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Obama Turns to Economy, Iraq on First Day on the Job
By JAKE TAPPER
Jan. 21, 2009
On his first full day in office President Obama froze the salaries of his senior staff and imposed tough new rules for lobbying and for releasing public information.
President Obama plans to put a freeze on White House salaries over $100K.
The president will move quickly to close Guantanamo prison, the controversial detainee base in Cuba started by the Bush administration. ABC News has learned Obama sent a messenger to Capitol Hill to brief members of Congress on orders he plans to sign tomorrow closing the base within a year.
Obama woke up in the White House for the first time and began a whirlwind day, having already set in motion Tuesday major policy changes for the new administration.
On his agenda for Day One, Obama summoned his economic advisers to hammer out details of an economic bailout and called in his top generals to give them new marching orders.
His staff was already putting into effect executive orders to usher in the Obama presidency, as well as his request that military hearings for terror suspects at the Guantanamo prison be suspended for 120 days.
But at a staff meeting to swear in top aides, Obama dropped a bombshell. He was freezing their salaries.
" During this period of economic emergency, families are tightening their belts, and so should Washington," Obama told the assembled staff.
He thanked the staff for accepting the restriction and said, "It's a mark of your commitment to public service."
The president said the salaries of everyone on the White House staff that exceeded $100,000 would be frozen. If the Obama White House pay structure is similar to that of the Bush White House, more than 100 staffers will have six-figure salaries.
Obama went on to spell out restrictions on lobbying after employees leave the White House and vowed that the federal government would be more willing to make information public.
The president said he was issuing the "rules of the road of my administration" to "make government more trustworthy in the eyes of the American people."
"There is too much secrecy in this city," he said. "That era is now over... Information will not be withheld just because I say so."
The adrenaline of taking over the Oval Office must have kicked in, because despite Tuesday's grueling pageant of ceremonies in the numbing cold, and dancing at 10 inaugural balls until 12:55 a.m., the lights snapped on in the residential quarters of the White House before dawn today.
Obama entered the Oval Office for his first day of work at 8:35 a.m. and got to spend 10 minutes alone before the demands of the nation began to demand his attention, White House spokesman Robert Gibbs said. During that time, he read a note left to him by former president George Bush that was addressed, "To #44, From #43." By tradition, notes from the departing president to the incoming president remain secret.
Then the work began. At 8:45 a.m. Chief of Staff Rahm Emanuel entered to discuss the day's busy list of events, and by 9:10 a.m., first lady Michelle Obama joined her husband in the Oval Office.
Obama dove into the thorny Middle East right away, placing phone calls to Israeli Prime Minister Ehud Olmrt, Palestinian President Mahmoud Abbas, Jordan's King Abdullah, and Egyptian President Hosni Mubarak.
Also demanding his immediate attention are Senate confirmation proceedings today for two key Cabinet posts, Secretary of State-designate Hillary Clinton and Treasury Secretary-designate Timothy Geithner.
In between, Obama attended a National Prayer Service at the National Cathedral, sharing a pew with Vice President Joe Biden and his wife, along with former President Bill Clinton and future secretary of state Hillary Clinton.
During the afternoon, Obama hosted an open house of his new home, telling visitors to roam around, just don't break anything.
Even during the balls on Tuesday night, Obama was plotting his first steps today.
"Starting tomorrow, we'll be making a series of announcements both on domestic and foreign policy that I think will be critical for us to act swiftly on," he told "Good Morning America's" Robin Roberts at the Neighborhood Ball. "We're not going to be able to delay."
As Obama charged through the long and emotional day Tuesday -- from attending a private church service in the morning to delivering his inaugural address to dancing well past midnight -- much of his staff got right to work.
Just hours after Obama took the oath of office, Emanuel sent a memorandum to federal agencies and departments, calling for them to halt pending regulations until the Obama administration reviewed them.
The new president's biggest priority will be reviving the faltering economy, and that includes hammering out with Congress the details of a massive $825 billion bailout.
