2008 - %3, October

Why AIG Went Down

| Tue Oct. 7, 2008 6:14 PM EDT

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Documents released today by a congressional committee investigating the collapse of insurance giant American International Group (AIG) paint a picture of a company that sought to conceal the scope of its risky investments, despite warnings from regulators, auditors, and even its own employees that its financial disclosures were insufficient.

According to a letter (PDF) released Tuesday by the House Committee on Oversight and Government Reform, which held a hearing on the firm's downfall, federal regulators warned AIG executives of a "material weakness" in the company's books five months before the insurance giant had to be rescued by an $85 billion government bailout. The federal Office of Thrift Supervision (OTS) wrote AIG on March 10, 2008 that its asset valuations "lacked the accuracy and granularity necessary to understand the impact… on AIG's accounting and financial reporting."

AIG's auditor, Pricewaterhouse Cooper (PWC), also warned the insurance giant about its books. Oversight committee chairman Henry Waxman (D-Calif.) pointed to minutes (PDF) from an AIG audit committee meeting in March indicating the board was told that the "root cause" of AIG's problems was internal auditors' lack of "appropriate access" to the Financial Products division—the very division whose massive losses eventually necessitated the $85 billion government bailout.

And even AIG's own employees warned the company that it had no way of knowing how much risk it was exposed to. In a letter (PDF) to the committee, Joseph St. Denis, the firm's former vice president for accounting policy in AIG's Financial Products division, accused AIG executives of stymieing his attempts to make sure the company was properly reporting the liabilities stemming from its involvement in risky financial products, including the $62 billion credit derivative swap (CDS) market. St. Denis, who worked as a Securities and Exchange Commission (SEC) enforcement official before joining AIG, said Joseph Cassano, the head of the division, "took actions that I believed were intended to prevent me from performing the job duties for which I was hired."

Lynn Turner, a former chief accountant for the SEC who testified at the hearing, said he didn't see how AIG's financial disclosures could possibly be consistent with its exposure. "When you've got that sort of exposure, you owe it to me as an investor [to disclose it]. That's the disclosure I cannot find in these filings…. There's a question there as to why we didn't get that."

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MP3: Brett Dennen - "Make You Crazy"

| Tue Oct. 7, 2008 5:06 PM EDT

mojo-photo-dennen.jpgI've been doing pretty well this election season, emotional-stability-wise, but today, I'm starting to get really pissed. With the tacit encouragement of the candidates, McCain-Palin rallies are turning into lynch mobs, astonishing examples of the real consequences of pushing Rovian campaign tactics that far. Whether or not Obama is dominating in the polls, this kind of stuff makes me furious and terrified, and I'm not sure I'll be able to watch the debate tonight without being physically restrained, or my TV might end up out on the sidewalk.

Oakdale, California's Brett Dennen understands. His new album, Hope for the Hopeless (hey, that's me!) comes out October 21st; his label, Downtown, has a free mp3 of the first single, "Make You Crazy" (that's also me!), whose lyrics acknowledge that the "lies just to get you/spies just to get you" are "enough to make you go crazy." Thankfully, its sunny samba rhythms have the calming properties of a nice caipirinha—not too sweet, but tasty enough to help you forget why you were about to blow your top over some planted pseudo-redneck at a Palin rally. And is that Femi Kuti in the background? Why yes it is. Ahhh, that's better.

MP3: Brett Dennen – "Make You Crazy"

Debate Preview

| Tue Oct. 7, 2008 4:25 PM EDT

DEBATE PREVIEW....Karen Tumulty notes that 9 out of 10 people are now dissatisfied with the way things are going in the United States:

With the nation in that frame of mind, it's hard to believe that talking about Obama's associations with a figure from the 1960s is going to gain McCain much ground. Nor will talking about earmarks, or recycling his stump speech jokes about how the federal government is studying the DNA of bears. These items aren't even a rounding error in the huge federal budget, and sound even smaller in the wake of last week's $700-billion bailout package. And all this is even before most Americans have taken a look at the quarterly statements they will be receiving in coming days that show just how badly their 401(k)s and other investments have been hit.

Two notes. First, what's the deal with the 9% of the country that apparently thinks we're doing OK? Did they not understand the question? Second, as dumb as it is, my guess is that McCain will talk about Ayers and Jeremiah Wright and bear DNA regardless. It's possible that there was never any winning strategy for McCain in the first place, but the strategy he ended up with has nonetheless been almost astonishingly bad. It's like he just put the last few winning Republican campaigns in a blender and decided to repeat them. Neither he nor Steve Schmidt seem to understand that the Republican base just isn't what it used to be.

Google Earth Adds Ocean View

| Tue Oct. 7, 2008 4:15 PM EDT

ocean.jpgIt's not all bad news from the International Union for Conservation of Nature (IUCN) this week. Today the group, in partnership with Google, launched an interactive marine layer for Google Earth. Users will be able to explore all of the world's most sensitive ocean areas, as well as upload their own photos and information to the map. Check it out here.

I haven't gotten to play with this yet, as the layer so far only works with Windows. But my sense is that the combination of solid information and the familiar Google Earth interface will get a lot more people interested in the fate of the ocean. Needless to say, the sooner the better.

Photo used under a Creative Commons license from coda.

Palin's (Functional Equivalent of an) Email Cover-up

| Tue Oct. 7, 2008 4:00 PM EDT

no-email250x200.jpg By using at least one private email account for state business, Alaska Governor Sarah Palin has virtually guaranteed that most of the emails she sent as governor--which are subject to the state's Open Records Act--will not be publicly released before Election Day.

