The Daily Kos headlined their article Wayne Barrett lowers the boom on Rudy Giuliani. This article was referring to The Daily News article Wayne Barrett: What Rudy Giuliani knows about love — a response to his ‘doesn’t love America’ critique of Obama.

Rudy may have forgotten the half-dozen deferments he won ducking the Vietnam War, even getting the federal judge he was clerking for to write a letter creating a special exemption for him. And remember Bernie Kerik? He’s the Giulaini police commissioner, business partner and sidekick whose nomination as homeland security secretary narrowly preceded indictments. He then did his national service in prison.

Giuliani went so far as to rebuke the President for not being “brought up the way you were and the way I was brought up through love of this country,” a bow no doubt to the parenting prowess of Harold Giuliani, who did time in Sing Sing for holding up a Harlem milkman and was the bat-wielding enforcer for the loan-sharking operation run out of a Brooklyn bar owned by Rudy’s uncle.

Though Rudy cited Harold throughout his public life as his model (without revealing any of his history), he and five Rudy uncles found ways to avoid service in World War II. Harold, whose robbery conviction was in the name of an alias, made sure the draft board knew he was a felon. On the other hand, Obama’s grandfather and uncle served. His uncle helped liberate Buchenwald, which apparently affected him so deeply he stayed in the family attic for six months when he returned home.

It’s great to have these facts about Giuliani’s preferred style of upbringing (if facts they are).  I have not done an independent check of these “facts”, but I urge the spreading of these “facts” in any case.  What a great story they make.

The Daily Kos has the story Why are people in America paid so poorly?.

The logic of the market is not to pay people what they deserve. It’s not to pay people what would make a better life for them. It’s to pay the absolute minimum that you can get away with.

Another good article that analyzes what is wrong and provides examples where it is better.  As expected, finding a viable solution is another matter entirely.

Thanks to Jane Switchenko for posting this on her Facebook page.

Talking Points Memo has the article Meet The Man At The Center Of The Unprecedented US-Israel Rift.

After having read the article, I still can’t decide whether or not it is worth reading.  It is a balanced article in the way that all “this side said, and that side said” articles are.  Not being able to predict the future, I’ll just have to be satisfied with seeing how this all plays out.

Naked Capitalism has the story The Boston Globe Covers Up for Wall Street, Ignores Swaps Losses in Coverage of MBTA Turmoil.

The omission of how the MBTA was fleeced in a story that focuses heavily on financial mistakes lets Wall Street off easy. And the Globe has no public editor or ombudsman to take complaints about this gaping hole in its account. So much for its commitment to journalistic ethics.

Particularly if you are in Massachusetts, please call or e-mail the Globe’s managing editor for news, Christine Chinlund and tell her the Globe is showing bias by ignoring the role of Big Finance in the MBTA’s tsuris.

Chinlund’s e-mail is: chinlund@globe.com and her phone is 617 929-3134.

The other approach is to show up the Globe by getting the word out through social media. Tweet this post and link to it on FaceBook. If the press refuses to do its job, it’s time for the Web-savvy to do it for them.

If you read or heard about the article in the Globe and erroneously thought you knew how the MBTA got into trouble, then read this article in Naked Capitalism. If you think of yourself as an informed voter, but get your information from “reputable” sources such as The Boston Globe, then you may have to rethink what you think you know. Just keep in mind who now owns the Globe when you read stories in praise of Wall Street. Of course it is difficult to even guess you are being bamboozled when the nefarious hand of Wall Street is not even mentioned in a story.

Maybe some compromise between the Wall Street Republicans and the Wall Street Democrats can figure out what to do with the rampant fraud by Wall Street bankers (not banks). A bank does not commit fraud, but bankers who run the banks do.

Truth Out has the article Five Reasons No Progressive Should Support Hillary Clinton.

If, as progressives, we simply allow ourselves to fall in line behind a Democratic establishment that smugly mocks us, then we will forever be marginalized and beholden to a political system in which the Overton window is permanently slanted to the right.

