Subprime Brokers Resurface as Dubious Loan Fixers

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Peter S. Goodman
July 20, 2009 - The New York Times

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LOS ANGELES - From the ninth floor of a downtown office building on Wilshire Boulevard, Jack Soussana delivered staggering numbers of mortgages to homeowners during the real estate boom, amassing a fortune.

By Mr. Soussana's own account, his customers fared less happily. He specialized in the exotic mortgages that have proved most prone to sliding into foreclosure, leaving many now scrambling to save their homes.

Yet the dangers assailing Mr. Soussana's clients have yielded fresh business for him: Late last year, he and his team - ensconced in the same office where they used to broker mortgages - began working for a loan modification company. For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California.

"We just changed the script and changed the product we were selling," said Mr. Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and "Now, we're able to help you out because we understand your lender."

Mr. Soussana's partners at FedMod, as the company is known, were also products of the formerly lucrative world of high-risk lending. The managing partner, Nabile Anz, known as Bill, previously co-owned Mortgage Link, a California subprime lender, now defunct, that once sold $30 million worth of loans a month.

Jeffrey Broughton, one of FedMod's initial partners, served as director of business development at Pacific First Mortgage, a lender that extended so-called Alt-A mortgages for borrowers with tarnished credit for Countrywide Financial, which lost billions of dollars on bad mortgages before being rescued in an acquisition.

FedMod is but one example of how many of the same people who dispensed risky mortgages during the real estate bubble have reconstituted themselves into a new industry focused on selling loan modifications.

Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit making loan modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers, more than 650 complaints filed with the Better Business Bureau, and documents filed by the Federal Trade Commission in a lawsuit against the company.

The suit, filed in California federal court, asserts that FedMod frequently exaggerated its rates of success, advised clients to stop making their mortgage payments, did little or nothing to modify loans and failed to promptly refund fees. The suit seeks an end to FedMod's practices, and compensation for customers.

"Our job was to get the money in and then we're done," said Paul Pejman, a former sales agent who worked out of FedMod's two-story headquarters in Irvine, Calif. He recounted his experience, he said, because "I really feel bad."

"I had people calling me crying, and we were telling them, 'You can pay me or you can lose your house,' " Mr. Pejman said. "People were giving me every dime they had, opening credit cards. But I never saw one client come out of it with a successful loan modification."

Mr. Anz, who is challenging the F.T.C. lawsuit, acknowledged that FedMod's business went "horribly wrong," but he maintains the company made genuine efforts to help delinquent borrowers. He said FedMod has refunded fees to 3,000 dissatisfied customers, while modifying 1,500 mortgages.

A New Mission

FedMod is among dozens of similar companies that have been accused by state and federal authorities of fraudulent business practices. On the same day in April that the F.T.C. sued FedMod, it brought action against four similar companies and sent letters of warning to 71 others. Last week, the commission brought lawsuits against four more loan modification companies, advancing an enforcement campaign involving 23 states.

Many of the companies formerly operated as mortgage brokers, The Times found. Since October, the California Department of Real Estate has ordered 210 businesses and individuals to stop offering loan modification or foreclosure prevention services, because they lacked a real estate license, as required by the state. In fact, nearly half the people have roots in the mortgage industry or other areas of real estate, according to public records.

Debt Barter Inc. is among them. A loan modification company based in Irvine that was cited by the state in January for collecting upfront fees without a license, it is owned by Sean R. Roberts, who formerly headed Instafi, a mortgage broker that closed $2 billion worth of loans a year at its peak. Since February, customers have filed 17 complaints against Debt Barter with the Better Business Bureau. Most accused the company of charging upfront fees, then failing to lower their payments.

"We can't please everyone all the time," said Mr. Roberts, who added that the company had modified loans for nearly 300 of its roughly 500 clients.

In Aliso Viejo, Calif., the Citywide Mortgage Corporation, which previously brokered Alt-A and subprime loans, last year became a loan modification company, USMAC. The company has not received a cease and desist order, but complaints on numerous consumer Web sites assert that it fails to deliver.

"I'm saving homes," said the company's president, Scott Gimbel, who claimed a success rate above 70 percent.

Chris Mozilo, nephew of Angelo R. Mozilo, the former chief executive of Countrywide Financial - a name synonymous with the subprime disaster - recently started a new business, eModifyMyLoan. It sells software that homeowners can use to apply for loan modifications.

Chris Mozilo worked at Countrywide for 16 years. "I'm very proud of my career in mortgage lending," he said. "We helped millions of people achieve the goal of homeownership."

From its inception in the middle of 2008, FedMod aimed to dominate the loan modification industry, growing swiftly with the aid of a national advertising campaign.

Mr. Broughton, 49, had worked in the mortgage industry since the mid-1980s. As the market ground to a halt in 2008, he founded FedMod with two Los Angeles entrepreneurs, Steven Oscherowitz and Boaz Minitzer.

Mr. Broughton sought to distinguish his company from the unscrupulous ventures that dominate the industry.

"You had a lot of these modification companies that were subprime guys," he said. "All they cared about was making quick dollars."

But the partners behind FedMod had their own questionable backgrounds. In the mid-1990s, Mr. Oscherowitz settled an F.T.C. lawsuit that accused his company, Universal Merchants, of falsely marketing the weight-loss benefits of a dietary supplement.

The partners entrusted Mr. Soussana with FedMod's Los Angeles sales office precisely because he had proved adept at selling the sorts of loans that now required modification. In 2006, Mr. Soussana, then 30, was listed as the nation's sixth most prolific mortgage broker by Mortgage Originator, a trade magazine, brokering $318 million worth of loans. The same year, he paid $1.8 million for a house near Beverly Hills.

"He was one of the biggest guys in subprime mortgages," Mr. Minitzer said. "He basically wanted to get back to his old days of 50, 60, 70 guys in his office, and we could help because we were basically taking over the market."

Bringing in the Law

The three original partners brought in Mr. Anz to gain a crucial asset: his law license. Having a lawyer in charge enabled them to market their venture as a law firm and thus collect upfront payments under California rules.

"Jeff asked me how I could, for lack of a better word, legitimize it," Mr. Anz said.

The California Department of Real Estate warns consumers that many dubious loan modification companies have organized themselves as law firms solely to allow them to collect upfront fees, even though the lawyers have little, if anything, to do with the services provided. The department cautions consumers against hiring such companies.

In its lawsuit against FedMod, the F.T.C. contends that the company's advertisements implied it had the backing of the federal government. "If you're like the millions of Americans out there who are struggling to pay a mortgage, you may be eligible for the Federal Loan Modification Program," radio ads beckoned.

Aggressive marketing ensured that Mr. Pejman, 22, never lacked for calls when he started at the Irvine sales office in January. He had worked at three wholesale mortgage brokerages. Now, a trainer emphasized he was at a law center.

"Our big sales pitch was that an attorney could do a better job with your loan modification," Mr. Pejman said. "If you told them these were basically washed-up people from the mortgage industry, or just people sending in paperwork, they would say, 'Well, why bother? I might as well do this myself.' "

He went on: "It was misleading to the client. Attorneys never touched those files."

Among the 700-plus full-time employees who worked for FedMod this spring, only nine were lawyers, Mr. Anz said, though the company retained a lawyer in every state.

Mr. Pejman and his fellow agents urged homeowners to send FedMod $3,495; the agents were promised a 30 percent commission for fees they took in. Most clients could not come up with more than $1,000 and agreed to a payment schedule for the rest. Assurances of relief from a homeowner's loan terms were typically extravagant, Mr. Pejman said.

"A big grabber was that your loan will be reduced to 2.5 percent to 5 percent on a 30-year fixed rate loan," he said. "They'd print out all these mythical success stories for us to read over the phone."

Under FedMod's policies, agents were prohibited from making false claims, counseling clients not to pay their mortgages or providing success rates, Mr. Anz said. New clients received follow-up compliance calls to ensure they understood nothing was guaranteed.

But sales agents were told of such policies with a wink, Mr. Pejman said.

"They basically told us, 'Do whatever you need to do,' " he said. " 'It's a sales floor. You're here to sell.' People would quote success rates and just pull them out of thin air. People would say 60 percent, 80 percent, 90 percent. To the average Joe in Kansas, that sounded great. But the reality is that 50 percent were immediately declined by the lender."

What shocked Mr. Pejman was how readily customers handed over their credit card numbers. Sales agents tapped into a deep vein of anxiety.

"I'd hear people say, 'Would you pay $1,000 to save your home? To save your marriage? Your kids' education?' " he recalled. "I'd hear people say, 'Yeah, we're the federal government.' There were a lot of corrupt people working there."

In Charlotte, N.C., Joshua Garland telephoned FedMod in March after seeing one of its television commercials. Mr. Garland's wife had been laid off from her hospital job. He had lost his job as a chef and was now bartending. Their monthly income had plunged from $3,200 to less than $1,000. They were already three months behind on their mortgage.

A FedMod agent confidently described how his company could cut their monthly payments from $1,200 to $532, Mr. Garland recalled. But first, he had to pay a $995 "retainer fee."

This was nearly as much as Mr. Garland earned in two weeks. Dental bills were piling up for his three children. He was behind on his utilities.

"I told him, 'We have $1,200 left to make our mortgage payment, and if we give that money to you, we're going to get further behind,' " Mr. Garland recalled. "He said, 'Go ahead and make the $995 payment, because once you're under our plan, the bank can't foreclose on you.' "

After several follow-up calls from the agent, Mr. Garland paid. Then, months passed with no contact from FedMod, he said. He left countless messages seeking updates, demanding a refund. His lender foreclosed on his house, scheduling a sale for Aug. 26.

"This guy hounds me for the $1,000, and then as soon as I pay him he disappears," Mr. Garland said. "I usually don't fall for stuff like this. I can usually tell if it's a scam. But this guy, I mean he came with his guns loaded."

Overwhelmed by Cases

FedMod was drowning in cases. The pipeline swelled by 8,000 clients from December to March, according to Mr. Anz.

Once sales agents took in applications, they passed files on to the processing department, where case managers were supposed to assemble documents and submit them to lenders. But their offices were hopelessly underequipped.