"They want to have a complete overhaul of this financial-rescue package within days," said ABC News' chief Washington correspondent George Stephanopoulos.
Obama will meet with senior economic advisers in the afternoon to discuss the stimulus package as well as the $350 billion in Troubled Asset Relief Funds that Congress approved at his request last week to stabilize the financial markets.
To underline the urgency of devising an economic plan, the stock market took its biggest ever inauguration day plunge Tuesday, with the Dow Jones industrial average dropping 330 points, and today's headlines warned of a worsening bank crisis.
Iraq is also high on the Day One agenda. In the late afternoon, Obama will meet with his top generals, including Defense Secretary Robert Gates, Chairman of the Joint Chiefs of Staff Adm. Mike Mullen, National Security Adviser Gen. Jim Jones (Ret.) and Gen. David Petraeus, who heads the U.S. Central Command. Joining the meeting via teleconference from Iraq will be U.S. Ambassador to Iraq Ryan Crocker and Gen. Ray Odierno, the top ranking U.S. general in Iraq.
It's not clear whether Clinton will be confirmed as secretary of state in time to sit in on the session.
Obama will be briefed on the status of military operations, and he will command the team to begin making plans to withdraw all U.S. combat troops from Iraq within 16 months.
http://abcnews.go.com/Politics/President44/story?id=6693901&page=1
Wednesday, January 21, 2009
On the Money Trail: Despite Crisis, Wall Street Gets Red Carpet from Obama
Top Executives from Citigroup and UBS Among Those Spotted at Elite Parties
By BRIAN ROSS. JUSTIN ROOD, and AVNI PATEL
Jan. 20, 2009
Wall Street firms may be in crisis, but some of their executives have been enjoying four-star treatment from Barack Obama's inauguration team.
ABC News spotted senior Citigroup executive Louis Susman entering an elite party Sunday night for top fundraisers to Obama's inauguration fund and Obama officials, including incoming White House chief of staff Rahm Emanuel. Citigroup lost $8 billion last quarter, and has taken $45 billion in taxpayer bailout funds. Susman raised $300,000 for Obama's inaugural committee.
"We're talking about an industry that's right in the middle of a bailout program," said Craig Holman of the Washington, D.C. watchdog group Public Citizen. "They want a seat at the table with the Obama administration."
The party, at the swanky Park at Fourteenth restaurant and club in downtown Washington, D.C., wasn't mentioned on the inauguration committee's public Web site. Reporters and cameras were not allowed inside.
Watch live coverage of the Inauguration all day Tuesday beginning with "Good Morning America" at 7 a.m. ET and go to the Inauguration Guide for all of ABC News' coverage details.
Susman could not be reached for comment Monday; he declined an earlier request to appear on camera. A Citigroup spokesperson said the bank was not participating in any inauguration-related events, and any executives present were there in a personal capacity. Because he raised so much money for the inauguration, Obama's committee would have given Susman some other nice perks: access to a VIP seating area for its Sunday "We Are One" superstar concert at the Lincoln Memorial, a comfortable table inside a high-end restaurant from which to watch the inaugural parade Tuesday, and more.
A spokesman for Obama's Presidential Inaugural Committee said Monday he saw no conflict in honoring Susman with special access and private events, because the group made no secret of Susman's generosity. "We believe this information should be out there," said Brent Colburn, "so the air is clear on who is supporting the efforts of the Presidential Inaugural Committee. . . so we can be clean and open."
Critics Say This is a Business Relationship, Not Just a Party
Robert Wolf, a top executive for Swiss banking giant UBS , also came to the Sunday party at Park at Fourteenth. Federal prosecutors say that for years UBS helped super-wealthy Americans cheat the IRS by hiding billions of dollars outside the government's reach. Wolf and his division, UBS Americas, was not alleged to have been a part of any wrongdoing.
UBS has said its internal review found evidence of "a limited number of cases" of tax fraud. It says it has ended the practices which have gotten it into trouble. Attempts to reach Wolf for comment were unsuccessful.