If Hillary Clinton is the Presidential nominee of the Democratic Party in 2016, then I may have to rethink my association with her party.

Thanks to Cedric Flower for posting this article on his Facebook page.

Nation of Change has posted the following image on their Facebook page.

When I see Faux Noise in any public place, Sharon has all she can do to restrain me from complaining to the management.

Don’t jump to the conclusion that because I dislike Faux Noise so much that I am a fan of MSNBC, CNBC, or CNN.

Thanks to Jacquelyn Wells for sharing this on Facebook.

New Economic Perspectives has the article Geithner: “The End of Capitalism as We Know It” by William K. Black.  Black makes a couple of important points.

First he talks about an item in David Axelrod’s new book.

… the finance guys argued that retroactive steps to claw back the money would have violated existing contracts.

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Notice that there is a contradiction in the description of the issue. Preventing banks that received bailouts from paying future bonuses is not “clawing back” bonuses. Clawing back bonuses means recovering bonuses that were improperly paid based on false accounting statements that massively overstated bank income. Neither of the practices I have described would have “violated existing contracts.” The people that “violated existing contracts” were the bankers who massively inflated reported net income in order to collect massive bonuses while the bank suffered huge losses and the bankers that made massive bonuses by leading frauds that ripped off customers. Both forms of fraud invalidate any contractual claim by the managers to bonuses. Bankers should not get paid in full under normal bankruptcy provisions when they run the bank into insolvency (including a liquidity crisis).

Second is his comment about capitalism as we know it.

Anyone that wants to save “capitalism” must destroy the current corrupt system “we know” that is posing as “capitalism.” To sum it up, there was no greater service that the Obama administration could have done for (real) capitalism than to produce “the end of capitalism as we know it.” Geithner was absolutely right in his diagnosis and absolutely wrong in his response. Wall Street hates “capitalism” – Geithner and Summers acted to save, rather than exorcize, its corrupt doppelgänger.

The supporters in Congress of the oligarchs claim to be supporters of capitalism and free markets, when, in truth, they support no such things.  They actually support oligarchy and controlled markets as long as the oligarchs are in control of the markets.

Israeli Prime Minister Benjamin Netanyahu has posted on his Twitter page the following tweet:

I’m determined to speak before Congress to stop Iran. RETWEET if I have your support.

You can use the above link to respond to his tweet.

I have told Netanyahu that I am standing with the Jewish Senator from Vermont to advocate boycotting his speech. The President of The United States conducts our foreign policy. Congress’s attempts to undercut him, and to invite you to speak publicly to a joint session of our Congress comes dangerously close to treason for Speaker Boner. If you don’t come in some sort of uniform, you might be considered a spy. If your Ambassador did not have diplomatic immunity, he might be considered the same. We cannot prosecute your Ambassador, but we can insist that he leave our country. Conspiring against our President is not what we tolerate from foreign diplomats assigned to our country.

I fit all of the above in 140 characters 🙂

Democracy Now has the broadcast Exclusive: Freed CIA Whistleblower John Kiriakou Says “I Would Do It All Again” to Expose Torture. There is also a full transcript available at the previous link.

In a broadcast exclusive interview, we spend the hour with John Kiriakou, a retired CIA agent who has just been released from prison after blowing the whistle on the George W. Bush administration’s torture program. In 2007, Kiriakou became the first CIA official to publicly confirm and detail the agency’s use of waterboarding.

Well, it’s really about 45 minutes or less because the news summary at the beginning takes up about 15 minutes.

At about 43 minutes into the video, Kiriakou talks about the “crime” for which he was punished. To hear his explanation, he was trying to protect the reputation of the person whose name he confirmed to a reporter, but did not reveal to the public. It is proof that no good deed goes unpunished.

Just to take a little dig at some relatives of some relatives, none of whom are probably reading this blog, I will excerpt some remarks at the end of the interview about Greece.

JOHN KIRIAKOU: Sure. I served in Greece for a couple of years, going back and forth, really, between headquarters and Greece. I was working on terrorism issues. But at the time—and this kind of seems quaint now—it was Euroterrorism, communist terrorism, specifically the Revolutionary Organization 17 November. I had a great experience in Greece. It’s a great country.

