Originally Published: 12/27/2008
The Imperial Presidency: Aziz Huq of The Nation had an interesting piece about undoing Bush’s Imperial Presidency. He said: "President-elect Obama's first appointments to the Justice, State and Defense Departments mark no radical change. Rather, they return to a centrist consensus familiar from the Clinton years. But pragmatic incrementalism and studied bipartisanship will do little to undo the centerpiece of the Bush/Cheney era's legacy. At its heart, that regime was intent on forcing the Constitution into a new mold of executive dominance." Good piece.
Osama bin Laden: VP Cheney admitted that they don’t know if he’s still alive. (Raw Story) Remember I told you about Benezir Bhutto saying that he had been killed? (TWW, Osama bin Laden-Dead or Alive?, 1/5/08)
Gitmo Detainees: At one time Bush couldn’t find anyone to take some of the Gitmo detainees who couldn’t be returned to their own countries. But now, at least half a dozen European countries are discussing whether they should accept them or not, quite a change in attitude. Some believe this attitude adjustment is to garner favor with the Obama administration since he pledged to close Gitmo. And some experts say there’s no way to close it without European help. Germany and Portugal are the only 2 countries that have publicly admitted they're considering whether to resettle Guantanamo detainees in their countries. But several others are also discussing the issue. Before they agree to anything, European officials say they would want Obama to commit to transfer at least a small number of detainees to the United States. Officials will also request a clear commitment to close the Guantanamo detention facility as well as a general agreement on legal principles to fight terrorism and how suspects should be treated. (Washington Post)
Pakistan: More drones have killed more people in Waziristan. It looks like 2 missiles were fired into South Waziristan, killing 7. Reuters says that U. S. forces are "frustrated by a spreading Taliban insurgency that is getting support from militant enclaves in northwest Pakistan." So, they’ve stepped up killing people.
Afghanistan: Many think a change of strategy is needed in Afghanistan and military leaders say Obama will have a limited amount of time in which he'll be able to implement dramatic measures. Everyone is advocating for more troops but Pentagon officials emphasize that they don't think the answer is that simple and some worry that sending too many troops could prove to be counter-productive. I would add that we don’t have any. (See below.) Many military officials also say that a surge in troops needs to be combined with other measures, including more training for local militias as well as a stepped-up effort to strengthen local governments. In addition, many are pushing for better cooperation with the State Department because it's impossible to separate the war in Afghanistan from Pakistan. (LA Times) What makes things even more difficult is that Taliban militants have pretty much taken over NATO's most important supply line into Afghanistan. Most of the supplies for troops in Afghanistan enter through Pakistan through the Khyber Pass, which has turned into "a death trap" in recent months with the arrival of a "brash young Taliban commander." Military officials are trying to find alternative routes since having a safe supply line is critical, particularly considering that the number of American troops in Afghanistan will probably at least double next year. (NY Times) If you remember, cutting off supply lines began a few weeks ago with an attack on 2 transport terminals in Pakistan. Taliban fighters torched more than 160 vehicles headed to U.S. troops in Afghanistan. (TWW, The Taliban, 12/13/08)
Russia: They seem to be testing our president-elect. The Guardian said it has "thrown down a new gauntlet" by announcing that it will "commission 70 strategic missiles over the next 3 years, as part of a massive rearmament program which will also include short-range missiles, 300 tanks, 14 warships and 50 planes." Great.
U.S. World Stance: Paul Richter of the LA Times blames the loss of U.S. prestige and power in the world on Bush. He says: "The president oversaw a period of eroding economic and political power, in which the rise of China, India and others was a major factor, but assisted by an aversion to him and his policies. . . Bush has been blamed widely for the erosion of American prestige. And the decline in U.S. influence is partly the result of the reaction to his invasion of Iraq, his campaign against Islamic militants, and his early disdain for treaties and international bodies."