"There's no doubt, some of the people who are helping pay for some of the Inaugural activities really are just excited about the new administration and perhaps just want to party," said Public Citizen's Holman. But when executives like Susman raise $300,000 to give Obama's inaugural fund, "This is a business relationship," Holman said. "This isn't just having a good time and partying."
http://abcnews.go.com/Blotter/MoneyTrail/Story?id=6681555&page=2
By BRIAN ROSS. JUSTIN ROOD, and AVNI PATEL
Jan. 20, 2009
Wall Street firms may be in crisis, but some of their executives have been enjoying four-star treatment from Barack Obama's inauguration team.
ABC News spotted senior Citigroup executive Louis Susman entering an elite party Sunday night for top fundraisers to Obama's inauguration fund and Obama officials, including incoming White House chief of staff Rahm Emanuel. Citigroup lost $8 billion last quarter, and has taken $45 billion in taxpayer bailout funds. Susman raised $300,000 for Obama's inaugural committee.
"We're talking about an industry that's right in the middle of a bailout program," said Craig Holman of the Washington, D.C. watchdog group Public Citizen. "They want a seat at the table with the Obama administration."
The party, at the swanky Park at Fourteenth restaurant and club in downtown Washington, D.C., wasn't mentioned on the inauguration committee's public Web site. Reporters and cameras were not allowed inside.
Watch live coverage of the Inauguration all day Tuesday beginning with "Good Morning America" at 7 a.m. ET and go to the Inauguration Guide for all of ABC News' coverage details.
Susman could not be reached for comment Monday; he declined an earlier request to appear on camera. A Citigroup spokesperson said the bank was not participating in any inauguration-related events, and any executives present were there in a personal capacity. Because he raised so much money for the inauguration, Obama's committee would have given Susman some other nice perks: access to a VIP seating area for its Sunday "We Are One" superstar concert at the Lincoln Memorial, a comfortable table inside a high-end restaurant from which to watch the inaugural parade Tuesday, and more.
A spokesman for Obama's Presidential Inaugural Committee said Monday he saw no conflict in honoring Susman with special access and private events, because the group made no secret of Susman's generosity. "We believe this information should be out there," said Brent Colburn, "so the air is clear on who is supporting the efforts of the Presidential Inaugural Committee. . . so we can be clean and open."
Critics Say This is a Business Relationship, Not Just a Party
Robert Wolf, a top executive for Swiss banking giant UBS , also came to the Sunday party at Park at Fourteenth. Federal prosecutors say that for years UBS helped super-wealthy Americans cheat the IRS by hiding billions of dollars outside the government's reach. Wolf and his division, UBS Americas, was not alleged to have been a part of any wrongdoing.
UBS has said its internal review found evidence of "a limited number of cases" of tax fraud. It says it has ended the practices which have gotten it into trouble. Attempts to reach Wolf for comment were unsuccessful.
"There's no doubt, some of the people who are helping pay for some of the Inaugural activities really are just excited about the new administration and perhaps just want to party," said Public Citizen's Holman. But when executives like Susman raise $300,000 to give Obama's inaugural fund, "This is a business relationship," Holman said. "This isn't just having a good time and partying."
http://abcnews.go.com/Blotter/MoneyTrail/Story?id=6681555&page=2
Monday, January 19, 2009
A New Menace to the Economy: 'Zombie' Debtors
Call them "zombie" companies. Many more has-been companies will be feeding off taxpayers, investors, and workers—sapping the lifeblood of healthier rivals
By Peter Coy
January 6, 2009
Henrik Drescher
Zombies. Seen one lately? If not, you may soon, because they are about to menace the U.S. economy. In financial lingo, zombies are debtors that have little hope of recovery but manage to avoid being wiped out thanks to support from their lenders or the government. Zombies suck life out of an economy by consuming tax money, capital, and labor that would be better deployed in growing companies and sectors. Meanwhile, by slashing prices to generate sales, zombie companies can drag healthier rivals into insolvency.
