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A nation of deadbeats…but swindlers, con artists and crooks comes closer to the mark.

9:33 am in Uncategorized by cmaukonen

I came across the following video after searching a bit after reading this interview in Mother Jones.

“Deadbeat Nation” sounds like a great name for book. And as it turns out, it is a book. In A Nation of Deadbeats: An Uncommon History of America’s Financial Disasters, William & Mary professor Scott Reynolds Nelson argues that American history consists of a never-ending string of defaults at the individual, municipal, and state levels. Credit bubbles alternately finance transformative policies like westward expansion and infrastructure improvements, and then remake the nation’s political landscape when they invariably pop. Economist Tyler Cowen, in a New York Times Magazinereview last July, needed just one sentence to summarize the book: “We have hardly ever had a well-functioning banking system.”

What this means is that from the very beginning the finances of this country were based on fraud. Watch the video here.

In this he shows how nearly all the financial disasters and crisis can be traced back to bank and financier investments that were dodgy at best and fraudulent at worst. What Nelson I think does not realize is that in this he also shows how capitalism itself is at it’s very core is based on fraud, swindling and corruption. And at the head are the bankers.

I have watched a number of these types of videos and read a number of articles and online books of this sort by various economic and financial historians etc. all with the stated or unstated premiss that there is nothing wrong with capitalism providing it is done honestly.

Then each one without exception goes on to show unequivocally that there is no such thing as honest capitalism.  There never has been and probably never will be.

My Mom passed away this morning

9:32 am in Uncategorized by cmaukonen

Hospital Corridor Bio-hazard - flickr

She did not die of cancer or a heart attack or a stroke. She did not have diabetes or any other disease. Some high BP but that is all. And she did not die of natural causes.

NO she died from the most likely cause these days after entering a hospital. She died of a hospital acquired infection.

Most likely CDIFF. She went in for a hip fracture. A common enough situation for an elderly person. But the out come has become far, far too common these days. As you can see from this piece from The Atlantic, you have a 1 in 17 chance of dying from an infection in a hospital.

The Health and Human Services department’s 2009 quality report to Congress found “very little progress” on eliminating hospital-acquired infections and called for “urgent attention” to address the shortcomings — first brought to light a decade ago.

Of five major types of serious hospital-related infections, rates of illnesses increased for three, one showed no progress, and one showed a decline. As many as 98,000 people a year die from medical errors, and preventable infections — along with medication mixups— are a significant part of the problem. MSNBC

And according to this report in WEBMD, the incidence of CDIFF is reaching epidemic proportions. And hospitals a loath to report this and that this particular bacteria has become more deadly and harder to treat each year.

C. diff disease can range from mild diarrhea to life-threatening colitis. The bug produces toxins that destroy the mucosal lining of the gut.

There are many different C. diff strains circulating in the U.S. But since 2000, one of these strains has gone from a minor player to become the most frequently isolated C. diff strain. The strain has several names. Referring to its genetic fingerprint, the CDC calls it NAP1. In Europe and Canada, it’s often called the 027 or BI strain.

The NAP1 strain of C. diff took off shortly after it acquired resistance to fluoroquinolone antibiotics. There’s some evidence it may also have acquired some resistance to Flagyl, one of the two antimicrobial agents used to treat it (the other is vancomycin).

Antibiotic resistance isn’t the only worrisome thing about NAP1. C. diff normally makes two toxins. The NAP1 strain makes 16 times more toxin A and 23 times more toxin B. And it also makes another toxin, called binary toxin, although it’s not yet clear how this toxin affects humans.

To date, the NAP1 strain has been reported in 37 U.S. states and in the District of Columbia.

A recent report shows that adult C. diff hospitalizations doubled between 2000 and 2005 to about 300,000 hospitalizations a year. That’s more hospitalizations than are seen with MRSA, which sends about 126,000 Americans to the hospital each year.