"The owners didn't want to invest in software, so everything was tracked manually," said Rachelle Cochems, who took over as operations manager on Jan. 19 and left the company in May after FedMod stopped paying her. "We couldn't handle the volume we were taking in. The system was broken."

Each case manager was responsible for as many as 200 files at a time, Ms. Cochems said, making it impossible to keep in regular touch with customers. Some files floated in limbo, because sales agent did not bother handing them over.

"You're paying the sales agent upfront," Ms. Cochems said. "So what motivation does he have to get it closed?"

In February, Mr. Anz shut the Los Angeles sales office, uncomfortable with reports that Mr. Soussana had filled it with "unsavory types" from the mortgage industry, he said.

"I'm not a shady person," Mr. Soussana said.

By March, sales agents were inundated by calls from furious clients who had paid long ago, but not heard from anyone. Some called from motels, their belongings piled in boxes, weeping as they recounted losing their homes.

The agents let most calls go to voicemail, playing the most dramatic messages over speakerphones for communal amusement, Mr. Pejman said.

"Guys would sit there and laugh," he said. " 'This lady's going crazy,' that sort of thing."

The next month, Mr. Anz took full control of the company, banishing his partners and blaming them for "a train wreck." He ceased marketing, he said, and concentrated on processing the backlog of files.

In April, the F.T.C. filed its lawsuit, prompting credit card companies to freeze their accounts with FedMod. The court imposed a temporary restraining order, barring FedMod from acquiring new customers.

By the time Rana Hajjar began working there on April 13 as a client representative, she found the company utterly chaotic.

"They just handed me 70 files and told me to call these people because they're very upset," Ms. Hajjar recalled. "The majority of them had paid three or four months earlier and had never heard from anyone. I was yelled at from today until tomorrow."

Several times a week, clients called to report that the police were at their door, ordering them out for foreclosure sales, Ms. Hajjar said. When she alerted negotiators, they sometimes called banks and postponed sales, but usually they ignored her messages, she said.

When Ms. Hajjar cashed her first paycheck, it bounced, she said. Over the next three weeks, she never received payment. On Monday, May 11, her manager told her and dozens of other employees to take the rest of the week off because the company had no money for payroll.

She was never called back, later adding her name to a file of more than 120 wage disputes leveled against FedMod with the California Labor Commissioner.

Today, FedMod has only 40 employees, said Mr. Anz, pledging to plow through the company's 4,200 remaining files.

"We're doing what we can," he said. "I'm the bad boy of loan mods."

Yet as television advertisements attest, many other companies remain aggressive in what amounts to perhaps the last growth industry left in American real estate.

Seance on Wall Street

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Financial analysts predicting a default on US government debt need a new crystal ball. The market tells a different story

Dean Baker
July 21, 2009 - The Guardian/UK

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There is a long history of mediums who claim to communicate with the dead. They sell their services to people anxious to talk to relatives or great figures of the past. Such exercises can be dismissed as harmless entertainment – people spend a few dollars to be treated to tall tales.

There is a Wall Street equivalent to these seances. People who claim to be knowledgeable about financial markets tell policy makers and reporters what the financial markets are thinking about current policy. These Wall Street seers claim to interpret events in financial markets for those of use who are less familiar with the mysteries of market movements.

In recent weeks, the Wall Street seers have been spinning stories about how the financial markets are very worried over the US budget deficit. They have told us that the markets are concerned about the government's ability to repay its debt. The seers tell us that the markets may soon demand much higher interest rates, if the government does not get its deficit under control.

The seers tell us that the government must take steps to rein in the budget deficits projected for the future by cutting back Medicare and Social Security. They also warn us about the risks of adding to the deficit with healthcare reform. And, the seers tell us that we certainly should not try to tackle the problem of 25 million unemployed or underemployed workers with another big round of stimulus. That would make the financial markets very angry.

Those of us who were not born with the gift of being able to communicate with financial markets cannot directly evaluate the information that the financial markets are passing on to the Wall Street seers. However, we can easily determine the risk that investors assign to holding long-term US government debt. This requires looking at interest rates.

Interest rates appear to be directly contradicting the seers' assertions about financial markets. The interest rate on 10-year Treasury bonds is currently near 3.5%. The interest rate is not determined by people rattling off their visions about future debt defaults. It is determined by investors putting their money on the line.

These investors are willing to hold hundreds of billions of dollars in long-term government debt at a return of just 3.5%. By contrast, they demanded a return of more than 5% in 2000, back when the US government was running a large budget surplus. If there is widespread fear in financial markets of a default on government debt, it is difficult to understand why investors would be willing to hold it at such a low rate of return. Usually investors demand high returns for holding risky assets.

In addition to interest rates, we could evaluate the seers' assessment by trying to carry through other implications of the bad news debt default scenario. Presumably, the stock market would be headed downwards with the financial sector stocks leading the way. After all, a default on US government debt would be cataclysmic for the US economy and especially for the banks who hold trillions of dollars in government debt or government-backed debt.

Here also the news doesn't seem to fit the seers' vision. The markets have been rallying lately, and many financial stocks are doing quite well.

One piece of evidence that these seers have occasionally used to support their case is the fact that the price of credit default swaps on US debt has risen. Credit default swaps (CDS) are in effect insurance against default. If the price of this insurance rises, then presumably the markets judge default to be a more likely event. That is the reason that people in their 60s pay more for life insurance than people in their 20s.

There is one problem with this story. The payoff of a CDS depends not only on the default but also, as those who did business with AIG know, on the ability of the counter-party to pay. What is the likelihood that JP Morgan, Goldman Sachs or anyone else will be left standing in a world where the US government has defaulted on its debt? It's not clear what the price of CDS issued on US government bonds means, but it is not a straightforward assessment of the probability of default on the government's debt.

It should not be surprising that the vision of the Wall Street seers seem to be far from reality. After all, their crystal balls could not see the $8tn housing bubble, the collapse of which has wrecked the economy.

In fact, the self-proclaimed seers are using their visions to try to discourage the public from supporting policies that the seers don't like. These people want to see cutbacks in Social Security, Medicare and other social programmes. They are more concerned that higher deficits could mean higher taxes on the wealthy at some point in the future than they are about the tens of millions of unemployed or under-employed today.

In short, those who want fantastic stories about the unknowable would be much better off visiting the people who promise to communicate with the dead than listening to the Wall Street spokespeople. They will learn more and be associating with people of greater integrity.

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Dean Baker is the co-director of the Center for Economic and Policy Research. He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.

Common sense prevails

Heeding Obama's veto threat – and common sense – the Senate has voted to strip $1.75 billion from a $679.8 billion military spending bill that would have funded more F-22s – so-called fighter planes that cost $44,000 an hour, need 30 hours of maintenance for every hour in the air, and can't fly in the rain. Still, gung-ho right-wingers promptly proclaimed, "America is less safe now than it was an hour ago." Only $679.8 billion to go.

"If we can't get this right, what on earth can we get right?" Defense Secretary Robert Gates last week.

- Common Dreams

The Great Tax Con Job

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Thom Hartmann
July 21, 2009 - Smirking Chimp

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Republicans are using the T-word - taxes - to attack the Obama healthcare program. It's a strategy based in a lie.

A very small niche of America's uber-wealthy have pulled off what may well be the biggest con job in the history of our republic, and they did it in a startlingly brief 30 or so years. True, they spent over three billion dollars to make it happen, but the reward to them was in the hundreds of billions - and will continue to be.

As my friend and colleague Cenk Uygur of The Young Turks pointed out in a Daily Kos blog recently, billionaire Rupert Murdoch loses $50 million a year on the NY Post, billionaire Richard Mellon Scaife loses $2 to $3 million a year on the Pittsburgh Tribune-Review, billionaire Philip Anschutz loses around $5 million a year on The Weekly Standard, and billionaire Sun Myung Moon has lost $2 to $3 billion on The Washington Times.

Why are these guys willing to lose so much money funding "conservative" media? Why do they bulk-buy every right-wing book that comes out to throw it to the top of the NY Times Bestseller list and then give away the copies to "subscribers" to their websites and publications? Why do they fund to the tune of hundreds of millions of dollars a year money-hole "think tanks" like Heritage and Cato?

The answer is pretty straightforward. They do it because it buys them respectability, and gets their con job out there. Even though William Kristol's publication is a money-losing joke (with only 85,000 subscribers!), his association with the Standard was enough to get him on TV talk shows whenever he wants, and a column with The New York Times. The Washington Times catapulted Tony Blankley to stardom.

"Fellowships" and other forms of indirect sponsorship of right-wing talk show hosts have made otherwise-marginal shows and their hosts ubiquitous, and such sponsorships of groups like Norquist's anti-tax "Americans for Tax Reform" regularly get people like him front-and-center in any debate on taxation in the United States.

All so they could run a tax con on the American people, thus keeping Moon and Murdoch and Scaife and Anschutz (and others) richer than you or I could ever even imagine.

All of this money was spent - invested, really, since it's been more than saved back in low income tax rates on millionaires and billionaires - to convince Americans that up is down and black is white when it comes to income taxes. Here's how it works:

Rich Person's Tax Effect

If a person earns so much money that he doesn't or can't spend it all each year, then when his taxes go down your income after taxes goes up. This is largely because there's little to no relationship between what he "needs to live on" and what he's "earning."

Somebody living on a million dollars a year but earning five million after taxes, can sock away four million in a Swiss bank. If his taxes go up enough to drop his after-tax income to only three million a year, he's still living on a million a year, and only socks away two million in the Swiss bank. His "disposable" income goes down when his taxes go up, and vice-versa. (Technically, the word is "discretionary" income for after-tax, after-living-expenses income, but "disposable" income has become so widely used as a phrase to describe discretionary income I'll use it here.)

The Rich Person's Tax Effect is the one that virtually all Americans understand - and, oddly, most working class people think applies to them, too (this is the truly amazing part of the con job referred to earlier).

But it doesn't.

Working Person's Tax Effect - version one

Most working people spend pretty much all of what they earn - their "disposable/discretionary" income is close to zero. Savings rates in the US among working people typically are small - one to five percent - and during the last few years of the W. Bush administration actually went negative. So the take-home pay that people have after taxes - regardless of what the taxes may be - is pretty much what they live on.

