Function: noun
Etymology: Middle English, from Middle French principe, principle, from Old French, from Latin principium beginning, from princip-, princeps initiator — more at prince
Date: 14th century
1 a : a comprehensive and fundamental law, doctrine, or assumption b (1) : a rule or code of conduct (2) : habitual devotion to right principles (a man of principle) c : the laws or facts of nature underlying the working of an artificial device
2 : a primary source : origin
3 a : an underlying faculty or endowment (such principles of human nature as greed and curiosity) b : an ingredient (as a chemical) that exhibits or imparts a characteristic quality
4 capitalized Christian Science : a divine principle : god
— in principle : with respect to fundamentals (prepared to accept the proposition in principle)

In other words, one simply cannot have a blind obedience to principle, logically one must recognize a fundamental law, doctrine, or assumption in order to follow it. By definition, principled behavior is self-conscious, aware, enlightened...never blind. One might have a blind allegiance to prejudices, myths, superstitions, shibboleths, taboos, and even the Democratic Party--but not to a principle. By definition, a principle is antithetical to blind allegiance.

So, in this statement the Secretary of State has revealed what she thinks about matters of principle...which is what makes it a Freudian slip.