Sometime in the past few months, zombies went from being a latent risk to a genuine threat—one that is likely to increase in the months ahead. The Bush Administration has already ladled out billions of dollars in assistance to weak banks and automakers. As the economy goes into what may become the worst economic downturn since the Great Depression, the Obama Administration will come under even more pressure to prop up sick financial and nonfinancial companies to save jobs. The debate will center on wounded giants such as Citigroup (C), General Motors (GM), and insurer American International Group (AIG). Other sectors with their hands out include steel, airlines, retail—and homeowners, who may be the scariest zombies of all.
Hard choices lie ahead, so it's important to have a sturdy framework for making them. The right approach, say those who have studied the matter, is to prop up a company if its core business is healthy but its financing sources have temporarily shut down. Otherwise, let it go. Postponing the decision by supporting sick and healthy alike will only make the eventual pain greater and reduce growth. "If an institution is poorly managed and does not have a reasonable plan for working out its problems, they ought to go ahead and shoot it," says William M. Isaac, a former Federal Deposit Insurance Corp. chairman who now heads bank consultancy Secura Group.
Japan was plagued by zombies during its lost decade of slow growth in the 1990s. Weak Japanese borrowers used the proceeds from new loans to pay interest on old ones—a process called "evergreening" that kept banks from having to acknowledge losses. In the '80s, the U.S. airline industry was pulled down by Eastern Airlines, which was allowed to keep flying (and charging low fares) while in bankruptcy court. That doesn't help anyone. "At some point, you need to wake up and accept the fact that, 'Oops, that's not going to work,' " says Stéphane Téral, an analyst with Infonetics Research who tracked the demise of scads of telecom carriers in the early 2000s.
Protecting zombies can stunt long-term growth by blocking what economist Joseph Schumpeter called "creative destruction"—the painful but necessary reallocation of resources from declining companies and sectors to rising ones. That turns out to be crucial. In the U.S. manufacturing and retail sectors, a huge share of productivity gains have come from such reallocation, says economist Steven J. Davis of the University of Chicago Booth School of Business. Case in point: the growth of hyperefficient Wal-Mart (WMT) at the expense of mom-and-pop shops, which were allowed to die. The absence of such reallocation could slow productivity growth.
"LEMON SOCIALISM"
The problem with the current bailout is that the government may be giving money to companies that don't have a long-term future: zombies. On paper, for example, the Treasury Dept. says it invests Troubled Asset Relief Program (TARP) money only in "healthy banks—banks that are considered viable without government investment" because "they are best positioned to increase the flow of credit in their communities." That's the right idea. In practice, though, the criteria aren't so stringent.
Banks like Citigroup still aren't strong enough to lend. "The bailout model is socialism," says R. Christopher Whalen, senior vice-president for consultancy Institutional Risk Analytics. He advocates selling failed institutions in pieces, as was done to resolve the savings and loan crisis in the late '80s and early '90s. In fact, Washington may be moving toward something like that with Citigroup.
When a big employer runs into trouble, it's tempting to keep it going at any cost. Economists call this "lemon socialism"—the investment of public money in the worst companies rather than the best. The impulse is misguided, says Yale University economics professor Eduardo M. Engel. "You don't want to protect the jobs," he says. "What you want to protect is workers' income during the transition from one job to another."
There's already a powerful and underused weapon against zombies: bankruptcy law. Bankruptcy courts liquidate the weakest companies while allowing the potentially viable ones to extinguish enough of their debts so they can make money again. Even GM, which is staggering now, could emerge as "a new, revitalized company" if it goes through a cleansing bankruptcy reorganization that changes its obligations to dealers, workers, and retirees, says economics professor Edward W. Hill of Cleveland State University.