As economist David Ricardo pointed out in 1817 in the "On Wages" chapter of his book "On the Principles of Political Economy and Taxation," take home pay is also generally "what a person will work for." Employers know this: Ricardo's "Iron Law of Wages" is rooted in the notion that there is a "market" for labor, driven in part by supply and demand. So if a worker is earning, for example, a gross salary of $75,000, his 2008 federal income tax would be about $15,000 ($802.50 on first $8,025 of income; $3,687.75 on income from $8,025 to $32,550; $10,612.50 on income from $32,550 to $75,000), leaving him a take-home pay of $60,000.

Both he and his employer know that he'll do the job he's doing for around $60,000 a year in take-home pay.

So what happens if his taxes go up, cutting his take-home pay to $55,000 a year (even though his gross is still $75,000)? Over time (typically one to three years) his wages will rise enough to compensate for the lost income.

Alan Greenspan used to be hysterical about this effect - he called it "wage inflation" - and The Wall Street Journal and other publications would often reference it, although the average working person has no idea that if his taxes go up, his wages will eventually go up. Similarly, when working-class people's taxes go down, their gross wages will, over time, go down so their inflation-adjusted take-home pay remains the same. We've seen both happen over the past eighty years, over and over again.

When I was in Denmark last year doing my radio show from the Danish Radio offices for a week and interviewing many of that nation's leading politicians, economists, energy experts, and newspaper publishers, one of my guests made a comment that dropped the scales from my own eyes.

We'd been discussing taxes on the air, what the Danes get for their average 52% tax rate (free college education, free health care, 4 weeks of vacation, being the world's "happiest" country according to research reported on CBS's "60 Minutes" TV show, etc.). I asked him why people didn't revolt at such high tax rates, and he smiled and just pointed out to me that the average Dane is very well paid with a minimum wage that equals about $18 US (depending on the exchange rate from day to day).

Off the air, he made the comment to me that was so enlightening. "You Americans are such suckers," he said, as I recall. "You think that the rules for taxes that apply to rich people also apply to working people. But they don't. When working peoples' taxes go up, their pay goes up. When their taxes go down, their pay goes down. It may take a year or two or three to all even out, but it always works this way - look at any country in Europe. And it's the opposite of how it works for rich people!"

Working Person's Tax Effect - Version Two

The other point about taxes - which Obama leveraged with his "no tax increases on people earning under $250,000 a year" pledge - has to do with the fact that our tax structure in the US is progressive.

Here's how it breaks out for a single person from the 2008 federal tax tables:

10% on income between $0 and $8,02515% on the income between $8,025 and $32,550;25% on the income between $32,550 and $78,850;28% on the income between $78,850 and $164,550;33% on the income between $164,550 and $357,700;35% on the income over $357,700.

Note that our $75,000/year worker has two full tax brackets above him, which, if they go up, will not affect him at all. (This is also true, of course, for the median-wage and average-wage American workers who earn in the low to mid-$40,000/year range.)

The top tax rate that a person pays is referred to as their "marginal tax rate" (in our worker's case 28%). So what happens if the top marginal tax rate on people making over $357,700 goes up from its current 35% to, for example, the Eisenhower-era 91%?

For over 120 million American workers who don't earn over $357,700/year, it won't mean a thing. But for the tiny handful of millionaires and billionaires who have promoted The Great Tax Con, it will bite hard. And that's why they spend millions to make average working people freak out about increases in the top tax rates.

Income taxes as the "Great Stabilizer"

Beyond fairness and holding back the Landed Gentry the Founders worried about (America had no billionaires in today's money until after the Civil War, with John D. Rockefeller being our first), there's an important reason to increase to top marginal tax rate, and to do so now.

Novelist Larry Beinhart was the first to bring this to my attention. He looked over the history of tax cuts and economic bubbles, and found a clear relationship between the two. High top marginal tax rates (generally well above 60%) on rich people actually stabilize the economy, prevent economic bubbles from forming, prevent economic crashes, and lead to steady and sustained economic growth (and steady and sustained wage growth for working people).

On the other hand, when top marginal rates drop below 50 percent, the opposite happens. As Beinhart noted in a November 17, 2008 post on the Huffington Post, the massive Republican tax cuts of the 1920s (from 73% to 25%) led directly to the Roaring '20s stock market bubble, temporary boom, and then the crash and Republican Great Depression of 1929.

Rates on the very rich went back up into the 70-90% range from the 1930s to the 1980s. As a result, the economy grew steadily; for the first time in the history of our nation we went 50 years without a crash or major bank failure; and working people's wages increased enough to produce the strongest middle class this nation has ever seen.

Then came Reaganomics.

Reagan cut top marginal rates on millionaires and billionaires from 74% down to 38% and there was an immediate surge in the markets - followed by the worst crash since the Great Depression and the failure of virtually the entire nation's savings and loan banking system.

Bush I cut taxes, and the nation fell into a severe recession while debt soared and wages for working people fell.

Things stabilized somewhat when Clinton slightly raised taxes on the very rich, but W. Bush dropped them again - including taking taxes on unearned income (interest and dividends - the "income" that people like W. born with a trust fund "earn" as they sit around the pool waiting for the dividend check to arrive in the mail) down to a top rate of 15%. (That's right - trust fund babies like Bush and Scaife pay a MAXIMUM 15% federal income tax on their dividend and interest income, thanks to the second Bush tax cut.) The result of this surge in easy money for the wealthy, combined with deregulation in the financial markets, was the "froth" Greenspan worried about and led us straight into the Second Republican Great Depression, ongoing today.

The math is really pretty simple. When the uber-rich are heavily taxed, economies prosper and wages for working people steadily rise. When taxes are cut for the rich, working people suffer and economies turn into casinos.

Roll Back The Reagan Tax Cuts

While there's much discussion about letting the Bush tax cuts expire, if we really want our country to recover its financial footing we must do something altogether different. We need to roll back the Reagan tax cuts that took the top marginal rate from above 70% down into the 30% range.

First, though, we have to help Americans realize that "no new taxes" is a mantra that is meaningful to the very rich, but largely irrelevant to average working people.

Only when the current generation re-learns the economic and tax lessons well known by the generation (now dying off) that came of age in the 30s through the 60s, will this become politically possible. Americans need to learn what Europeans know about taxes - they only matter to the rich.

Thus today the uber-rich are spending hundreds of millions to make sure words like "burden" are always associated with the word "tax," and to convince average working people that they should throw out of office any politicians who are willing to raise taxes on the rich.

We have a lot of education to do...and as long as the Right Wing Machine of the uber-rich continues to "lose" (e.g. "invest") millions of dollars a year in their ongoing disinformation campaign, it's going to require all of us reciting the mantra, "Roll back the Reagan tax cuts!"

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Thom Hartmann is a Project Censored Award-winning best-selling author, and host of a nationally syndicated daily progressive talk show carried on the Air America Radio network and Sirius. www.thomhartmann.com His most recent book, just released, is "Screwed: The Undeclared War on the Middle Class and What We Can Do About It." Other books include: "The Last Hours of Ancient Sunlight," "Unequal Protection," "We The People," and "What Would Jefferson Do?"

Zen Moment of the Day

Cambridge police responding to a call about "two black males" breaking into a home ended up arresting the man who lives there – Harvard professor Henry Louis Gates Jr., probably the country's pre-eminent African-American scholar. The 58-year-old director of Harvard's W.E.B. Du Bois Institute forced his own door open after finding it jammed; he was handcuffed and arrested on a disorderly conduct charge by police who said they were investigating a break-in.

"Why? Because I'm a black man in America?" Gates responded.

- Common Dreams

The Man in the Mirror

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Chris Hedges
July 13, 2009 - TruthDig.com

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In celebrity culture we destroy what we worship. The commercial exploitation of Michael Jackson's death was orchestrated by the corporate forces that rendered Jackson insane. Jackson, robbed of his childhood and surrounded by vultures that preyed on his fears and weaknesses, was so consumed by self-loathing he carved his African-American face into an ever changing Caucasian death mask and hid his apparent pedophilia behind a Peter Pan illusion of eternal childhood. He could not disentangle his public and his private self. He became a commodity, a product, one to be sold, used and manipulated. He was infected by the moral nihilism and personal disintegration that are at the core of our corporate culture. And his fantasies of eternal youth, delusions of majesty, and desperate, disfiguring quests for physical transformation were expressions of our own yearning. He was a reflection of us in the extreme.

His memorial service—a variety show with a coffin—had an estimated 31.1 million television viewers. The ceremony, which featured performances or tributes from Stevie Wonder, Brooke Shields and other celebrities, was carried live on 19 networks, including the major broadcast and cable news outlets. It was the final episode of the long-running Michael Jackson series. And it concluded with Jackson's daughter, Paris, being prodded to stand in front of a microphone to speak about her father. Janet Jackson, before the girl could get a few words out, told Paris to "speak up." As the child broke down, the adults around her adjusted the microphone so we could hear the sobs. The crowd clapped. It was a haunting echo of what destroyed her father.

The stories we like best are "real life" stories—early fame, wild success and then a long, bizarre and macabre emotional train wreck. O.J Simpson offered a tamer version of the same plot. So does Britney Spears. Jackson, by the end, was heavily in debt and had weathered a $22 million out-of-court settlement payment to Jordy Chandler, as well as seven counts of child sexual abuse and two counts of administering an intoxicating agent in order to commit a felony. We fed on his physical and psychological disintegration, especially since many Americans are struggling with their own descent into overwhelming debt, loss of status and personal disintegration.

The lurid drama of Jackson's personal life meshed perfectly with the ongoing dramas on television, in movies and in the news. News thrives on "real life" stories, especially those involving celebrities. News reports on television are mini-dramas complete with a star, a villain, a supporting cast, a good-looking host and a dramatic, if often unexpected, ending. The public greedily consumed "news" about Jackson, especially in his exile and decline, which often outdid most works of fiction. In "Fahrenheit 451," Ray Bradbury's novel about a future dystopia, people spend most of the day watching giant television screens that show endless scenes of police chases and criminal apprehensions. Life, Bradbury understood, once it was packaged, scripted, given a narrative and filmed, became the most compelling form of entertainment. And Jackson was a great show. He deserved a great finale.