After Senator John McCain, the GOP presidential nominee, picked Palin to be his running mate, a number of news organizations, including Mother Jones filed Open Records Act requests for copies of emails Palin had received or sent. (For a comprehensive list of all the requests received by Palin's office, see here.)On September 22, in response to the Mother Jones request, Palin's office replied that it would cost $2,249.46 to conduct a search of her official email account. This did not include copying fees. The fee was later reduced to $590.06. But money was not the issue.

Palin has used at least two private email accounts in addition to her state account. That posed a serious challenge to the record-keepers in her office: how to find the emails to and from these accounts. The information managers had easy access to the emails she generated and received with her official account. But they did not have access to a Yahoo account she used for official communications and another private account she might have used for state business.

Vladimir Putin Would Totally Kick Your Ass

| Tue Oct. 7, 2008 2:15 PM EDT

Yep, that's our favorite despot Vladimir Putin getting shown who's boss by an opponent half his size. But don't be fooled: Putin is a badass, and he wants you to know it. We've all seen the pictures of him fly-fishing with his shirt off and, more recently, of him taking aim at a wild boar and saving an imperiled group of scientists. The macho media campaign continues with this latest installment. In honor of his birthday, Putin has released a 75-minute DVD called Learning Judo with Vladimir Putin. It follows a 2004 book the Russian president (then prime minister) co-authored with judo partner Vasily Shestakov. "The book sold very well, and I think there will be a big demand for this film," Shestakov told the The Times (London). "Putin demonstrates five or six moves from the book, and he also explains his philosophy and outlook on judo... He is a very successful master, a 6th Dan, and he gives very clear demonstrations of technique, of movement and grip. Russia lost a great judo player, but found a great leader."

As for Putin, one of the things that attracts him to judo is the premium placed on softness and finesse. "The name of the sport, 'the gentle way,' reveals the fundamental principle—an opportunity to gain the upper hand by soft but effective actions," he says in the video.

Makes you wonder what Georgia's Mikheil Saakashvili would say about that. As The Times points out, Putin is probably the "only world leader who is as skilled at self-defence as his bodyguards." But maybe not for long: last month, Putin told a French newspaper that Nicolas Sarkozy expressed an interest in judo. "We have decided to do some training together," he said. Oh, how I would love to see that.

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Debate Bingo....This Time For Real!

| Tue Oct. 7, 2008 12:45 PM EDT

DEBATE BINGO....THIS TIME FOR REAL!....Speaking of tonight's debate, our debate bingo game is back and it's better than ever. Thanks to enterprising reader Jason S., you can now print different versions of the card and play actual bingo with your friends tonight. Just click the link to go to our fundraising page and then click on the bingo card. Once you're there, click the Mother Jones logo at the top of the card and all the squares will randomly reset. You can print as many different cards as you like.

Now that's customer service! I'll be liveblogging, of course, so come on by and join us in comments. And as long as you're already at our fundraising page, maybe you can throw a few dollars our way too. It keeps both the magazine and the blogs going and helps keep progressive journalism alive. Pretty good deal, eh?

That National Conversation About Race Is Actually Happening...

| Tue Oct. 7, 2008 12:40 PM EDT

But, boy, do we have a long way to go. Check out this article about Obama organizers doing their best in Buchanan County, Virginia. Here's an excerpt:

...Obama's supporters, as they push to win this dead-even battleground state, are talking directly about race, betting that the best way to raise their neighbors' comfort level with the prospect of the first black president is to openly confront their feelings.
When Cecil E. Roberts, president of the coal miners union that shapes politics in much of this mountain region, talks to voters, he tells them that their choice is to have "a black friend in the White House or a white enemy." When Charlie Cox, an Obama supporter, hears friends fretting about Obama's race, he reminds them that they pull for the nearby University of Tennessee football team, "and they're black."
Union organizer Jerry Stallard asks fellow coal workers what's more important: improving their work conditions or holding onto their skepticism of Obama's race, culture or religion. "We're all black in the mines," he tells them.

Not everyone is enthusiastic. ('Course we knew that.) See the full story for more.

Debate Format

| Tue Oct. 7, 2008 12:19 PM EDT

DEBATE FORMAT....Taegan Goddard summarizes the rules for tonight's "town hall" debate:

The questions will "be culled from a group of 100 to 150 uncommitted likely voters in the audience and another one-third to come via the Internet."...."An audience member will not be allowed to switch questions. Under the deal, the moderator may not ask followups or make comments. The person who asks the question will not be allowed a follow-up either, and his or her microphone will be turned off after the question is read. A camera shot will only be shown of the person asking — not reacting."....McCain and Obama are not supposed to ask each other direct questions.

This is ridiculous. Why bother with a human audience or moderator at all? You might as well just select the questions, project them on a screen via PowerPoint, and televise the results. Wire the candidates up to received increasingly intense electrical shocks if they exceed their time limits and you'd be all done. Anybody got a problem with that?

New Army Doctrine Emphasizes "Stability Operations"

| Tue Oct. 7, 2008 11:42 AM EDT

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Today, the U.S. Army released it's "Stability Operations Field Manual" (.pdf), which places humanitarian and relief work at the center of its strategic focus. The manual follows two earlier documents issued in 2005 (National Security Directive 44 and Department of Defense Directive 3000.05), which first paid institutional attention to the need to adjust the military's approach to 21st century conflicts—both issued amid widespread criticism that the Bush administration did not adequately prepare for its occupation of Iraq. (Read my piece about Directive 3000.05 here.) But the new Army field manual solidifies these earlier orders and will shape how GIs are deployed for years to come.

The manual had been in the works for 10 months and was shepherded to completion by Lt. Gen. William B. Caldwell IV, commander of the Army's Combined Arms Center at Ft. Leavenworth, Kansas. His predecessor was none other than David Petraeus, who authored the Army's new counter-insurgency manual and went on to implement it in Iraq.