Right now, the biggest zombie problem may lie in housing. Millions of homeowners are juggling mortgages they can't afford to pay alongside other debts: credit cards, auto loans, and so forth. In struggling to keep their heads above water, they're slashing consumer spending, which is harming economic growth. Until 2005, bankruptcy filings would have lowered their consumer debts, freeing up more money for mortgages. But a law passed that year has exacerbated the zombie problem by making it much harder to discharge bad debts. Halfhearted modifications of loan terms haven't helped much. According to a new study by Alan M. White, a Valparaiso University School of Law professor, only one-third of modifications of subprime and near-subprime mortgages in November 2008 involved reductions in the monthly payment, often because late fees got tacked onto principal. As a result, he writes, "many modifications are temporary." That's the zombie condition.
Looking ahead, economists are trying to devise ways to make the financial system more resilient and less likely to breed zombies. A group of 16 top financial economists calling itself the Squam Lake Working Group on Financial Regulation is quietly working on a plan it hopes will get the attention of regulators in Washington and other capitals. Kenneth R. French of Dartmouth College, who helped organize the first meeting at New Hampshire's Squam Lake in November, says one goal is to invent a way to shut down or restructure failing institutions with a minimum of collateral damage to other firms and the general economy.
Recessions cause great harm, but they can also do some good if they force a needed reallocation of resources toward the most promising sectors. "If we can ride this wave the right way, this is going to be great for the future of the American economy," says Massachusetts Institute of Technology economics professor Daron Acemoglu. Right. Just as long as the zombies don't get in the way.
http://www.businessweek.com/magazine/content/09_04/b4117024316675_page_2.htm
What Recession? The $170 Million Dollar Inauguration
Obama's Inauguration Has Been Financed Partially by Bailed-Out Wall Street Executives
By SCOTT MAYEROWITZ
ABC NEWS Business Unit
Jan. 19, 2009
The country is in the middle of the worst economic downturn since the Great Depression, which isn't stopping rich donors and the government from spending $170 million, or more, on the inauguration of Barack Obama .
Employees at banks, brokerages and Wall Street firms donated $7 million Barack Obama's inauguration.
(ABC News Photo Illustration)
The actual swearing-in ceremony will cost $1.24 million, according to Carole Florman, spokeswoman for the Joint Congressional Committee on Inaugural Ceremonies.
It's the security, parties and countless Porta-a-Potty rentals that really run up the bill.
The federal government estimates that it will spend roughly $49 million on the inaugural weekend. Washington, D.C., Virginia and Maryland have requested another $75 million from the federal government to help pay for their share of police, fire and medical services.
And then there is the party bill.
Nobel Prize Winner's Recession Solution
"We have a budget of roughly $45 million, maybe a little bit more," said Linda Douglas, spokeswoman for the inaugural committee.
That's more than the $42.3 million in private funds spent by President Bush's committee in 2005 or the $33 million spent for Bill Clinton's first inaugural in 1993.
Douglas said that this will be the "most open and accessible inauguration in history," with members of the general public able to participate on a greater scale than ever before.
"The money is going toward providing events which we hope are going to connect people, make them feel like we are all in this together and reinforce the notion that when we pull together, we're stronger," Douglas said. "And we need to pull together to face the challenges that are before us today."
Among the expenses: a Bruce Springsteen concert, the parade, large-screen TV rentals for all-free viewing on the national Mall, $700,000 to the Smithsonian Institution to stay open and, of course, the balls, including three that are being pitched as free or low cost for the public.
But there are plenty of rich donors willing to pick up the tab.
"They are not the $20 and $50 donors who helped propel Obama through Election Day," said Massie Ritsch, communications director for the Center for Responsive Politics. "These are people giving mostly $50,000 apiece. They tend to be corporate executives, celebrities, the elite of the elite."
http://abcnews.go.com/Business/Inauguration/story?id=6665946&page=1&nwltr=WN_mostviewedstories_hed4
Sunday, January 18, 2009
My Spotted Ass & Friend
Here is a very bad 15 second video of my new spotted ass, "Paco," and his mini-horse friend "Rascal." Two minutes before I ran outside with the cam to take the vid, they were running around like crazy playing with eachother. It is very hard to get this on film as everytime I come out and they see me they stop what they are doing thinking I have treats for them, which most of the time I do, but am learning it is not a good thing to give them treats everytime for then they will get spoiled and come to expect them and maybe cop an attitude if they dont get them. I like to keep them in suspense when it comes to when treat-time is. Sometimes I do and sometimes I dont give them.