Those who created Jackson's public persona and turned him into a piece of property, first as a child and finally as a corpse encased in a $15,000 gold-plated casket, are the agents, publicists, marketing people, promoters, script writers, television and movie producers, advertisers, video technicians, photographers, bodyguards, recording executives, wardrobe consultants, fitness trainers, pollsters, public announcers and television news personalities who create the vast stage of celebrity for profit. They are the puppet masters. No one achieves celebrity status, no cultural illusion is swallowed as reality, without these armies of cultural enablers and intermediaries. The producers at the Staples Center in Los Angeles made sure the 18,000 attendees and the television audience (even the BBC devoted three hours to the tribute) watched a funeral that was turned into another maudlin form of uplifting popular entertainment.

The memorial service for Jackson was a celebration of celebrity. There was the queasy sight of groups of children, including his own, singing over the coffin. Magic Johnson put in a plug for Kentucky Fried Chicken. Shields, fighting back tears, recalled how she and a 33-year-old Jackson—who always maintained that he was straight—broke into Elizabeth Taylor's room the night before her last wedding to "get the first peek of the [wedding] dress." Shields and Jackson, at Taylor's wedding, then joked that they were "the mother and father of the bride." "Yes, it may have seemed very odd to the outside," Shields said, "but we made it fun and we made it real." There were photo montages in which a shot of Jackson shaking hands with Nelson Mandela was immediately followed by one of him with Kermit the Frog. Fame reduces all of the famous to the same level. Fame is its own denominator. And every anecdote seemed to confirm that when you spend
your life as a celebrity you have no idea who you are.

We measure our lives by these celebrities. We seek to be like them. We emulate their look and behavior. We escape the messiness of real life through the fantasy of their stardom. We, too, long to attract admiring audiences for our grand, ongoing life movie. We try to see ourselves moving through our lives as a camera would see us, mindful of how we hold ourselves, how we dress, what we say. We invent movies that play inside our heads with us as stars. We wonder how an audience would react. Celebrity culture has taught us, almost unconsciously, to generate interior personal screenplays. We have learned ways of speaking and thinking that grossly disfigure the way we relate to the world and those around us. Neal Gabler, who has written wisely about this, argues that celebrity culture is not a convergence of consumer culture and religion so much as a hostile takeover of religion by consumer culture. 

Jackson desperately feared growing old. He believed he could control race and gender. He transformed himself through surgery and perhaps female hormones from a brown-skinned African-American male to a chalk-faced androgynous ghoul with no clear sexual identity. And while he pushed these boundaries to the extreme, he did only what many Americans do. There were 12 million cosmetic plastic surgery procedures performed last year in the United States. They were performed because, in America, most human beings, rich and poor, famous and obscure, have been conditioned to view themselves as marketable commodities. They are objects, like consumer products. They have no intrinsic value. They must look fabulous and live on fabulous sets. They must remain young. They must achieve notoriety and money, or the illusion of it, to be a success. And it does not matter how they get there.

The moral nihilism of our culture licenses a dark voyeurism into other people's humiliation, pain, weakness and betrayal. Education, building community, honesty, transparency and sharing are qualities that will see you, in a gross perversion of democracy and morality, ridiculed and voted off any reality show. Fellow competitors for prize money and a chance for fleeting fame elect to "disappear" the unwanted. In the final credits of the reality show "America's Next Top Model," a picture of the woman expelled during the episode vanishes from the group portrait on the screen. Those cast aside become, at least to the television audience, nonpersons. Celebrities who can no longer generate publicity, good or bad, vanish. Life, these shows teach, is a brutal world of unadulterated competition and constant quest for notoriety and attention. And life is about the personal humiliation of those who oppose us. Those who win are the best. Those who lose
deserve to be erased. Those who fail, those who are ugly or poor, are belittled and mocked. Human beings are used, betrayed and discarded in a commodity culture, which is pretty much the story of Jackson's life, although he experienced the equivalent of celebrity resurrection. This has been very good for his music sales and perhaps for his father's new recording company, which Joe Jackson made sure to plug at public events after his son's death. Compassion, competence, intelligence and solidarity are useless assets when human beings are commodities. Those who do not achieve celebrity status, who do not win the prize money or make millions in Wall Street firms, deserve their fate.

The cult of self, which Jackson embodied, dominates our culture. This cult shares within it the classic traits of psychopaths: superficial charm, grandiosity and self-importance; a need for constant stimulation, a penchant for lying, deception and manipulation; and the incapacity for remorse or guilt. Jackson, from his phony marriages to his questionable relationships with young boys, had all these qualities. This is also the ethic promoted by corporations. It is the ethic of unfettered capitalism. It is the misguided belief that personal style and personal advancement, mistaken for individualism, are the same as democratic equality.  It is the celebration of image over substance. 

We have a right, in the cult of the self, to get whatever we desire. We can do anything, even belittle and destroy those around us, including our friends, to make money, to be happy and to become famous. Once fame and wealth are achieved, they become their own justification, their own morality. How one gets there is irrelevant. It is this perverted ethic that gave us Wall Street banks and investment houses that willfully trashed the nation's economy, stole money from tens of millions of small shareholders who had bought stocks to finance their retirement or the college expenses of their children. The heads of these corporations, like the winners on a reality television program who lied and manipulated others to succeed, walked away with hundreds of millions of dollars in compensation and bonuses. The ethic of Wall Street is the ethic of celebrity.

The saturation coverage of Jackson's death is an example of our collective flight into illusion. The obsession with the trivia of his life conceals the despair, meaninglessness and emptiness of our own lives. It deflects the moral questions arising from mounting social injustice, growing inequalities, costly imperial wars, economic collapse and political corruption. The wild pursuit of status, wealth and fame has destroyed our souls, as it destroyed Jackson, and it has destroyed our economy.

The fame of celebrities masks the identities of those who possess true power—corporations and the oligarchic elite. And as we sink into an economic and political morass, as we barrel toward a crisis that will create more misery than the Great Depression, we are controlled, manipulated and distracted by the celluloid shadows on the wall of Plato's cave. The fantasy of celebrity culture is not designed simply to entertain. It is designed to drain us emotionally, confuse us about our identity, make us blame ourselves for our predicament, condition us to chase illusions of fame and happiness and keep us from fighting back. And in the end, that is all the Jackson coverage was really about, another tawdry and tasteless spectacle to divert a dying culture from the howling wolf at the gate.

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Chris Hedges writes a regular column for Truthdig.com. Hedges graduated from Harvard Divinity School and was for nearly two decades a foreign correspondent for The New York Times. He is the author of many books, including: War Is A Force That Gives Us Meaning, What Every Person Should Know About War, and American Fascists: The Christian Right and the War on America.  His most recent book, Empire of Illusion: The End of Literacy and the Triumph of Spectacle, will be out in July.

America's White Underclass: When seeing ain't believing, somebody's blind

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Joe Bageant
July 19, 2009 - joebageant.com

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"White underclass" is a term I've used often in my writing, and most American readers seem to know what I mean. They've got eyes and live in the same nation I do. But in a sudden burst of journalistic responsibility, I decided that if I am going to throw around the word underclass, then I should offer some clearer, perhaps more scientific definition.

So I started writing this with a pile of published research papers before me. Now they are in the trash can by my side. Looking down on them, I can see the gobbledygook titles, the stuff of which government policy and political platforms are made. They run together in slurry of the language of our society's commissars: Concerning-Prevalence-Growth-and-Dynamics-Concentrated Urban Poverty Areas- block-level vs. tract-level segregation-800-tract-tables-urban abstracts-Defining-and-Measuring-the-Underclass-from-The Journal of Policy Analysis and Management-statistical-summary-of ...

What I find is that nobody in social science seems to agree on the term, or, being firmly placed in the true white middle class themselves, even agree if such a thing as a white underclass exists. You can't smell the rabble from the putting green. To others, some blacks for example, the term white underclass is an oxymoron, or maybe yet another new white social code word to be deciphered. I can't blame them for their wariness. You have to be an American to get even these code words. For instance, for all practical purposes and to most Americans, regardless of race, the term "middle class" means "white." Plain and simple. We all know that, even members of the "black middle class."

Middle class also has implications of people's occupations, usually white collar occupations, though it also includes some of the ever thinning ranks of blue-collar workers. But this comes down to describing human beings solely in terms of their jobs in the capitalist labor marketplace, and assumptions about income and whether one takes their daily shower before they go to work or after they come home. By that definition, anyone of working age who doesn't have a steady job of the right type, for whatever reason, is in some sort of "economic underclass." In other words, they are the people that middle class folks feel should damned well be working, if they are over age 18 and have a pulse. ("If I gotta do time in this meaningless workhouse of a nation, you do too!") This underclass includes any people of color seen on the street at midday during the week, single mothers, and paraplegics too, now that the middle class is paying taxes for handicap parking
spaces and wheelchair access to the public shitters.

Another way we define underclass is as "losers." People who cannot talk, think, or act like middle class professional and managerial workers, people who cannot even be posers. There is absolutely no excuse for these people. We've got television 24/7 to show 'em how to behave. They could learn to act like the blue collar workers we see on the endless reruns of The King of Queens (an American sitcom about a parcel service delivery truck driver.). They could at least be funny and amiable fer godz sake.

From reading the studies, I can see that social scientists dislike plural nouns, and thus shun the word losers. So they call this the "educational underclass." Either way, it comes down to folks too wooly and uncurried for office water cooler society. Nobody is denying that they all should have jobs, of course, just nowhere near the water cooler.

Yes, eight to eighty, crippled blind or crazy, Americans generally agree that every man or woman in America should have a full time job, except those women who manage to snag a wealthy man. They are exempt, as are the middle class commissariat's own beer guzzling spawn keeping the pizza delivery and the all-night video arcade businesses thriving in college towns across the republic.

Then you've got your moral underclass. Like the rest of us, they come in two major varieties -- male and female. Females who don't bother to get married before they have babies (the non-technical term is "welfare sluts"), and men who have things more serious on their national police state blotters than a parking ticket. "Non-mainstreamers," in socio-demographic speak. Many of these are men who say, "Screw it, I ain't gonna even bother to work my ass off and be treated like dirt for six bucks an hour. I'd rather shoot pool." Me too.