The CDC’s C. diff expert, L. Clifford McDonald, MD, tells WebMD that if you count pediatric C. diff cases and cases in the community that do not enter the hospital, there are probably half a million U.S. cases of C. diff infection each year.

And yes, it is an epidemic: The infection rate is going up by about 10% a year. But the death rate is going up even faster, says Marya Zilberberg, MD, adjunct professor at the University of Massachusetts, Amherst, and president of the EviMed Research Group. WEBMD

And for my mother it was pure torture the entire time:

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The Great American Empire – A review of the detailed review by Oliver Stone and Peter Kiznick

7:58 pm in Uncategorized by cmaukonen

Empire State Building - Benjamin Dumas/flickr commons

Empire has been the mainstay and primary support of the bourgeoisie. Empire built  these people and empire has supported them since the eradication of feudalism and institution of capitalism. The merchants and factory owners. Businessman and clerics. Doctors and lawyers and management and stock brokers and investors and University and College deans and even more than a few professors. Especially those who are tenured.

With the fall of feudalism in the 19th century, mass subjugation of the local populace was replaced by subjugation of people in less developed areas of the world. England and France and Germany and The Netherlands and Spain and America all involved in imperialistic endeavors through out the world, one way or another. The Kings and Queens and presidents and prime ministers and all were the ones who drove the empires and the bankers and financiers help to fund, the bourgeoisie made out like bandits. Always making sure they got their cut. In return they gave their undying support to these efforts, like all good little toadies. The Grima Wormtongues,  Uriah Heeps, Fred Rutherfords and Frank Burns.

Oliver Stone has done a documentary on his book The Untold Story of The United States. Since I do not have cable and have no intention of ever getting it, I will likely not see it. So I bought the Kindle version of the book to read on my Mac.

I strongly suspect that the Showtime documentary is a bit milder as even they do not want to offend a lot of viewers. But there undoubtedly will be a number of them offended. As this take down of the review of the series by Alessandra Stanley by Ted Rall shows.

There is an old saying that If you are not outraged, you’re no paying attention. I would like to add this if after reading Oliver Stones book you do not want to engage in some serious blood letting on Wall Street, your reading comprehension is in doubt.

The book, like the series begins just before WWI with the election of Woodrow Wilson. Hitting on all the major and some minor events up to the Obama administration. Stone does a particular good job of deflating the blown up reputations of such heroes of the liberal establishment as Wilson, FDR, Truman, JFK, LBJ, Carter, Clinton and Obama. But neither does he leave Harding, Hoover, Eisenhower, Nixon, Ford, Reagan, Bush of W alone. Giving then their do as well.

He [Stone] does an excellent job of showing how American flavor of imperialism was essentially Wall Street imperialism by proxy, initially in South America with the support of dictatorships there and helping to topple any regime that was not completely friendly to Wall Street. Especially the petroleum industry. Either directly or indirectly.

The book does a very good job of showing the thinking that was going on behind the entry into WWI and WWII but also touches on the domestic issues as well. Like the rise in the popularity of the Communist and Socialist parties here. How the Russian revolution and communism shook the capitalist elites to the very core. How this thinking is still prevalent today. Stone points out how any dissident voice against WWI was treated harshly and even lynched. That this was acceptable. And how propaganda was enhanced to make the public back entry into the war.

Even though America entered WWI late and lost far fewer men than Briton, France, Germany and even Russia, it left the country demoralized.

The most acerbic of democracy’s critics was certainly H. L. Mencken, “the sage of Baltimore.” Mencken referred to the common man, mired in religion and other superstitions, as a “boob,” a member of the species “boobus Americanus.” He expressed contempt for the same yeoman farmers whom Jefferson anointed the backbone of democracy, exclaiming “we are asked to venerate this prehensile moron as . . . the citizen par excellence, the foundation-stone of the state! . . . To Hell with him, and bad luck to him.”The Untold Story of The United States

Stone not only goes into how WWI and the Treaty of Versailles were the set up for the rise in Adolf Hitler, but also how he was backed by German and American financiers. That Wall Street began it’s long love affair with fascism and Nazism backing not only Hitler but Mussolini as well and how Wall Street originated an attempted coup on the FDR presidency. Though he thinks FDR instituted some very progressive legislation, Stone also lets the reader know that a lot of his domestic policies did not include non-whites and that his conservative leanings in his second term nearly brought the country back into the depression.