As you watch (and listen) to the vid, dont mind my asthmatic breathing nor my deep throated "evil" laugh! I am laughing at Paco coming at me so "lickity-split" as he does, as if he were going to mow me down. I am sure he thought I had treats for him and was probably wondering what was that silly black-box looking thing I had in my hands holding up to him instead of carrots. He did stop when he got to me though, but I thought for a moment that he was going to eat the camera! lol
More and better pics of the new fur-kids coming soon.
As you watch (and listen) to the vid, dont mind my asthmatic breathing nor my deep throated "evil" laugh! I am laughing at Paco coming at me so "lickity-split" as he does, as if he were going to mow me down. I am sure he thought I had treats for him and was probably wondering what was that silly black-box looking thing I had in my hands holding up to him instead of carrots. He did stop when he got to me though, but I thought for a moment that he was going to eat the camera! lol
More and better pics of the new fur-kids coming soon.
Tuesday, December 16, 2008
"Who Could Have Known?"
Hot News frum Big-Mouth Broad Casting; Dec. 16th, 2008
Frum my new love at Huffington Post;
------------
See if this sounds familiar:
An ambitious and risky undertaking carried out with hubris, and featuring the weeding out of anyone who raises alarm bells, little-to-no transparency, an oversight system in which no central authority is accountable, and the deliberate manufacturing of ambiguity and complexity so that if -- when -- it all falls to pieces, the excuse "who could have known?" can be used....
Is it Iraq? Fannie Mae? Citigroup? Bernie Madoff?
The correct answer is: all of the above.
When you look at the elements that were crucial to the creation of each of these debacles, it's amazing how much in common they all have. And not just in how they began but in how they ended: with those responsible being amazed at what happened, because...who could have known? Well, to paraphrase James Inhofe, I'm amazed at the amazement.
In fact, when historians look for a name that sums up the Bush II years, they could do worse than calling them The "Who Could Have Known?" Era.
Each of the disasters listed above was entirely predictable. And, indeed, was predicted. But those who rang the alarm bells were aggressively ignored, which is why it's important that we not let those responsible get away with the "Who Could Have Known?" excuse.
Let's start with Iraq -- specifically the reconstruction of Iraq. This weekend the New York Times got its hands on the unpublished 513-page federal history of the reconstruction. It's not pretty. As the Times puts it: it was "an effort crippled before the invasion by Pentagon planners who were hostile to the idea of rebuilding a foreign country, and then molded into a $100 billion failure by bureaucratic turf wars, spiraling violence and ignorance of the basic elements of Iraqi society and infrastructure." As a result, almost six years and $117 billion later, many essential services are only now reaching pre-war levels.
The report quotes Colin Powell on how the Pentagon, to cover up its failures, "kept inventing numbers of Iraqi security forces [that had reached readiness] -- the number would jump 20,000 a week! 'We now have 80,000, we now have 100,000, we now have 120,000.' "
Hmm, making up numbers to realize a short-term gain, but which end up making the inevitable long-term reckoning much worse? Sounds a lot like what was happening at Citigroup at around the same time.
In late 2002, Charles Prince was put in charge of the company's corporate and investment bank. The banking giant was already knee deep in toxic paper and aggressively looking the other way.
He was so successful at averting his eyes that when, five years later, as Wall Street began to feel the initial shocks of the mortgage meltdown, he was told that the bank owned $43 billion in mortgage-related assets -- it was the first he'd heard of it. Isn't that something he should have known? Or did he prefer not knowing?