The unwed mothers come in two varieties. There are those who decide they want children, but are choosy about the husband that traditionally comes with the deal. And there are those who are so young and naive due to cultural circumstance and environment they do not know what this country does to, not for, single mothers. They often find themselves working at least part time (workfare), yet permanently institutionalized into poverty by our social services industry, instead of being lifted out of it. More than 45 percent of U.S. single mothers are poor, compared to five percent in Sweden and Finland, where no stigma is attached and substantial public resources are applied to child health and development. But research done in Europe shows that even if U.S. women had a zero rate of single motherhood, poverty among American women would still be higher than in European and other socially advanced nations.

Armchair sociologist that I am, I have a theory about this: Millions of American women are in poverty because they are paid poverty wages. I could be wrong, I often am, but there seems to be a connection between poverty and money. I started developing this theory last year when I was in a Melbourne, Australia hotel and learned from a single mother hotel housekeeper there that she made $19 an hour, had government assisted childcare and was going to college at night toward becoming a medical technician. Hmmm... Over here we tell single mothers, "Get a six dollar an hour job or get married bitch! Workfare, baby, workfare." Then too, contrary to the American middle class belief system, out-of-wedlock babies are increasing at all levels of white American society. Even more contrary to popularly held notions, as many of these children turn out to be as well adjusted people as do children of the middle class. But for damned sure poorer in most cases.

And finally we have simple snottiness as a line of underclass demarcation -- one's manner of physical gesture or accent. Believe me from personal experience, a Southern accent in America is no ticket to the top. But even with a Southern accent, if you talk like a college grad, don't wear bib overhauls or gang banger gear, and appear to know where South America is on a map, Americans will deem you middle class. Actually, if you smile a lot, and sound like any sort of white customer service type, it will fly. It's called having the appropriate social and cultural skill set. Yeah, right, appropriate to be hired as a telemarketer so you can piss people off by interrupting their dinner hour.

But even if you gather aluminum cans from dumpsters for a living, with effort, you can "pass" like light skinned black folks used to do in this country. As testimony to this, I, who am a high school dropout with a Southern accent, have successfully managed entire magazine publishing groups for a living. (The secret is balls.) If I'd been black or Hispanic though, I'd have been distributing the urinal cakes in the rest rooms at night. So yes, there is a slight edge to whiteness, though not nearly as much as minorities assume. Still, you gotta make the most of that little edge.

In the end, race, gender or sexual preference are just moving parts of the class machine, with middle class perceptions setting the standard. You can indeed be black or queer, but with the properly buffed patina of white middle class mojo you can make it to the top, or near to the top of the heap (in America, proximity to the top of our cultural garbage heap is everything). All the rest of us are mere consumer refuse, as the Michael Jackson Morbidity Festival demonstrated. You can even be celebrated as an icon of diversity if you act white and middle class enough. Obama is Harvard white guy enough, Ellen DeGeneres is going strong ten years after coming out, gay Congressman Barney Franks still gets reelected. They've all got white middle class mojo. Al Sharpton on the other hand, has cootie mojo. (Tip for Al: They need golf cart drivers at the Congressional Country Club. A year of that and you'd know all you need to know about the white mojo shtick.
Because you can watch Obama play golf there).

When it comes to the underclass, there is no arguing that some people are members because they are so damned uneducated they cannot count their toes or read well enough to fill out a job app, the causes of which are too deep and tangled to go into at the moment. Others just don't care to do the smiling grammatically correct wimp assed customer service zombie thing. They prefer swinging a bigger hammer than that -- doing real work, like America used to do. And doing it without kissing ass, which is why they are called the "permanently jobless." As sociologist Christopher Jencks points out, "There is no absolute standard dictating what people need to know in order to get along in society. There is however, an absolute rule that you get along better if you know what the elite knows than if you do not." He also cautions that "the term underclass combines so many different meanings that social scientists must use it with extreme care."

Which is fine. But I'm no social scientist. If in my travels and experience in American life I see that tens of millions of Americans being screwed silly by a handful of chiselers at the top, or if I see one percent of Americans earning as much annually as the bottom 45 percent of Americans, then that 45 percent is an underclass. When I see a 70-year-old man on his second pacemaker limping through Wal-Mart as a "greeter" so he can pay at least something on last winter's heating bill this month, then he is part of an underclass. When I see the humiliated single mom waitress tugging downward on the ridiculously short red plastic skirt she must wear at the Hooter's type joint so her crotch won't show, she's part of an underclass of humiliated and socially oppressed people. Screw the hairsplitting about who qualifies as underclass and what color they are. Just fix it. Or reap the consequences.

We're finally starting to hear a little discussion about the white underclass in this country. Mainly because so many middle class folks are terrified of falling into it. Frankly, I hope they do. We've got room for them. All the lousy, humiliating jobs have not yet been outsourced. The Devil still has plenty for them to do down here.

Call all of this anecdotal evidence. You won't be the first. I was on a National Public Radio show last year with a couple of political consultants, demographers as I remember. One, a lady, was obviously part of the Democratic political syndicate, the other was part of the Republican political mob. The Democratic expert said dismissively of my remarks, "Well! Some people here seem to believe anecdotal evidence is relevant." Meaning me. I held my tongue. But what I wanted to say was this:

Sister, most of us live anecdotal lives in an anecdotal world. We survive by our wits and observations, some casual, others vital to our sustenance. That plus daily experience, be it good bad or ugly as the ass end of a razorback hog. And what we see happening to us and others around us is what we know as life, the on-the-ground stuff we must deal with or be dealt out of the game. There's no time for rigorous scientific analysis. Nor need. We can see the guy next door who's drinking himself to death because, "I never did have a good job, just heavy labor, but now I'm all busted up, got no insurance and no job and it looks like I'll never have another one and I've got four more years to go before Social Security." He doesn't need scientific proof. He doesn't need another job either. He needs a cold beer, a soft armchair, some Tylenol PM and a modest guarantee of security for the rest of his life. Freedom from fear and toil and illness.

And furthermore, Sister, we cannot see much evidence that other, more elite people's scientific analysis of our lives has ever benefited us much. When you're fucked, you know it. You don't need scientific verification.

I wanted to say that on the radio. But I didn't. The little white guy mojo voice in my head told me not to. So I just laughed good naturedly. Like any other good American.

May God forgive me.

With ironic gratitude to Christopher Jencks of the Center for Urban Affairs and Policy Research at Northwestern University.
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About author
Joe Bageant is author of the book, Deer Hunting With Jesus: Dispatches from America's Class War (Random House Crown), about working class America. A complete archive of Joe's essays can be found at http://www.joebageant.com.

Bailout Overseer Says Banks Misused TARP Funds

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Binyamin Appelbaum
July 20, 2009 - Washington Post

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Many of the banks that got federal aid to support increased lending have instead used some of the money to make investments, repay debts or buy other banks, according to a new report from the special inspector general overseeing the government's financial rescue program.

The report, which will be published Monday, surveyed 360 banks that got money through the end of January and found that 110 had invested at least some of it, that 52 had repaid debts and that 15 had used funds to buy other banks.

Roughly 80 percent of respondents, or 300 banks, also said at least some of the money had supported new lending.

The report by special inspector general Neil Barofsky calls on the Treasury Department to require regular, more detailed information from banks about their use of federal aid provided under the Troubled Asset Relief Program. The Treasury has refused to collect such information.

Doing so is "essential to meet Treasury's stated goal of bringing transparency to the TARP program and informing the American people and their representatives in Congress about what is being done with their money," the report said.

In a written response, the Treasury again rejected that call. Officials have taken the view that the exact use of the federal aid cannot be tracked because money given to a bank is like water poured into an ocean.

"Although it might be tempting to do so, it is not possible to say that investment of TARP dollars resulted in particular loans, investments or other activities by the recipient," Herbert M. Allison Jr., the assistant Treasury secretary who administers the rescue program, wrote in a letter to Barofsky.

The Treasury has required 21 of the nation's largest banks to file public reports each month showing the dollar volume of their new lending.

The government so far has invested more than $200 billion in more than 600 banks under a program that began in October with investments in nine of the largest banks. Some banks have started to repay the aid even as others continue to apply for it.

Officials said the program intended to increase the capital reserves of healthy banks, allowing them to make more loans. From the beginning, however, the government invested in troubled banks -- most prominently Citigroup -- that had publicly announced intentions to reduce lending.

The government has also used the money to encourage mergers, such as Bank of America's acquisition of Merrill Lynch and PNC's deal for National City.

The report provides the most comprehensive look to date at how banks have used the money, based on voluntary responses to a March survey. Banks were asked to describe how they used the money, but they were not asked to break down the amounts.

One response, which the report described as typical, said the money had been used "to make loans to credit worthy customers, and to facilitate resolution of problem assets on our books."

TOON

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Why Israel Is Fighting Toward its Own Demise

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Ira Chernus
July 19, 2009 - Religion Dispatches

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Israeli Jews are deeply worried about their nation's image around the world, and with good reason. Military occupation is never a pretty sight, especially when the occupiers have been there for 42 years, steadily taking over the occupied people's lands as the whole world watches on television and the internet. It's not surprising that Israel gets so little sympathy when it complains about its image problem—which only makes many Israelis worry more about their public image.

But if Israeli Jews want to escape that vicious cycle and improve their image, no amount of money spent on clever PR campaigns will help until they do something about a basic root of the problem: their own cultural self-image. Not all Israeli Jews have the same self-image, of course. But there is a complex one embedded in their national culture; a set of basic assumptions that shape their political discourse and their government's policy decisions.

The first assumption is obvious whenever Israelis hear that others don't see them in a positive light. Their culture gives them a ready-made response, one that goes back to the very roots of Zionism: The world criticizes us, picks on us, dislikes us, victimizes us simply because we are Jews.

Certainly not all Israelis Jews respond this way. Some assess the criticisms objectively and see whether there is any truth in them; though they are fighting an uphill battle against the dominant tendency of their society and its history. Since so many Israelis have learned to see themselves as victims, they take every criticism as further proof that they are unfairly singled out for the world's harsh judgment.

