Mojo - March 2009

AIG Reveals Creditors, Plans Bonuses

| Mon Mar. 16, 2009 9:48 AM EDT

As Kevin Drum notes, "AIG" (really the mostly government-owned company's government-appointed executives) released the names of its largest counterparties on Sunday. So it looks like the Project on Government Oversight's Michael Smallberg was right on the money when he told me on Friday: "With members of Congress from both sides of the aisle asking for the list, they'll only be able to avoid these questions for a limited amount of time."

Now we know what many observers already suspected: not only were companies receiving billions from the insurance company in what's been dubbed a "backdoor bailout," but some of those banks weren't even US-based. The meat of the "backdoor bailout," Portfolio's Felix Salmon writes, is in Appendix B of AIG's list (PDF): the amounts of bad mortgage-backed securities AIG bought from its counterparties to cancel out the bad insurance contracts it had written for those very same mortgage-backed securities. France's Société Générale got $6.9 billion, Germany's Deutsche Bank got $2.8 billion, and Swiss UBS got $2.5 billion. Goldman Sachs, as POGO suspected, also did quite well: it got $6.8 billion. The benefit for AIG's counterparties here is twofold: they offloaded bad assets, which improves their financial situation, and were most likely compensated for those assets in excess of what were actually worth.

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The Least Liked Person in the Obama White House Is Also the Guardian of the Fire

| Mon Mar. 16, 2009 9:34 AM EDT

I know I'm late to this, but I'm a big fan of this Norm Eisen character. From a profile in last Friday's WaPo:

Eisen is the White House ethics adviser, the guardian of Obama's integrity, and he is called for consultation every time the new administration has a question regarding more than 1,000 pages of government ethics rules and regulations....

Eisen almost never leaves his office without a binder of ethics statutes and a badly mangled copy of "5 CFR," the code of federal regulations. It's a dense collection of complicated rules. One chapter on gift bans is followed by a long addendum of exceptions, which are then followed by their own exceptions. Gifts from lobbyists are not allowed, unless they're worth less than $20, and only then if they result from a spouse's business or employment.

After he accepted the ethics job, Eisen "got comfortable" with his copy of the 5 CFR -- meaning he tore off the cover, ripped out pages that did not apply to the White House and annotated sections he liked. He crossed out rules in pencil that he planned to change. No longer, he decided, could White House employees receive small gifts, honorary degrees or awards from lobbyists.

"No way," he said. "Some of these things are just scams."

Ultimately, it is Norm Eisen's work that has the power to separate Obama's administration from all the other administrations in recent history, including the Democratic ones. He is the Secretary for Ending Politics As Usual. And I wish him all the luck in the world.

Actual Socialist: 'Don't Besmirch Socialism's Good Name!'

| Mon Mar. 16, 2009 9:06 AM EDT

Proud socialist Billy Wharton took to the pages of the Washington Post yesterday to argue that Barack Obama is not a socialist. Frankly, he'll thank everyone for dropping the phony comparison.

All this speculation over whether our current president is a socialist led me into the sea of business suits, BlackBerrys and self-promoters in the studio at Fox Business News. I quickly realized that the antagonistic anchor David Asman had little interest in exploring socialist ideas on bank nationalization. For Asman, nationalization was merely a code word for socialism. Using logic borrowed from the 1964 thriller "The Manchurian Candidate," he portrayed Obama as a secret socialist, so far undercover that not even he understood that his policies were de facto socialist. I was merely a cudgel to be wielded against the president -- a physical embodiment of guilt by association.

The funny thing is, of course, that socialists know that Barack Obama is not one of us. Not only is he not a socialist, he may in fact not even be a liberal. Socialists understand him more as a hedge-fund Democrat -- one of a generation of neoliberal politicians firmly committed to free-market policies.

Wharton points to Obama's refusal to nationalize the banks, his rejection of single-payer health care, and his unwillingness to withdraw all troops from Iraq and Afghanistan immediately. All are areas that represent deep divides between the president and America's socialist minority. Wharton continues, "The president has... been assigned the unenviable task of salvaging a capitalist system intent on devouring itself." Fundamentally reshaping that system is out of the question for Obama. Any political observer who has been watching Obama closely but still doesn't accept that either (1) doesn't understand the president, (2) doesn't understand socialism, or (3) understands both but is willing to disregard reality for the sake of a partisan talking point.