WWII and the FDR presidency was a turning point in American foreign and domestic policy. FDR went to great lengths to win over Stalin and tried to help the Soviet Union with arms shipments, but they were always delayed. The the people of the United States were supportive of Stalin and his plight and the Communist part as popular as ever, having many notable writers, performers and academics as members – the military and right wing would find ways to stall this as much as possible. The Soviet Union had largely escaped the economic disaster of the depression and was heralded as a triumph. Stone in his book makes it clear that the majority of the fighting and military and civilian deaths during the war were done by the Soviet people. That by the time the Allies had landed in France, the war was nearly over and the Soviets were on the march toward Berlin. To the point of almost describing the Allies as also-rans.

But it was Churchill that influenced post war policies in this country the most. He positively hated the USSR, Stalin and Communism. Being a Tory (conservative) in the exact mold as Margret Thatcher. FDR sympathized with Stalin and the USSR and agreed with the partisan of Europe and the permanent partisan of Germany. Since Russia had been invaded numerous times they were most concerned about their own security. FDR’s VP, Henry Wallace was according to Stone one of the last true progressive voices in Washington. A champion of the “Common man” and deplored empires.

Vice President Henry Wallace deplored all empires— whether British, French, German, or American. In May 1942, Wallace repudiated Luce’s nationalistic and, arguably, imperial vision and proposed a progressive, internationalist alternative:

Some have spoken of the “American Century.” I say . . . the century . . . which will come of this war— can and must be the century of the common man. . . . No nation will have the God-given right to exploit other nations . . . there must be neither military nor economic imperialism. . . . International cartels that serve American greed and the German will to power must go. . . . The march of freedom of the past 150 years has been a . . . great revolution of the people, there were the American Revolution of 1775, the French Revolution of 1792, the Latin American revolutions of the Bolivian era, the German Revolution of 1848, and the Russian Revolution of 1917. Each spoke for the common man. . . . Some went to excess. But . . . people groped their way to the light. . . . Modern science, which is a by-product and an essential part of the people’s revolution, has made it . . . possible to see that all of the people of the world get enough to eat. . . . We shall not rest until all the victims under the Nazi yoke are freed. . . . The people’s revolution is on the march. 35

When the bloodiest war in human history finally drew to a close three years later, Americans would choose between these diametrically opposed visions: Luce’s American Century versus Wallace’s Century of the Common Man.

But when the next election came up, Wallace lost out to Harry Truman do to back room manipulations by the democratic committee. A man that Stone refers to as and ex haberdasher and even less qualified to become president than George W. Bush. A man who unlike Wallace, supported the resumption of the empires of England and France after the war. Something that de Gaulle and Churchill wanted most of all.

He brings up how the cold war and the almost fanatical hated of communism was instigated by Churchill and a large group of Wall Streeters.

Perhaps not surprisingly, the most vociferous critics of the Soviet Union shared a similar class background that inclined them to mistrust the Soviets’ motives and intentions and revile anything that smacked of socialism. Harriman, the son of a railroad millionaire, had founded Brown Brothers Harriman. Forrestal had made a fortune on Wall Street. And Stettinius had been chairman of the board of U.S. Steel, the nation’s largest corporation. They would join with other wealthy international bankers, Wall Street and Washington lawyers, and corporate executives, who had also inherited or made their fortunes during the interwar years, to shape postwar U.S. policy. These men included Dean Acheson of Covington and Burling; Robert Lovett of Brown Brothers Harriman; John McCloy of Cravath, Swain and Moore; Allen and John Foster Dulles of Sullivan and Cromwell; oil and banking magnate Nelson Rockefeller; Paul Nitze of Dillon, Read; Ferdinand Eberstadt of Dillon, Read and F. Eberstadt and Co.; and General Motors President Charles E. Wilson, who, in 1944, as the director of the War Production Board, told the Army Ordnance Board that in order to prevent a return to the Depression, the United States needed “a permanent war economy. 107 Although these people also served in the Roosevelt administration, they had exerted much less influence on Roosevelt, who acted largely as his own secretary of state. [Emphasis mine]