So in order to even approach a solution to the crisis in Israel/Palestine, it's necessary to ask: Where did this self-image come from? The whole Zionist project to create a Jewish state began not merely because Jews felt victimized, but because so many felt powerless to do anything about it as long as they lived among the goyim (gentiles). What's more, many early Zionists were ashamed of their weakness, seeing it as a sign that Jews were "abnormal." They expected to escape all those feelings once they had their own independent nation, with its own armed forces.

It doesn't seem to have worked out that way. They have the power, to be sure (by various accounts, the fourth, fifth, or sixth most effective military in the world) which they frequently put on display. But all that expenditure of effort and money—much of it from American tax dollars, but a considerable amount from Israelis' taxes—has apparently not purchased feelings of powerfulness, confidence, and pride.

On the contrary, Israeli political life seems dominated by anxiety. So, for example, the fear of an Iranian nuclear bomb (even just one, against Israel's two hundred or more) makes headlines in Israel nearly every day, like this one from the Jerusalem Post: "Iran Could Build Bomb Within a Year"; even though, as the article clearly states, the Israeli government "currently believes that worst-case scenario is not likely to materialize."

Israel's Defense Minister Ehud Barak betrayed the same sense of anxiety about weakness when he complained to the New York Times that with the Obama administration "focusing solely on settlement building and not on what the Arab countries should also be doing for peace, Israel felt that it was being driven to its knees and delivered to the other side."

That's a bizarre exaggeration. In fact, the administration is also focusing on what the Arab countries should be doing: moving toward normalized ties with Israel. And even were those demands not being made, the idea that a nation with far more military power than any of its neighbors is being "driven to its knees," simply because people want them to stop expanding settlements (which are illegal in the first place) seems out of touch with reality.

And, to be precise, it's not just "people" who want them to stop expanding settlements. It's the most powerful person in the world, the President of the United States. When POTUS says he wants something from Israel and makes it clear, in private, that he really means it, the Israeli government jumps—no matter who is heading it, no matter how hard they try to hide the fact. That was obvious as far back as the Persian Gulf War of 1991 when Israel was hit with a number of Iraqi missiles the Israeli government, which always boasts that it will respond harshly to any attack, did nothing because Washington put up a big red light.

Washington appears to be flashing the red light once again. According to the Washington Times, "a senior Israeli official said that Israel has not asked for US aid or permission [to attack Iran] because the Netanyahu government doesn't want to risk being told 'no.'" The obvious point is that when the United States says "no" and means it, Israeli leaders kneel down and obey; which is why Barak is so worried about Israel being "driven to its knees."

This is the plight Israel finds itself in: It wants to use force to prove to the world, and to itself, that Jews have finally escaped from their age-old powerlessness and the anxiety it breeds. But Israel can use force only when given permission by the goyim in Washington; which seems to prove that the Jews are still powerless.

If the goyim say "no," they can be dismissed as Jew-haters (or, if they happen to be Jewish, as "self-hating Jews," which is just how Israeli prime minister Benjamin Netanyahu has described Obama confidantes David Axelrod and Rahm Emanuel. But that merely reinforces the sense that Jews are surrounded by enemies, victims of a hatred that seems to have no end, and (once again) powerless.

Netanyahu, doing little to cloak his status in this vicious spiral of insecurity, told a meeting of EU ambassadors that "Israelis are not willing to be suckers." Of course no one is suggesting that Israelis are or should be suckers—except their prime minister. He's standing firm against every call for an end to settlement expansion just to prove that he and his people are not suckers. And his defense minister, Ehud Barak, leader of what was once the opposition party, is standing just as firm to prove that Israel won't be "driven to its knees."

Perhaps that's why they continue to attract the hawks calling for an attack on Iran; perhaps, rather than fear, it's the tempting opportunity to flex their national muscle that moves them. Yet every muscle flexed to prove their strength only reinforces their fear that they may not be, perhaps can never be, strong enough. Whether Israel unleashes or restrains its military power, either way there is no escape from anxiety.

There is a real bond between the leaders and the people on this point, according to columnist Doron Rosenblum in Israel's leading newspaper, Ha'aretz: "Netanyahu and Barak would not have achieved such positions of power if they did not represent at least two outstanding traits of Israeliness: aggressiveness and paranoia… They reflect two sides of the same coin—the fear of being considered weak and, the only thing that's worse, being considered naïve." All of which is really just a kind of psychological weakness.

Rosenblum rightly concludes that if Israelis shun Obama's peace overtures they are the real suckers. Yet he suspects that Israelis will respond to the president with "the usual default option, in which military aggressiveness and diplomatic suckerhood go hand in hand in perfect harmony." That's the tragic fruit of a culture built on a self-image of weakness and victimization.

That self-image is so pervasive, it has now become a self-fulfilling prophecy that can shape Israeli policy. According to an unnamed "senior Israeli official" quoted in Ha'aretz, "Israel is skeptical" that US envoy George Mitchell "would be able to coax Arab states to make concrete normalization commitments if only a temporary settlement freeze was declared." In other words, since we know that the other side hates us and will never make peace, we won't take a first step toward peace.

Most Israelis share this view, according to columnist Shmuel Rosner in the Jerusalem Post:

It is clear to the vast majority of Israelis that freezing the settlements will not bring about peace or security. That's why one doesn't see many Israelis supporting Obama's attempt to freeze the settlements. That's why no major political party in Israel can afford to be identified with the Obama way. It will be politically damaging.
Of course "it is clear" is only based on Israeli beliefs, not facts. Beliefs and feelings, on the other hand, are what drive voter sentiment in Israel as everywhere else.

With so many voters affecting a posture of permanent victimization, the government finds it politically safest to avoid taking even the first baby steps toward peace. Instead Israeli leaders play on the voters' fears (what Rosenblum calls "paranoia") by promising the other side of the coin: a more aggressive stance. They insist on expanding settlements, for example, even though Israel stands to lose far more than it can gain.

Two Israeli academics now have statistical data to confirm that fear has largely muted the Israeli public discourse on peace. The study, by Prof. Daniel Bar-Tal and Dr. Eran Halperin, showed that most Jewish Israelis view the conflict with the Palestinians through the lens of fear, which creates "a selective and distorted processing of information aimed at preserving conflict-beliefs." On the other hand, "only a small minority of Israelis evaluate the conflict through the ethical lenses of justice and morality."

The researchers claim to have found a silver lining: "People who were exposed to a scenario emphasizing the price Israel might have to pay for allowing the conflict to continue were more willing to accept new information and compromise, in comparison to those exposed to a scenario based on the fruits of peace." Logically, then, Israeli leaders should tell their voters that they stand to lose plenty if they don't support compromises for peace.

But here's the rub. If Israeli leaders express, or even hint at, that obvious truth, they will give public voice to the self-image of vulnerability and victimhood. They will reinforce the very anxiety that the existence of Israel was supposed to relieve, yet never did. And the voters will reject them.

Again, Israelis are stuck in a difficult plight: As long as the same old self-image pervades Israeli political culture, any policy their government adopts, whether for war or peace, will only intensify their anxiety. And their most familiar response to anxiety about weakness is to get tough.

The need to be tough—to prove that Israel won't be "driven to its knees" because Israelis are not "suckers"— goes far toward explaining the Netanyahu government's hardline positions. Most voters, having decided that they will always be victims, apparently want their leaders to use force in an endless attempt to prove to the world (but even more to themselves) that they are not powerless victims.

Of course that project is doomed to fail. It only perpetuates the conflict, reinforcing the sense of victimization that provokes more calls for force. Since the root of the problem lies in national self-image, nothing that any other nation does can make much difference. People caught in such a trap naturally have a hard time seeing any way to break out and extend a hand of peace to the other side. Instead they resort to the familiar pattern of blaming others, which sets the vicious cycle going all over again.

Perhaps Israelis will some day be so afraid of the dangerous consequences of rejecting peace that they will turn toward peace.

But it seems more likely that real peace will begin only when enough Israelis decide that they no longer want to define themselves by their traditional self-image, that they want a new one to match the reality of their power. Then the majority of Israeli voters will be able to find national pride not in the exercise of power but in the pursuit of peace. When that day comes, we can expect the Israeli government to begin sincerely and earnestly pursuing peace.

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Ira Chernus is Professor of Religious Studies at the University of Colorado at Boulder.

Air Force Plans for All-Drone Future

As of 2009 the Air Force's robotic drone fleet stands at 195 Predators and 28 Reapers.

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Is the day of the hot-shot fighter jock nearly done?

David Axe
July 19, 2009 - Wired

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An Air Force study, released without much fanfare on Wednesday, suggests that tomorrow's dogfighers might not have pilots in the cockpit. The Unmanned Aircraft System Flight Plan. which sketches out possible drone development through the year 2047, comes with plenty of qualifiers. But it envisions a radical future. In an acronym-dense 82 pages, the Air Force explains how ever-larger and more sophisticated flying robots could eventually replace every type of manned aircraft in its inventory — everything from speedy, air-to-air fighters to lumbering bombers and tankers.

Emphasis on "might" and "could." While revealing how robots can equal the capabilities of traditional planes, the Air Force is careful to emphasize that an all-bot air fleet is not inevitable. Rather, drones will represent "alternatives" to manned planes, in pretty much every mission category.

Some of the missions tapped for possible, future drones are currently considered sacrosanct for human pilots. Namely: dogfighting and nuclear bombing. Drones "are unlikely to replace the manned aircraft for air combat missions in the policy-relevant future," Manjeet Singh Pardesi wrote in Air & Space Power Journal, just four years ago. Dogfighting was considered too fluid, too fast, for a drone's narrow "situational awareness." As for nuclear bombing: "Many aviators, in particular, believe that a 'man in the loop' should remain an integral part of the nuclear mission because of the psychological perception that there is a higher degree of accountability and moral certainty with a manned bomber," Adam Lowther explained in Armed Forces Journal, in June.

Despite this, the Air Force identifies a future "MQ-Mc" Unmanned Aerial System for dogfighting, sometime after 2020. The MQ-Mc will also handle "strategic attack," a.k.a nuke bombing. Less controversial is the conjectural MQ-L, a huge drone that could fill in for today's tankers and transports.