Some Prison Tips for Bernie Madoff

| Fri Mar. 13, 2009 5:58 PM EDT

So Bernie Madoff's spending the weekend in a 7-by-8 jail cell, and come June 16, he's likely to start a lengthy stint in federal prison. Sure, he'll probably go to a minimum-security facility, but his new surroundings will take some getting used to. Fortunately, Mother Jones is here to help. While researching our package on the prison meltdown last year, we came across all kinds of helpful info for the would-be white-collar convict. A few tips Madoff might find useful: One, when a fellow prisoner talks about "high class," he's more likely talking about Hepatitis C than season tickets to the Met. Two, be wary of opaque financial transactions with shady characters: As a former prisoner told us, "If you bum a smoke and the guy with the cigarettes says, 'Sure, it's a twofer,' you should know a twofer means, 'I give you one for two, so now you owe me.'" And lastly, read the rest of our advice while you still can—Mother Jones is contraband in some joints.

Photo by Flickr user sabeth718 used under a CC License

Watchdog to Fed, Treasury: Where's AIG's Money Going?

| Fri Mar. 13, 2009 2:08 PM EDT

The reason that taxpayers have had to prop up AIG to the tune of $173 billion is that AIG is now basically a conduit—it owes money to so many other companies that the cash just pours right through. If AIG doesn't pay its counterparties—the entities on other end of its bad bets on the subprime mortgage market, the counterparties might go belly-up, too. That's why the bailout of AIG is sometimes referred to as a "backdoor bailout" for other companies. The people and companies on the receiving end of the "backdoor bailout" are AIG's counterparties, and so far, the Treasury and the Fed have been keeping their names secret. Now the Project on Government Oversight (POGO) is trying to change that.

On Thursday, Danielle Brian, POGO's executive director, wrote to Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke warning that "the government's unprecedented effort to rescue the American International Group (AIG) from collapse has been marred by a lack of disclosure and a troubling appearance of favoritism toward Goldman Sachs, one of AIG's most prominent counterparties." Former Treasury Secretary Henry Paulson was Goldman's CEO. The department's assistant secretary in charge of the bailout, Neil Kashkari, and chief of staff, Mark Patterson, among others, are also former Goldman employees. "By withholding crucial details about Goldman Sachs and the other counterparties to AIG, you have given the public ample reason to question the integrity of the government's decisions related to the bailout," Brian wrote.

Male Violence With Impunity: "Corrective" Rape in South Africa

| Fri Mar. 13, 2009 1:34 PM EDT

In South Africa, which already boasts one of the world's highest rape rates, black lesbians are being targeted for particularly brutal assaults. The frequent victims of gang assaults and hideous torture, the government does absolutely nothing. One woman spoke of her gang-rapists taunting her with the "classic lesson" they were imparting during her 2003 abduction. At least she survived. And damned if she isn't still living her life as an out and proud lesbian and high-profile "footballer." Where do Third World women find the courage?

The government, even in the case of a rare prosecution, refuses to acknowledge that lesbians are being specifically targeted. Called "corrective rape" by human rights workers (i.e. rape meant to set the lesbos straight), pressure is mounting for the judiciary there to dub attacks on lesbians hate crimes and forcefully prosecute these criminals. Good luck.

FromThe Guardian:

"The partially clothed body of Eudy Simelane, former star of South Africa's acclaimed Banyana Banyana national female football squad, was found in a creek in a park in Kwa Thema, on the outskirts of Johannesburg. Simelane had been gang-raped and brutally beaten before being stabbed 25 times in the face, chest and legs. As well as being one of South Africa's best-known female footballers, Simelane was a voracious equality rights campaigner and one of the first women to live openly as a lesbian in Kwa Thema.
Her brutal murder took place last April, and since then a tide of violence against lesbian women in South Africa has continued to rise...Now, a report by the international NGO ActionAid, backed by the South African Human Rights Commission, condemns the culture of impunity around these crimes, which it says are going unrecognised by the state and unpunished by the legal system.