From Truman, Eisenhower, JFK and the rest, this view has permeated domestic and foreign policy. Though he does give JFK the benefit of the doubt since he seemed to get religion after the Cuban Missile Crisis, making sure the reader understands just how close we came to nuclear Armageddon. In fact he shows that the US and no other country has used nuclear blackmail to get its way in the world.

The book also goes on to show how LBJ’s policies in Vietnam were the exact opposite of Kennedy’s and implies through example how the majority of anti-communist and anti-USSR hawks came from southern states. Not surprising really since their slave holding plantation economy was this counties landed gentry. Elite wanna-bees that were still resentful of having this free ride removed and still hoping to get it back again.

Stone states in the first paragraph on Carter that he is the best ex-president we ever had but then goes on to show how he went back to the cold war rhetoric and policies that of the past. Derailing détente and botching his presidency by his support of the Sha of Iran.

I would have liked that he [Stone] would have shown more of how domestic and foreign policy was instigated by – however discreetly – Wall Street. And how the top 20% – America’s bourgeoisie – has always supported Wall Street and this counties imperialistic policies. Since they were one of the greater benefactors of it, second only to the elites. That their hatred of communism and socialism was nearly as great since they would lose their cushy life styles as well. Is it no wonder then that we whole heartedly supported the White Russians in their civil war against the Soviets ? Or these bourgeoisie were pretty OK with fascism as well ? That Hitler was at one point Man of the year on Times cover ?

All in all I think the book is a good read and exposes a lot of the myths of both the right and left – those that dare call themselves liberal.

America…Land of the hustler and home of the con.

6:08 pm in Uncategorized by cmaukonen

Market Street, Youngstown, Ohio

I was in group therapy for quite a few years. Not some nicey happy joy joy mind you, this was a therapy based on unvarnished, in your face, harsh reality. It had to be. For this particular center dealt with late stage substance abuse, alcoholism and eating disorders. They ripped the rose colored glasses off of your face, threw them on the floor and proceeded to stomp them in to bits. And if you continued to come in with a new pair, you had the same thing done.

This is a post on a review done in David Masciotra in Truth Out that is in exactly the same vein. A review of the book or rather, three books, written by historian Morris Berman – The Twilight of American Culture, Dark Ages America and now finally Why America Failed. David does not pull any punches in this review, in which he adds his own experiences and opinions on the subject.

He likes to use from the beginning, the analogy of the rise and eventual fall of Elvis. From the King to a drug addicted fat has been with bizarre behavior. One can be tempted to compare the rise and fall of this country with that of Rome, and many have. Except that Rome rose with high ideals and culture that this country never has had.

David writes how:

Berman was living in the brain of the beast – Washington, DC – and teaching sociology at the Catholic University of America when he began keeping a file of newspaper clippings, academic studies, and handmade notes chronicling disturbing developments of ignorance, cruelty and lunacy in American life.

. . . . . .