Military Preparedness: The U.S. Army says it’s in trouble. It needs to add "at least 30,000 active-duty soldiers to its ranks to fulfill its responsibilities around the world without becoming stretched dangerously thin." Undersecretary of the Army Nelson Ford said in an interview last week: "You can't do what we've been tasked to do with the number of people we have." Also, the Army "lacks a strategic reserve of brigades trained and ready for major combat and "units being deployed to Iraq and Afghanistan are receiving new soldiers at the last minute, meaning they have insufficient time to train together before crossing into the war zone." (Washington Post)
Winning Hearts & Minds: I guess the CIA goes in for a little bribery when trying to win hearts and minds. With the warlords and tribal leaders in Afghanistan they’re trying unconventional methods. They handed out school supplies, made offers for surgeries for sick family members, and – get this – gave them Viagra. Yeah. Really. The Afghan leaders expect to be paid for their cooperation but just handing cash is rarely practical since it immediately becomes obvious to those around them that they are cooperating with the Americans. "Whatever it takes to make friends and influence people -- whether it's building a school or handing out Viagra." (Washington Post)
Transition: When Bush leaves office it’s required by federal law that copies all White House documents, including e-mail messages, be transferred to the National Archives. Probably won’t happen though as such a transfer "has been imperiled by a combination of technical glitches, lawsuits and lagging computer forensic work." It is estimated that there are more than 300 million messages and 25,000 boxes of documents "depicting some of the most sensitive policymaking of the past 8 years. But archivists are uncertain whether the transfer will include all the electronic messages sent and received by the officials, because the administration began trying only in recent months to recover from White House backup tapes hundreds of thousands of e-mails that were reported missing from readily accessible files in 2005." (Washington Post)
Dennis C. Blair: Obama has picked retired admiral Dennis C. Blair as Director of National Intelligence. "That selection has been a particular headache as the president-elect has sought to find a CIA director steeped in terrorism and counter-proliferation issues but not closely linked to controversial Bush administration policies like the CIA’s detention and interrogation program and the National Security Agency’s domestic wire-tapping program." Blair is expected to help select a CIA director, "which could give him an upper hand in the turf battles that still plague the spy community." (NY Times) Yeah. While we’re standing in our stocking feet at the airport, these guys are playing "King of the Mountain."
State Department: Hillary Clinton has started working on strengthening the State Department so it will have a greater role in dealing with the global economic crisis. She plans to reinstitute the practice of sending high-profile special envoys to key parts of the world, a practice that was common in Bill’s administration. Of course, having all these "envoys," she’ll need a bigger budget. The NY Times reported she’s recruiting Jacob Lew, her husband’s budget director, who has strong ties to Congress, as a way to get more money. It looks like the Defense secretary and the incoming national security adviser are both supporting Clinton's push for more resources.
Influence Peddling: More than a third of top congressional staffers who left Capitol Hill this year have gone to work for groups that seek to influence the government. Out of the 193 top staffers, 32 have registered as lobbyists and 42 went to work for a variety of other influence-peddlers. (USA Today)
Health Care: Many states are severely cutting their Medicaid programs, the health insurance for the poor, due to decreased revenues and increased registrants -- more people are losing their jobs and health insurance. 19 states have already made cuts in payments and coverage and many are planning even bigger cutbacks next year. (Washington Post) Bush, however, has doubled funding for community health care centers during his time in office, which has helped with health services. Almost 1,300 clinics in underserved areas have opened or been expanded. (NY Times)
Melamine: That nasty stuff that’s caused so much damage (TWW, Tainted Pet Food, 2/9/08) is now suspected to be in the seafood being exported from China. Sources say they’re adding it to "artificially boost protein readings." (LA Times)
Money Laundering: The War on Drugs has had little effect on money laundering. "In many cases, the network that turns ill-gotten gains into legal tender, crucial to operations and lavish lifestyles, continues to spin unhindered." Edgardo Buscaglia, an expert on organized crime who has advised both the United Nations and Mexican officials, said, "You can arrest thousands of [traffickers] but if you don't touch the financial enterprises, the business just goes on . . .. and becomes more violent." (LA Times) Makes you wonder why we’re spending so much money on fighting drugs, doesn’t it? Or, does it?