But the Greeks have had a tough time for the last—especially for the last seven years or so. The recession has hit Greece probably harder than any other country in western Europe, certainly harder than in the United States. And part of the problem was, you had two governing parties—PASOK and Neo Demokratia, New Democracy—that were really corrupted by the system. And now, Syriza, which is a young, new, populist party, has won a sweeping victory in the recent parliamentary elections, falling only two seats short of an absolute majority, which in Greece is really an incredible feat.

Like most Greek Americans, I’m very excited about this. I think it was time for a change. It was time for a populist regime in Greece, a leftist populist regime. And I think that under Alexis Tsipras’s leadership, I think the country may come out of its recession. Now, with that said, there’s going to have to be some give from the troika in terms of aid and assistance to Greece. The Greek people have suffered terribly. Suicides are up something like 300 percent. There’s a brain drain, where doctors, lawyers, engineers are moving to the United States or Europe or Australia. And that has to come to an end. The Greeks have to stay in Greece and try to rebuild their country. But I think that can be done under Syriza. I’m very excited about it.

Seems like I have proof here that not all Greek Americans think alike. Their non-Greek relatives by marriage should not necessarily accept what they say as gospel to use an odd word.

As a little afterthought, I have to wonder why does President Obama think it more important to prosecute CIA whistle blowers for trying to protect the reputations of their fellow CIA officers than it is to prosecute criminal bankers, but leave the bankers free to further ply their criminal trade? Why the same attitude about leaving the criminals in the CIA untouched, and jailing the ones who are doing nothing criminal? Is this part of the Constitutional law that Obama was teaching before he became President? I don’t think this behavior is what I voted for when I voted for President Obama (twice).

New Economic Perspectives has the article Oral Testimony of William K. Black.

The article points to a transcript of the testimony Joint Committee of Inquiry into the Banking Crisis. Rather than read the article’s summary of the testimony, I went right to the transcript. The transcript is long, so even the lengthy excerpts below are only a small part of the transcript. (I wish I had found the link to the promised video.)

Marc MacSharry

Okay. In terms of the likelihood of a repeat, does Professor Black think that the set of parameters that currently exist make it quite likely that it will all happen again?

Professor William Black

Yes, and it will be worse. This is not just Ireland and Europe – this is the United States. There has been no accountability for the bankers and no accountability for the regulators. So, it will take the next boom before this happens again. In the savings and loan crisis, as the committee heard we got over these 1,000 felony convictions. None of those people, to my knowledge, participated in the current crisis precisely because they had criminal records. That is what we call specific deterrence. There will be no specific deterrence out of this crisis. The worst actors who know exactly how to use these four ingredients of the recipe that I told the committee are out there, and what they have learned from this crisis is that it is a sure thing and not much of anything happens to one. That is a really perverse incentive structure. It is critical that one reverses that.

Notice the mention of Stephanie Kelton and her current position. This is a name that I have been trying to get readers of my blog to burn into their memories. It is going to be extremely important for people to know who she is, and to remember who hired her – Bernie Sanders.

Marc MacSharry

Would Professor Black feel that the euro, therefore, is arguably unfit for purpose because of the smaller economies on the periphery like Ireland, which are less than 1% of the eurozone?

Professor William Black

The euro is a disaster. It never made sense in terms of the economic literature on an optimal currency area. My colleague, Professor Stephanie Kelton, who is now the chief economist on the Senate budget committee, is one of a number of scholars who wrote this in advance and their predictions have proven absolutely correct.
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Professor William Black