After several years of collecting these obituaries of American civilization, and recognizing that the file would grow larger on a daily basis, he decided to write a book. The Twilight of American Culture was the result, and it became a critical and commercial success. Berman wrote that “collapse involves a progressive weakening of a society’s political and administrative center.” It is a “recurrent feature of human societies,” and there was no reason to believe, despite the dogmatic protests of American exceptionalists and Reaganites – what Cornel West calls “cheap American optimism” – that America’s tower would not tumble. Based on his own studies of civilizational decline, Berman identified four factors present during a collapse:

1. Accelerating social and economic inequality – check.
2. Declining marginal returns with regard to investment in organizational solutions to socioeconomic problems or, in other words, the political system becomes dysfunctional – check.
3. Rapidly dropping levels of literacy, critical understanding and general intellectual awareness – check.
4. Spiritual death, what Berman calls the “emptying out of cultural content and the freezing of it in formulas, kitsch” – check.

He then goes on to list some of the particulars, like how the high school drop out rate has risen to 30%, how corporations have maintained tyrannical rule of America, how colleges and universities have been modeled on a business like culture and are no longer places of higher learning for culture’s sake, but more like training grounds for the next generation of con artists, hustlers and racketeers.

How Communications Professor Robert McChesney, in a series of books, undresses the mainstream media as nothing more than a shallow shill for its parent companies and advertisers.”
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The BoA Perfect Storm. Where the CEOs and Counterparties get the life boats and the depositors drown.

6:04 pm in Uncategorized by cmaukonen

David Dayen did a good blog on how BoA moved it’s risky derivatives to a subsidiary with deposits insured by the FDIC. Now here is a break down of the how and why of it by Bill Back of the S&L investigations fame. I am going to jump around here a bit and give you first some background info on BoA. It’s not your grandfathers BoA.

B of A is really “Nations Bank” (formerly named NCNB).  When Nations Bank acquired B of A (the San Francisco based bank), the North Carolina management took complete control.  The North Carolina management decided that “Bank of America” was the better brand name, so it adopted that name.  The key point to understand is that Nations/NCNB was created through a large series of aggressive mergers…..

Now here is the nitty gritty of it all.

During this crisis, Ken Lewis went on a buying spree designed to allow him to brag that his was not simply bigger, but the biggest.  Bank of America’s holding company – BAC – became the acquirer of last resort.  Lewis began his war on BAC’s shareholders by ordering an artillery salvo on BAC’s own position.  What better way was there to destroy shareholder value than purchasing the most notorious lender in the world – Countrywide.  Countrywide was in the midst of a death spiral.  The FDIC would soon have been forced to pay an acquirer tens of billions of dollars to induce it to take on Countrywide’s nearly limitless contingent liabilities and toxic assets.  Even an FDIC-assisted acquisition would have been a grave mistake.  Acquiring thousands of Countrywide employees whose primary mission was to make fraudulent and toxic loans was an inelegant form of financial suicide.  It also revealed the negligible value Lewis placed on ethics and reputation.

But Lewis did not wait to acquire Countrywide with FDIC assistance.  He feared that a rival would acquire it first and win the CEO bragging contest about who had the biggest, baddest bank.  His acquisition of Countrywide destroyed hundreds of billions of dollars of shareholder value and led to massive foreclosure fraud by what were now B of A employees.

What this all means is that BoA’s problems began with it’s acquisition of Countrywide whose financial deals or mis-dealings and fraud were much worse than what anyone was lead to believe at the time. And that the acquisition was driven by ego as much as greed.

But there are two truly scary parts of the story of B of A’s acquisition of Countrywide that have received far too little attention.  B of A claims that it conducted extensive due diligence before acquiring Countrywide and discovered only minor problems.  If that claim is true, then B of A has been doomed for years regardless of whether it acquired Countrywide.  The proposed acquisition of Countrywide was huge and exceptionally controversial even within B of A.  Countrywide was notorious for its fraudulent loans. There were numerous lawsuits and former employees explaining how these frauds worked. [emphasis mine]

………..