EPA: Last week I told you that Environmental Protection Agency Administrator Stephen Johnson had told his staff not to take carbon dioxide emissions into consideration when issuing air pollution permits. (TWW, EPA, 12/20/08) Well, Barbara Boxer (D, CA), chair of the Senate Environment Committee, sent a letter to AG Michael Mukasey urging him to require Johnson to withdraw the "blatantly illegal memo." (Raw Story)
Air Pollution: The Court of Appeals for the District of Columbia reversed an earlier decision and "temporarily reinstated a Bush administration plan to reduce pollution from coal-fired power plants." Last July, it had struck down the EPA rule allowing a new emissions-trading system to reduce that pollution. It said the EPA must re-write the rule. This time, it said that "a flawed rule temporarily in place was better than having no rule at all." It left in place it’s order to revise the rule but set no deadline for doing so. Environmentalists are upset, saying it’s a set-back for clean air. The EPA’s regulation is called the Clean Air Interstate Rule and has been "the centerpiece of the Bush administration’s re-engineering of the Clean Air Act." (NY Times)
Mining Regulations: Groups concerned about the damage Bush’s new mining regulations will do to the environment are suing the Interior Department and the EPA "seeking to overturn a new rule that will make it easier for mining companies to dump waste rock into streams." The rule revisions (TWW, Burrowing, 11/22/08 & EPA, 11/8/08) "will let mining companies disregard a 100-foot stream buffer zone if they are able to convince regulators that no other option was available and that they had taken steps to minimize harm to the environment." Kentucky Waterways Alliance, Earthjustice, Appalachian Center for the Economy and the Environment, Appalachian Citizens Law Center, Sierra Club, Waterkeeper Alliance and other groups have filed suit in the U.S. District Court in Washington, D.C. They claim that if the rule isn’t overturned, there will be more mountaintop removal. Judith Petersen, executive director of Kentucky Waterways Alliance, said: "The notion that coal mining companies can dump their wastes in streams without degrading them is a fantasy that the Bush administration is now trying to write into law." (Courier-Journal)
Mining Disaster: This week a dam broke in eastern Tennessee and created what "may be the nation's largest spill of coal ash." Check out this aerial view of the mess. It's truly amazing. Hundreds of acres are covered with the ash, which is the byproduct of coal burning at the Kingston Fossil Plant, "fiercely reigniting a debate over its potential toxicity. . . Federal studies have long shown coal ash to contain significant quantities of heavy metals like arsenic, lead and selenium, which can cause cancer and neurological problems." But the Bush administration has released "no official word on the dangers of the sludge." (NY Times) Despite widespread reports of dead fish downstream from the spill (Tennessean) officials say they haven't seen any. Environmentalists see this as further evidence that "clean coal" doesn't really exist.
The Nation’s Levees: New data shows that "only 45 of the 122 levees across the country that were deemed to be in 'un-acceptable' condition almost 2 years ago have been repaired. In February 2007, the Army Corps of Engineers gave state and local governments a year to fix the levees it deemed "unaccept-able," but 18 states and Puerto Rico have so far failed to complete repair work. People who live near the unrepaired levees "have every right to be concerned." The Corps has been trying to pressure governments to repair their levees, but many simply don't have the money and see it as a problem that the federal government should fix. (USA Today)
U.S. Budget: The Congressional Budget Office (CBO) is estimating that the Treasury will report a federal budget deficit of $408 billion for the first 2 months of fiscal year 2009, $253 billion higher than the deficit recorded through November of last year. This estimate includes $191 billion disbursed for the Troubled Assets Relief Program (TARP) during the first 2 months of the fiscal year. CBO believes that the equity investments for that program should be recorded on a net present value basis adjusted for market risk, as specified in the Emergency Economic Stabilization Act of 2008, rather than on a cash basis as recorded by the Treasury. Evaluating TARP on a net present value basis, CBO estimates the federal deficit totaled $267 billion through November.
U.S. Economy: AFP had a pretty depressing article. "The US economy shrank in the 3rd quarter . . . as the IMF's top economist warned of a second Great Depression offering no respite from relentless gloom ahead of Christmas. The abrupt 0.5% contraction of gross domestic product (GDP) in the world's largest economy was seen as marking the start of a steep downturn for the United States after GDP growth of 2.8% in the 2nd quarter." It’s not all gloom and doom, however. Stocks rose "as the contraction had been expected and was unrevised from a previous estimate." I don’t know how many of you remember, but there was a time when there was a daily reporting of labor statistics and that’s how we measured how the economy was doing. If people were working, the economic outlook was good. Somewhere in the 1980s we started measuring the economy by how well Wall Street was doing. This may be the problem.
Holiday Sales: It was a bad holiday season for retailers. A decrease in sales was widely expected but it was "much worse than the already-dire picture painted by industry forecasts." Despite deep discounts, retail sales plunged 2.5% in November and 4% in December through Christmas Eve, excluding auto-mobiles and gasoline. Luxury goods, once considered immune to economic downturns, were hit particularly hard. It plunged 34.5%. It’s looking like more stores will file for bankruptcy in 2009. (Wall Street Journal)
Labor: Even though we’re seeing massive lay-offs, some organizations are opting for other methods of cutting labor costs, like having 4-day workweeks, unpaid vacations, and voluntary or enforced furloughs, "along with wage freezes, pension cuts, and flexible work schedules." Employees seem okay with these things. (NY Times) Guess it beats losing your job.