But just because a drone could replace a manned plane, doesn't necessarily mean it definitely will. "We do not envision replacing all Air Force aircraft with UAS," Col. Eric Mathewson told Danger Room by email. "We do plan on considering UAS as alternatives to traditionally manned aircraft across a broad spectrum of Air Force missions … but certainly not all." In other words, in coming years drones might be able to do everything today's manned planes can do — technically speaking. But the Air Force still might find good reasons — moral, financial or otherwise — to keep people in some cockpits.

The Flight Plan represents a new twist in a heated debate raging in Congress over the Pentagon's 3,000-strong fighter force. The legislature is split over whether to fund more F-22 fighters — a move that could draw a veto from President Barack Obama. Secretary of Defense Robert Gates has long favored drone development over buying more manned fighters, and in May Joint Chiefs chair Admiral Mike Mullen predicted Gates' position would win out, over the long term. "There are those that see [the F-35 Joint Strike Fighter] as the last manned fighter," Mullen said. "I'm one that's inclined to believe that." General Atomics, which makes the popular Predator line of drones, underscored Mullen's comment by unveiling its new, faster Predator C.

If Flight Plan proves an accurate predictor, it's not just manned fighters (maybe) headed for extinction, but (maybe) nuclear bombers, transports, tankers … nearly all human-occupied military planes.

How Bad Will the Economy Get? Really, Really Bad

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Historically, every financial and economic crisis has been used to further centralize power and concentrate wealth. This one is no different.

Thomas Greco, Jr.
July 14, 2009 - AlterNet

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Historically, every financial and economic crisis has been used to further centralize power and concentrate wealth. This one is no different, and in fact the moves being promoted by the Obama administration and the central banks of the Western powers will take the whole world to the pinnacle of financial despotism -- unless enough people wake up and claim their own "money power."

In recent months, the Fed has expanded its "assets" from about $800 billion to more than $2,000 billion. Those so-called assets are securities it bought from financial institutions and loans made to central banks in other countries. But the Fed refuses to name the specific recipients of those funds, while admitting that by doing so they are manipulating the value of the US dollar on foreign exchange markets. (Congressman Alan Grayson Grills Fed Vice Chair Donald Kohn.)

Where does the Fed get the money to buy those "assets" or to make those loans? Quite simply, it creates the money. Unlike you or me or any other economic entity, the Fed has the power to create Federal Reserve dollars by effectively writing a check against no funds. This is the function known as "Open Market Operations."

What is the economy experiencing now, and what is in prospect for the future? Despite unprecedented inflation of the money supply, we are now (mid-July, 2009) in a period of depression. How can we have simultaneous inflation of the currency and still have economic depression?

It is a matter of where the money is going. While the public sector (federal government) is being lavishly funded to maintain a global empire, and the banks are being bailed out to try to keep a dysfunctional and destructive financial system from collapsing, the private productive sector is being starved for credit. As a result, businesses are bankrupting, people are losing their jobs and their incomes, and lower levels of government are being squeezed because their tax revenues are shrinking.

There is also the matter of the real estate bubble that was created by the financial institutions as they loaded up the private sector with a debt burden that was way beyond its ability to bear. Now that burden is being shifted to the public sector as the government assumes those "toxic" loans. Unfortunately, it is not the poor suckers who were lured into the debt trap that are being relieved, but the predatory lenders who laid the traps. So mortgages are being foreclosed at an unprecedented scale, people are losing their equity as housing values plunge, and more Americans are being made homeless.

These are the factors that have so far kept the effects of monetary inflation from becoming extreme. Ultimately, however, such abusive issuance of political money shows up as rising prices.

When will the price effects of hyper-inflation begin to kick in? How will the government respond to it? What will be the social and political fallout? What can ordinary people do to protect themselves from monetary and legislative abuses? These are the questions that beg for answers.

Already there are rumblings and signs that the U.S. dollar is about to lose its status as the global reserve currency. When that happens, imports of energy and other necessities will become more expensive. The U.S.'s massive trade deficits will not be sustained into the future. China, the OPEC countries, and others that have been buying massive amounts of U.S. government bonds with their dollar earnings, are indicating that their appetite has been sated. Bilateral and multilateral trade agreements are being made that bypass the use of the dollar for international trade.

One thing is clear -- we cannot rely upon the government to act in the best interests of the people. Already, President Obama has moved to give the Federal Reserve even more power to control the people's credit and financial resources. According to a June 18 article in the Wall Street Journal, "The central bank would win power to monitor risks across the financial system, and sweeping authority to examine any firm that could threaten financial stability, even if the Fed wouldn't normally supervise the institution." This is not a new plan; it was floated as a trial balloon during the Bush administration. As early as March 2008, then Treasury Secretary Paulson was proposing to "give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system."

Ostensibly that would be done to prevent the errant financial institutions from repeating their sins of the recent past, but more likely it will have the effect of suppressing any private initiative that might compete with the financial cartel. The Fed is, after all, a private company run by the bankers for the bankers. A recent Reuters article is critical of Obama's move because of the Fed's lack of accountability. It is a plan that seeks to preserve at all costs the credit monopoly that exists under the central banking regime and to perpetuate the looting of the economy by monetization of federal government debts and other ultimately worthless "assets."

During the Great Depression, President Franking Roosevelt, upon taking office in 1933, declared a "bank holiday." He ordered all banks to close. Many of those banks never reopened and many people lost their savings. He also demanded that all Americans turn in their gold holdings in return for paper currency, which was one of the biggest robberies in history up to that time. Some pundits are predicting that another such bank holiday is being planned to put the brakes on price increases, once they begin in earnest, by depriving people of access to their savings, as was done in Argentina in 2002.

Governments that mismanage money invariably use the force of law to prevent the sheep from escaping from the shearing pen (or the slaughter house). So long as people are completely dependent upon political money and banks, they will docilely (or grudgingly) accept whatever "solutions" the political leadership puts forth, and do whatever the government demands of them.

Fortunately there is a way out. The primary purpose of money is to facilitate the exchange of goods and services in the markets. But it is possible to mediate the exchange process without using political money as the payment medium, and without borrowing from banks.

There is plenty of precedent for this sort of cashless trading. It involves a process of direct credit clearing among associated buyers and sellers. During the Great Depression the entrepreneurial middle class in Switzerland organized themselves into the WIR Economic Circle Cooperative. After 75 years, the WIR clearing circle continues to thrive with more than 60,000 member businesses trading the equivalent of about US$1.3 billion per year.

The past four decades have seen the emergence of a new industry comprised of commercial trade exchanges, sometimes called "barter" exchanges, that act as "third part record keepers" enabling the same sort of direct credit clearing for thousands of businesses in cities around the world. Efforts at the grassroots by social entrepreneurs to localize exchange and finance have been similarly widespread in many communities over the past twenty-five years.

Measures to properly reform the money and banking system by political means have about as much chance as the proverbial snowball in hell. However, what is possible, and what seems to be gaining traction to transcend the dominant system, is the materialization of voluntary, private initiatives that enable the cashless exchange of goods and services. As these systems continue to improve, proliferate, and scale up, they will provide a pathway toward a sustainable economy, greater local control, and a better quality of life for all.

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Thomas H. Greco, Jr. is the director of the Community Information Resource Center, which he founded in 1992. CIRC is a nonprofit consulting organization and networking hub dedicated to economic equity, social justice, and community improvement, specializing in community currency and mutual credit design, development, and implementation. His newest book is The End of Money and the Future of Civilization.

Celebrating Cronkite While Ignoring What He Did

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Glenn Greenwald
July 18, 2009 - Salon.com

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"The Vietcong did not win by a knockout [in the Tet Offensive], but neither did we. The referees of history may make it a draw. . . . We have been too often disappointed by the optimism of the American leaders, both in Vietnam and Washington, to have faith any longer in the silver linings they find in the darkest clouds. . . .

"For it seems now more certain than ever that the bloody experience of Vietnam is to end in a stalemate. . . . To say that we are closer to victory today is to believe, in the face of the evidence, the optimists who have been wrong in the past" -- Walter Cronkite, CBS Evening News, February 27, 1968.

"I think there are a lot of critics who think that [in the run-up to the Iraq War] . . . . if we did not stand up and say this is bogus, and you're a liar, and why are you doing this, that we didn't do our job. I respectfully disagree. It's not our role" -- David Gregory, MSNBC, May 28, 2008.

When Pulitzer Prize-winning journalist David Halberstam died, media stars everywhere commemorated his death as though he were one of them -- as though they do what he did -- even though he had nothing but bottomless, intense disdain for everything they do. As he put it in a 2005 speech to students at the Columbia School of Journalism: "the better you do your job, often going against conventional mores, the less popular you are likely to be . . . . By and large, the more famous you are, the less of a journalist you are."

In that same speech, Halberstam cited as the "proudest moment" of his career a bitter argument he had in 1963 with U.S. Generals in Vietnam, by which point, as a young reporter, he was already considered an "enemy" of the Kennedy White House for routinely contradicting the White House's claims about the war (the President himself asked his editor to pull Halberstam from reporting on Vietnam). During that conflict, he stood up to a General in a Press Conference in Saigon who was attempting to intimidate him for having actively doubted and aggressively investigated military claims, rather than taking and repeating them at face value:

Picture if you will rather small room, about the size of a classroom, with about 10 or 12 reporters there in the center of the room. And in the back, and outside, some 40 military officers, all of them big time brass. It was clearly an attempt to intimidate us.

General Stilwell tried to take the intimidation a step further. He began by saying that Neil and I had bothered General Harkins and Ambassador Lodge and other VIPs, and we were not to do it again. Period.

And I stood up, my heart beating wildly -- and told him that we were not his corporals or privates, that we worked for The New York Times and UP and AP and Newsweek, not for the Department of Defense.

I said that we knew that 30 American helicopters and perhaps 150 American soldiers had gone into battle, and the American people had a right to know what happened. I went on to say that we would continue to press to go on missions and call Ambassador Lodge and General Harkins, but he could, if he chose, write to our editors telling them that we were being too aggressive, and were pushing much too hard to go into battle. That was certainly his right.