The acquisition of Countrywide did not have to be consummated exceptionally quickly.  Indeed, the deal had an “out” that allowed B of A to back out of the deal if conditions changed in an adverse manner (which they obviously did).  If B of A employees conducted extensive due diligence of Countrywide and could not discover its obvious, endemic frauds, abuses, and subverted systems then they are incompetent.  Indeed, that word is too bloodless a term to describe how worthless the due diligence team would have had to have been.  Given the many acquisitions the due diligence team vetted, B of A would have been doomed because it would have routinely been taken to the cleaners in those earlier deals.

That scenario, the one B of A presents, is not credible.  It is far more likely that B of A’s senior management made it clear to the head of the due diligence review that the deal was going to be done and that his or her report should support that conclusion.  This alternative explanation fits well with B of A’s actual decision-making.  Countrywide’s (and B of A’s) reported financial condition fell sharply after the deal was signed.  Lewis certainly knew that B of A’s actual financial condition was much worse than its reported financial condition and had every reason to believe that this difference would be even worse at Countrywide given its reputation for making fraudulent loans.  B of A could have exercised its option to withdraw from the deal and saved vast amounts of money.  Lewis, however, refused to do so.  CEOs do not care only about money.  Ego is a powerful driver of conduct, and CEOs can be obsessed with status, hierarchy, and power.  Of course, Lewis knew he could walk away wealthy after becoming a engine of mass destruction of B of A shareholder value, so he could indulge his ego in a manner common to adolescent males.
In other words Lewis and the top management knew all along that they were getting crap but did it anyway for some big ego strokes. Now enter Merrill Lynch.
Merrill Lynch is the quintessential example of why it was common for the investment banks to hold in portfolio large amounts of collateralized debt obligations (CDOs).  Some observers have jumped to the naïve assumption that this indicates that the senior managers thought the CDOs were safe investments.  The “recipe” for an investor maximizing reported income differs only slightly from the recipe for lenders.

1. Grow rapidly by

2 .Holding poor quality assets that provide a premium nominal yield while

3. Employing extreme leverage, and

4. Providing only grossly inadequate allowances for future losses on the poor quality assets

Investment banks that followed this recipe (and most large U.S. investment banks did), were guaranteed to report record (albeit fictional) short-term income.  That income was certain to produce extreme compensation for the controlling officers.  The strategy was also certain to produce extensive losses in the longer term – unless the investment bank could sell its losing position to another entity that would then bear the loss.

The optimal means of committing this form of accounting control fraud was with the AAA-rated top tranche of CDOs.  Investment banks frequently purport to base compensation on risk-adjusted return.  If they really did so investment bankers would receive far less compensation.  The art, of course, is to vastly understate the risk one is taking and attribute short-term reported gains to the officer’s brilliance in achieving supra-normal returns that are not attributable to increased risk (“alpha”).  Some of the authors of Guaranteed to Fail call this process manufacturing “fake alpha.

…………….

Merrill Lynch was known for the particularly large CDO positions it retained in portfolio.  These CDO positions doomed Merrill Lynch.  B of A knew that Merrill Lynch had tremendous losses in its derivatives positions when it chose to acquire Merrill Lynch.

Given this context, only the Fed, and BAC (Bank of America’s holding company), could favor the derivatives deal

Lewis and his successor, Brian Moynihan, have destroyed nearly one-half trillion dollars in BAC shareholder value.  (See my prior post on the “Divine Right of Bank Profits…”)  BAC continues to deteriorate and the credit rating agencies have been downgrading it because of its bad assets, particularly its derivatives.  BAC’s answer is to “transfer” the bad derivatives to the insured bank – transforming (ala Ireland) a private debt into a public debt.

So what we have here is a case where BoA knows that sooner or later they will go belly up and so they are making damn sure the investors will get the life boats first and damn the depositors.   With BoA in this situation, it kind of makes you wonder about the others. Like the saying goes. “Like picking up a hay stack and having three needles drop at your feet, it’s a pretty safe bet that the thing is stiff with needles.”

Isn’t it any wonder that these banks are going ape shit over people closing their accounts ? The same accounts they are planning to use to cover their asses.