Protectionism: A number of countries are beginning to impose trade barriers, despite the fact that world leaders pledged a few weeks ago not to turn to protectionism during the economic slump. Although the moves haven't become widespread yet, many warn they could grow in the coming months to bring a new wave of protectionism that could make it more difficult for economies around the world to recover. (Washington Post)
Overseeing the Stock Market: New data indicate that there has been a sharp drop in federal prosecutions of fraudulent stock schemes. Surprise! Bush has been heavily criticized in the past few months for failing to appropriately oversee financial markets, and the new data appear to support that contention. This year, federal officials will likely bring the fewest number of prosecutions for securities fraud since 1991. Meanwhile, the number of Securities and Exchange Commission (SEC) investiga-tions that led to a prosecution plunged 87% in 2007 compared with 2000. "Legal and financial experts say that a loosening of enforcement measures, cutbacks in staffing at the Securities and Exchange Commission, and a shift in resources toward terrorism at the FBI have combined to make the federal government something of a paper tiger in investigating securities crimes." (NY Times)
TARP: "The Congressional Oversight Panel, a 4-person board authorized by Congress and led by consumer advocate Elizabeth Warren of Harvard Law School, is charged with finding out what the Treasury has done with the billions it has already spent." In the first of a series of reports, they will look at "who got the money, what have they done with it, how has it helped the country and how has it helped ordinary people?" They expect to have the report published by January 9th. (IPS)
Getting TARP Money: How do you get in on the federal giveaway? Why, just fill out an application. You need to put down the name of your financial institution and your address and the names of the primary and secondary people to contact with their phone numbers, fax numbers, and e-mail addresses. Then there’s the technical information: your company’s federal number, number of preferred stock shares, the total of your risk-weighted assets. There’s the mandatory "Did you read the stuff we gave you?" box. (Just say "yes.") There’s a section for "Is there anything else you want to tell us?" And that’s it. Just sign it and pretty soon you’ll get a check for a couple of billion dollars. No, you don’t have to cut your salary, sell your jet, or promise to do anything. Just take the money and have a party. So nice doing business with you. And, they’re making it easier to qualify. GMAC, the financing arm of General Motors, applied to become a bank so it can get some of the money. The Federal Reserve Board approved the application. (NY Times)
How’s It Being Spent?: No one knows. Nor is anyone likely to know. "The Associated Press contacted 21 banks that received at least $1 billion in government money and asked 4 questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest? None of the banks provided specific answers." Guess it’s none of our business. We just provide the money.
Bailout Recipients: Wanna know why the bailout recipients are broke? "Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year. . . The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay packages." (AP) And while everyone was screaming about auto company CEOs traveling to Washington D.C. in private jets to beg for money (TWW, Cutting the Perks, 12/6/08 & Auto Bail-Out, 12/20/08), Wall Street hasn’t had to give up a damn thing. "6 financial firms that received billions in bailout dollars still own and operate fleets of jets to carry executives to company events and sometimes personal trips." (AP)
What Went Wrong?: The NY Times did an exhaustive look at the Bush policies that led to the economic debacle. It says that Bush’s "hands-off approach to regulation" stoked the "mortgage bonfire" that, in part, led to the current crisis. In the middle of the piece is the real telling story. It says that Bush has just let Treasury Secretary Hank Paulson take over. "Never once, Mr. Paulson said in a recent interview, has Mr. Bush overruled him."