We have not set this up but I thank Deputy Doherty. My answer is not in response to Ireland. I am not talking about Ireland. I am responding to the generic question. Here is an example of that dated 15 July 1987 from Charles Keating, our most notorious fraud in the savings and loan crisis to his chief political fixer. “Highest priority – get Black. Good grief – if you can’t get Wright [the Speaker of the House] and Congress to get Black – kill him dead – you ought to retire.” That is the kind of thing I am talking about. Our joke in the savings and loan crisis was the highest return on assets was always a political contribution for any banker. In our context, the Speaker of the House held hostage our Bill to get funding to close the institutions, to extort special favours for several fraudulent Texas savings and loan branches. Five US Senators who became known as the Keating Five sought to keep us from taking enforcement action against the worst fraud. The President of the United States attempted to appoint two members, chosen by Charles Keating, to run the agency. I told the committee it was a three presidential appointee agency that ran it. A Mr. Phelan, doubtless a distant cousin, was hired by the House ethics committee to investigate the ethics complaints against the Speaker of the House, James Wright. He did resign at the end of this process, but three of the recommended charges by Mr. Phelan after his investigation were that an ethics case should be brought against the Speaker of the House for his effort to fire William Black, his effort to fire Joe Selby, who was one of those two top regulators I told the committee about, and because he held hostage our funding to extort favours on behalf of folks.

In the United States context, these people do not go quietly. If you bring cases against powerful bankers, they will enlist their political allies and they will give very large political contributions to do that. In our context, Alan Greenspan was used to recruit the Keating Five, the five US Senators. He was hired as a lobbyist initially by Charles Keating to recruit those Senators. The United States is not unusual in those terms. If you take on really powerful bankers you will find that you get political push-back. If you do not pick regulators who will stand up to that – this is what I referred to as the Mike Patriarca level – Mike Patriarca was asked by a US Senator, one of the five who was meeting with us, whether he was saying that Arthur Young & Company, then one of the top tier audit firms, would prostitute itself for a client. Committee members, as legislators, know that if they ask that of a bureaucrat what the only possible answer is. When there are five Senators the only possible answer is, “Oh no sir, I would never say that.” The actual answer from Mike Patriarca was “Absolutely, it happens all the time.”
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Professor William Black

When I was an enforcement and litigation director I negotiated these things all the time and here is the key that you need to understand. Bankers make the decision and their priorities are not to go to jail, not to lose their job and not to have their bonuses clawed back. To accomplish those three things they also have a fourth priority to not throw anybody junior to the wolves. In the United States we have much broader plea bargaining powers than exists in most of Europe. If you throw the junior person to the wolves we will flip him which means we will get him to plead and to testify about the more senior people. The committee will note that in all of these major deals in the United States nobody got named, loses their bonus, loses their job or goes to jail and they are happy to trade off fines.

The fines sound large. They are large in absolute terms but relative to JP Morgan Chase, to pick a non-random example, they are literally a few weeks’ revenue so they do not care. Also, bankers do not pay the fines; it is the shareholders. This is the third in a triple whammy hit if you follow the recipe to the extent that the banks have followed this recipe. First, they have caused huge losses to the shareholders directly by making bad loans intentionally. Second, they have taken a whole lot of money that should have gone to the shareholders in the form of bonuses for destroying the institution or at least causing huge losses. Third, they come along and are happy to sign an agreement in which the shareholders pay the fines to make sure that they have no accountability. Therefore, this is an utterly useless exercise in terms of deterrence.

I think I understood a lot of the testimony because I am a regular reader of the New Economic Perspectives blog and of the book, “The Best Way to Rob a Bank Is To Own One”. I wonder how much is understood by ordinary people and perhaps even the members of the committee that took the testimony.

I take particular interest in the talk of Gresham’s Dynamic, which I am not sure Black did justice to in explaining it to the uninitiated.

Back in the late 1980’s and early 1990’s I was remarking on the Gresham’s Law as it applied to Mutual Fund Managers. The only ones who could keep their jobs were the ones who were taking insane risks and achieving insane (if temporary) returns for their funds. It was hard to find a mutual fund that was still being managed by prudent investors. I even had to keep reminding myself that it was not how much money that I was making on paper, but it was about how much of it that I would eventually get to keep.

The American public still does not get what a crucial failure of the Obama administration it was and still is in the failure to prosecute the bankers (fraudsters.) This is why I keep harping on this issue to the same extent that Bill Black does.