If South Africa isn't going to prosecute crime, should the women there, straight and gay, go commando and start parceling out justice on their own?

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GAO: Pentagon Health Records Don't Compute

| Fri Mar. 13, 2009 11:46 AM EDT

Even though the Veterans Administration and the Pentagon have been working to integrate their electronic medical records systems for over a decade, they still can't fully communicate with each other, according to a report (PDF) by the Government Accountability Office. While the departments have made some progress, the GAO says they "continue to face challenges in managing the activities required to achieve this inherently complex goal." Of the information the departments are able to share, much of it is not readable by computers. Instead, much of the sharing involves what are essentially electronic versions of paper documents, rather than fully sortable and analyzable information databases. Without fully computable data, the DoD and VA are "missing 95 percent of the potential benefits of an integrated system," says Phillip Longman, a senior fellow at the New America Foundation and the author of Best Care Anywhere: Why VA Health Care is Better Than Yours.

Cramer v. Stewart: What It Means for the MSM

| Fri Mar. 13, 2009 11:11 AM EDT

The world--that is, the world of media, blogs, and the Internet--was buzzing on Friday morning about Jon Stewart's take-down of Jim "Mad Money" Cramer the evening before. The smack-down speaks for itself. But toward the end, Stewart made a point that applies to all media, not just the wildcats of cable finance shows.

Cramer was acknowledging that CNBC had aired oodles of interviews during which corporate execs had not told the truth. He insisted that he had been tough on Bush administration Treasury Secretary Hank Paulson and Fed chairman Ben Bernanke. Referring to Paulson, he said,

I've called him a liar...Should we all call them liars? I'm a commentator....It's difficult to have a reporter say I just came from an interview with Hank Paulson and he lied his darn fool head off. It's difficult. I think it challenges the boundaries.

But Stewart was all for pushing such conventional media boundaries:

I am under the assumption--and maybe this is purely ridiculous--but I'm under the assumption that that we don't just take their word at face value, that you actually then go around and try to figure it out.

Meaning figure out if they are telling the truth or not--and, if they are not, you do call them liars.

What's my interest in this slice of the titanic Cramer v. Stewart battle? Well, I once wrote a book immoderately titled, The Lies of George W. Bush. More recently, I wrote a piece noting that the MSM was far too hesitant after 9/11 to call Bush out on his falsehoods--particular on the misrepresentations (or, lies) that greased the way to the Iraq war. That article noted that some MSMers still recoil from the task of branding a politician or government official a truth-teller or liar. Though Stewart concluded this exchange by quipping that he would prefer to be making fart-noise jokes than to be policing financial news networks, it was heartening to see him advance this simple point: if the media doesn't assail leaders (financial or political) who lie, then those leaders can get away with almost anything.

Conservative Think Tank Thinking Less

| Fri Mar. 13, 2009 9:54 AM EDT
Oh how sad. The venerable conservative think tank, the American Enterprise Institute--so flush during the go-go years of the Bush administration--is having a budget crisis, reports the Washington Independent. The group that launched so many of the worst neoconservative ideas of the Bush era (remember those guys who wanted to privatize Social Security and bring democracy to Iraq?) has watched helplessly as its long-time corporate benefactors have hit the skids and no longer have the luxury of funding loony political "scholars." Perhaps we should consider this one of the few upsides of the nation's grim economic crisis: a few conservatives are actually going to have to work for a living, or discover the pitfalls of retiring during a bear market!

10 Winners of the Global Economic Meltdown

| Fri Mar. 13, 2009 9:43 AM EDT

"Everyone is suffering," President Obama said in his speech to a joint session of Congress in late February. He was referring to the global financial and economic crisis, but he didn't have it exactly right. There are some people who are doing well: dollar-store owners, bankruptcy lawyers, gun manufacturers (sales are up!), short-sellers of stock, foreclosure experts, and so on. But some who are doing well are doing really well. You've heard of some of them: John Paulson, the hedge fund guru; Andrew Lahde, the hemp enthusiast; Meredith Whitney, the super-prescient analyst. But what about the guy from New Zealand who got a 236 percent return last year? He's on the list, too. Here's a rundown of 10 of the financial crisis' biggest winners.