What Happened to Regulation?: Bush’s regulators were in bed with the institutions they were supposed to be regulating. Darrel Dochow was a senior bank regulator who was director of the Office of Thrift Supervision’s West Division which regulated IndyMac Bank, Washington Mutual, Countrywide, and Downey Savings and Loan, "among other banks that have been seized or sold this year." The Treasury Department's inspector general announced that Dochow allowed IndyMac Bank to alter its records and backdate a capital infusion it received from its parent company to help make it seem as though it was in better financial shape than it actually was. 2 months later, the bank failed. Bart Dzivi, a lawyer who represents financial ser-vices institutions, said: "It is [the regulators] job to be a cop. But Darrel Dochow and senior management take the view, 'We're working with these institutions to help them with their problems.' They see themselves as consultants, not cops." (Washington Post) What does this mean to us taxpayers? "If the backdating had not been allowed, the Federal Deposit Insurance Corp. might have been able to facilitate a sale of the company at no cost to the insurance fund, as it did in September with Washington Mutual Bank." Dochow also played a role in the 1980s' savings-and-loan crisis. He was demoted after investigators found he ignored warnings and failed to properly regulate Charles Keating's Lincoln Saving & Loan Association. William Black, a former Office of Thrift Supervision attorney who teaches law, said: "This guy is the most infamous banking regulator in the country, and somehow he ended up back in charge." (LA Times)
Synthetic Collateralized Debt Obligations: The Wall Street Journal did an in-depth look at CDOs that are lurking in the background but could cost investors around the world billions of dollars. Synthetic CDOs insure trillions of dollars, mostly in U.S. corporate debt. Investors have already lost plenty on deriva-tives tied to subprime mortgages, but many more put money into synthetic CDOs, which were seen as a safe investment since it seemed unlikely there would be a massive wave of corporate defaults. Now that the scenario has become a reality, "synthetic-CDO deals are poised to trigger a massive transfer of wealth" from investors to hedge funds and big investment banks. Synthetic CDO investors "are popping up in unexpected places," including an Australian town, a group of hundreds of individuals in Singapore, and 5 school districts in Wisconsin, to name a few. Some now say many of the local governments and nonprofits that invested in synthetic CDOs didn't understand the risks and had no business buying into the derivatives to begin with.
Auto Bailout: If you remember, I’ve been decrying the bailout as a way of getting rid of the UAW. It seems that Peter Whoriskey of the Washington Post agrees with me. He says that the concessions made by the UAW in order to get the federal bailout package "essentially erase the significant distinctions between union and nonunion auto workers, and the lack of such union worker advantages would render moot the union's fundamental purpose. . . It was the financial crisis, as well as the domestic industry's slippage against foreign automakers in the United States, that forced the union to acquiesce, albeit reluctantly." UAW president Ron Gettelfinger, while supporting the bailout, said he was disappointed that Bush "added unfair conditions singling out workers." Rep. Barney Frank (D, MA), chair of the committee overseeing much of the government financial rescue efforts, said that requirement was "unilaterally inserted" by Bush. The agreement may bring about a showdown. Obama said that workers shouldn’t have to be the ones "taking all the hits" and that all stakeholders "are going to have to play a part in this process." Frank said, "The president has added an unfair assault on working men and women, which could require them to accept a disproportionately large reduction in what is currently legally owed to them. I am particularly opposed to the notion . . . that could give foreign auto companies in effect the ability to dictate wages for all American auto workers." He added that, when president, Obama "should take whatever steps are necessary" to remove these requirements.
Canada’s Bailout: Last week I told you that Canada had offered to chip in $2.8 billion to help GM plants there. (TWW, More Help, 12/20/08) This week they upped the ante to $4 billion. (NY Times)
Foreign Auto Companies: Toyota will post its first operating loss in 7 decades, illustrating how the slump in auto sales is being felt everywhere, even with the strongest companies. This downturn comes after years of steady growth and will lead auto companies to cut vehicle production next year. (NY Times)
Global Climate Change: A report by the U.S. Geological Survey, commissioned by the U.S. Climate Change Science Program, says that the U.S. is facing the possibility of "much more rapid climate change by the end of the century than previous studies have suggested." This report "expands on the 2007 findings of the United Nations Intergovernment Panel on Climate Change [IPCC], "and looked at things like rapid sea ice loss in the Arctic and prolonged drought in the Southwest. "[T]he new assess-ment suggests that earlier projections may have underestimated the climatic shifts that could take place by 2100." "In one of the report's most worrisome findings, the agency estimates that in light of recent ice sheet melting, global sea level rise could be as much as 4 feet by 2100. The IPCC had projected a sea level rise of no more than 1.5 feet by that time, but satellite data over the past 2 years show the world's major ice sheets are melting much more rapidly than previously thought. The Antarctic and Greenland ice sheets are now losing an average of 48 cubic miles of ice a year, equivalent to twice the amount of ice that exists in the Alps." (Washington Post)
Passive Homes: The NY Times has a great piece on the new passive homes being built in a suburb of Frankfurt, Germany. There's no furnace; just a radiator as an emergency backup. The amount of energy needed for all the heat and hot water is about the same that "would be needed to run a hair dryer." "Using ultrathick insulation and complex doors and windows, the architect engineers a home encased in an airtight shell, so that barely any heat escapes and barely any cold seeps in. That means a passive house can be warmed not only by the sun, but also by the heat from appliances and even from occupants’ bodies." The cost to build it in Germany is only about 5% to 7% more.