Can anyone imagine any big media stars -- who swoon in reverence both to political power and especially military authority -- defying military instructions that way, let alone being proud of it? Halberstam certainly couldn't imagine any of them doing it, which is why, in 1999, he wrote:

Obviously, it should be a brilliant moment in American journalism, a time of a genuine flowering of a journalistic culture . . .

But the reverse is true. Those to whom the most is given, the executives of our three networks, have steadily moved away from their greatest responsibilities, which is using their news departments to tell the American people complicated truths, not only about their own country, but about the world around us. . . .

Somewhere in there, gradually, but systematically, there has been an abdication of responsibility within the profession, most particularly in the networks. . . . So, if we look at the media today, we ought to be aware not just of what we are getting, but what we are not getting; the difference between what is authentic and what is inauthentic in contemporary American life and in the world, with a warning that in this celebrity culture, the forces of the inauthentic are becoming more powerful all the time.

All of that was ignored when he died, with establishment media figures exploiting his death to suggest that his greatness reflected well on what they do, as though what he did was the same thing as what they do (much the same way that Martin Luther King's vehement criticisms of the United States generally and its imperialism and aggression specifically have been entirely whitewashed from his hagiography).

So, too, with the death of Walter Cronkite. Tellingly, his most celebrated and significant moment -- Greg Mitchell says "this broadcast would help save many thousands of lives, U.S. and Vietnamese, perhaps even a million" -- was when he stood up and announced that Americans shouldn't trust the statements being made about the war by the U.S. Government and military, and that the specific claims they were making were almost certainly false. In other words, Cronkite's best moment was when he did exactly that which the modern journalist today insists they must not ever do -- directly contradict claims from government and military officials and suggest that such claims should not be believed. These days, our leading media outlets won't even use words that are disapproved of by the Government.

Despite that, media stars will spend ample time flamboyantly commemorating Cronkite's death as though he reflects well on what they do (though probably not nearly as much time as they spent dwelling on the death of Tim Russert, whose sycophantic servitude to Beltway power and "accommodating head waiter"-like, mindless stenography did indeed represent quite accurately what today's media stars actually do). In fact, within Cronkite's most important moments one finds the essence of journalism that today's modern media stars not only fail to exhibit, but explicitly disclaim as their responsibility.

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UPDATE: A reader reminds me that -- very shortly after Tim Russert's June, 2008 death -- long-time Harper's editor Lewis Lapham attended a party to mark the release of a new book on Hunter Thompson, and Lapham said a few words. According to New York Magazine's Jada Yuan, this is what happened:

Lewis Lapham isn't happy with political journalism today. "There was a time in America when the press and the government were on opposite sides of the field," he said at a premiere party for Gonzo: The Life and Work of Dr. Hunter S. Thompson on June 25. "The press was supposed to speak on behalf of the people. The new tradition is that the press speaks on behalf of the government." An example? "Tim Russert was a spokesman for power, wealth, and privilege," Lapham said. "That's why 1,000 people came to his memorial service. Because essentially he was a shill for the government. It didn't matter whether it was Democratic or Republican. It was for the status quo." What about Russert's rep for catching pols in lies? "That was bullshit," he said. "Thompson and Russert were two opposite poles."

Writing in Harper's a few weeks later, Lapham -- in the essay about Russert (entitled "An Elegy for a Rubber Stamp") where he said Russert's "on-air persona was that of an attentive and accommodating headwaiter, as helpless as Charlie Rose in his infatuation with A-list celebrity" -- echoed Halberstam by writing:

Long ago in the days before journalists became celebrities, their enterprise was reviled and poorly paid, and it was understood by working newspapermen that the presence of more than two people at their funeral could be taken as a sign that they had disgraced the profession.

That Lapham essay is full of piercing invective ("On Monday I thought I'd heard the end of the sales promotion. Tim presumably had ascended to the great studio camera in the sky to ask Thomas Jefferson if he intended to run for president in 1804"), and -- from a person who spent his entire adult life in journalism -- it contains the essential truth about modern establishment journalism in America:

On television the voices of dissent can't be counted upon to match the studio drapes or serve as tasteful lead-ins to the advertisements for Pantene Pro-V and the U.S. Marine Corps. What we now know as the "news media" serve at the pleasure of the corporate sponsor, their purpose not to tell truth to the powerful but to transmit lies to the powerless. Like Russert, who served his apprenticeship as an aide-de-camp to the late Senator Daniel Patrick Moynihan, most of the prominent figures in the Washington press corps (among them George Stephanopoulos, Bob Woodward, and Karl Rove) began their careers as bagmen in the employ of a dissembling politician or a corrupt legislature. Regarding themselves as de facto members of government, enabling and codependent, their point of view is that of the country's landlords, their practice equivalent to what is known among Wall Street stock-market touts as "securitizing the junk." When requesting
explanations from secretaries of defense or congressional committee chairmen, they do so with the understanding that any explanation will do. Explain to us, my captain, why the United States must go to war in Iraq, and we will relay the message to the American people in words of one or two syllables. Instruct us, Mr. Chairman, in the reasons why K-Street lobbyists produce the paper that Congress passes into law, and we will show that the reasons are healthy, wealthy, and wise. Do not be frightened by our pretending to be suspicious or scornful. Together with the television camera that sees but doesn't think, we're here to watch, to fall in with your whims and approve your injustices. Give us this day our daily bread, and we will hide your vices in the rosebushes of salacious gossip and clothe your crimes in the aura of inspirational anecdote.

That's why they so intensely celebrated Tim Russert: because he was the epitome of what they do, and it's why they'll celebrate Walter Cronkite (like they did with David Halberstam) only by ignoring the fact that his most consequential moments were ones where he did exactly that which they will never do.

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UPDATE II: In the hours and hours of preening, ponderous, self-serving media tributes to Walter Cronkite, below is a clip you won't see, in which Cronkite -- when asked what is his biggest regret -- says:

What do I regret? Well, I regret that in our attempt to establish some standards, we didn't make them stick. We couldn't find a way to pass them on to another generation.

It's impossible even to imagine the likes of Brian Williams, Tom Brokow and friends interrupting their pompously baritone, melodramatic, self-glorifying exploitation of Cronkite's death to spend a second pondering what he meant by that.

http://www.newseum.org/news/news.aspx?item=nh_CRON090714_2

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Glenn Greenwald was previously a constitutional law and civil rights litigator in New York. He is the author of the New York Times Bestselling book "How Would a Patriot Act?," a critique of the Bush administration's use of executive power, released in May 2006. His second book, "A Tragic Legacy", examines the Bush legacy.

Identifying the Great Blob of Alaska (No, it's not Sarah Palin)

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Wesley Loy 
July 19, 2009 - Time

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A group of hunters aboard a small boat out of the tiny Alaska village of Wainwright were the first to spot what would eventually be called "the blob." It was a dark, floating mass stretching for miles through the Chukchi Sea, a frigid and relatively shallow expanse of Arctic Ocean water between Alaska's northwest coast and the Russian Far East. The goo was fibrous, hairy. When it touched floating ice, it looked almost black.

But what was it? An oil slick? Some sort of immense, amorphous organism adrift in some of the planet's most remote waters? Maybe a worrisome sign of global climate change? Or, as folks wondered who followed from faraway via the internet, was it something insidious and, perhaps, even carnivorous like the man-eating jello from the old Steve McQueen movie that inspired the Alaska phenomenon's nickname?

The hunters got word to the U.S. Coast Guard, which immediately sent two spill response experts to fly over the mass, which looked sort of rusty from the air. They also approached it by boat. The North Slope Borough, the local government for the vast and sparsely populated cap of Alaska, sent its own people out the main village of Barrow to have a look. They scooped up jars of the stuff for analysis in a state lab in Anchorage.

"We responded as if it were an oil product," says Coast Guard Petty Officer Terry Hasenauer. "It was described to us as an oil-like substance, thick and lingering below the surface of the water. Those characteristics can indicate heavy, degraded oil, maybe crude oil, or possibly an intermediate fuel oil." Meanwhile, the story spread over the internet like an oil-spill, giving lots of people a queasy feeling.

Test results released Thursday showed the blob wasn't oil, but a plant - a massive bloom of algae. While that may seem less dangerous, a lot of people are still uneasy. It's something the mostly Inupiat Eskimo residents along Alaska's northern coast say they could never remember seeing before.

Algal blooms are a common and often menacing event along many U.S. coastlines. Some strains are toxic and can close beaches and poison seafood, posing a hazard to consumers. The National Oceanic and Atmospheric Administration maintains a forecasting system for the Gulf of Mexico to warn of harmful Florida blooms. On Thursday, on the other side of the continent, U.S. Sen. Olympia Snowe, a Maine Republican, urged NOAA to direct at least $500,000 to assess a disastrous red tide - a form of algal bloom. "The state of Maine is currently besieged by the most virulent red tide event ever recorded in the region," Snowe wrote. "As a result of this outbreak, virtually the entire coast of our state has been closed to the harvest of clams, mussels, ocean quahogs, and other shellfish."

While Alaskans may find the algal blob unusual if not frightening, scientists say that algal blooms are nothing new in Arctic Ocean waters, though the blob itself might be a little weird. Brenda Konar, a marine biology professor at the University of Alaska Fairbanks, said algal outbreaks can and do occur even in icy Arctic waters. It just takes the right combination of nutrients, light and water temperature, she said. "Algae blooms," she says. "It's sort of like a swimming pool that hasn't been cleaned in a while." The blob, Konar said, is a microalgae made up of "billions and billions of individuals." "We've observed large blooms in the past off Barrow although none of them at all like this," Barry Sherr, an Oregon State University professor of oceanography, said in an e-mail. "The fact that the locals say they've never seen anything like it suggests that it might represent some exotic species which has drifted into the region, perhaps as a result of
global change. For the moment that's just a guess."

So far in Alaska, nothing suggests the Chukchi Sea blob is toxic, although the Coast Guard's Hasenauer said toxicity tests were planned. In any case, virtually no commercial seafood production comes from the waters along Alaska's northern coast, but residents do fish, hunt whales and harvest other animals as part of a traditional subsistence lifestyle. In the meantime, the blob for the most part is staying away from the shoreline and slowly drifting farther and farther away.