Prince had plenty of help ignoring the obvious, particularly from Robert Rubin. According to a former Citigroup executive quoted in the long New York Times analysis of Citi's downfall, despite ascending to the top of the Citi food chain, Prince "didn't know a C.D.O. from a grocery list, so he looked for someone for advice and support. That person was Rubin."
When it all came tumbling down, both Rubin and Prince portrayed themselves as helpless victims of circumstance, because...Who Could Have Known?
"I've thought a lot about that," Rubin said when asked if he made mistakes at Citigroup. "I honestly don't know. In hindsight, there are a lot of things we'd do differently. But in the context of the facts as I knew them and my role, I'm inclined to think probably not."
What he means, of course, is the facts as he chose to know them.
Prince's head is even higher in the clouds: "Anything," he said, "based on human endeavor and certainly any business that involves risk-taking, you're going to have problems from time to time."
Sounds like he's reading from the same damage control playbook as former Fannie Mae CEO Franklin Raines. According to Raines, he can't be blamed for what happened at Fannie Mae because mortgage stuff is so, well, complicated. In fact, he can't even understand his own mortgage: "I know I can't and I've tried," Raines told a House committee last week. "To this day, I don't know what it said... It's impossible for the average person to understand" mortgage terms such as negative amortization. In other words, Who Could Have Known?
Committee chair Henry Waxman wasn't buying it: "These documents make clear that Fannie Mae and Freddie Mac knew what they were doing. Their own risk managers raised warning after warning about the dangers of investing heavily in the subprime and alternative mortgage markets."
Ignoring warning after warning is an essential element of the "Who Could Have Known?" excuse, as are rewriting history and shamelessly disregarding the foresight shown by those who sounded the alarm bells.
We're seeing the same ingredients in the Madoff affair. "We have worked with Madoff for nearly 20 years," said Jeffrey Tucker, a former federal regulator and the head of an investment firm facing losses of $7.5 billion. "We had no indication that we...were the victims of such a highly sophisticated, massive fraudulent scheme." It's a sentiment echoed by Arthur Levitt, the former chairman of the Securities and Exchange Commission: "I've known [Madoff] for nearly 35 years, and I'm absolutely astonished."
Who Could Have Known?
Well, Harry Markopoulos, for one. In 1999, after researching Madoff's methods, Markopolos wrote a letter to the SEC saying, "Madoff Securities is the world's largest Ponzi Scheme." He pursued his claims with the feds for the next nine years, with little result.
Jim Vos, another investment adviser who had examined Madoff's firm, says: "There's no smoking gun, but if you added it all up you wonder why people either did not get it or chose to ignore the red flags."
The answer comes from Vos's cohort Jake Walthour Jr., who told HuffPost blogger Vicky Ward: "In a bull market no one bothers to ask how the returns are met, they just like the returns."
Hasn't the "Who Could Have Known?" excuse been exposed as a sham enough times to render it obsolete?
Apparently not. Here come the Bush Legacy Project's revisionists expecting us to believe that everyone thought Saddam had WMD -- even though many were on record saying he didn't.
In the wake of 9/11, Condi Rice assured us nobody "could have predicted" that someone "would try to use an airplane as a missile." Except, of course, the government report that in 1999 said, "Suicide bomber(s) belonging to al Qaeda's Martyrdom Battalion could crash-land an aircraft packed with high explosives (C-4 and semtex) into the Pentagon, the headquarters of the Central Intelligence Agency (CIA), or the White House."
After Katrina, the White House read from the "Who Could Have Known?" hymnal: No one could have predicted that the storm would be a Category 5, and that this could result in the levees being breached. We now know, of course, that plenty of people knew that the levees could be breached and said so before the storm hit.
Then there is Alan Greenspan, who, looking back in October of this year on the makings of the financial crisis he helped create (I mean, that just happened to come out of nowhere) delivered this "Who Could Have Known?" classic: "If all those extraordinarily capable people were unable to foresee the development of this critical problem...we have to ask ourselves: Why is that? And the answer is that we're not smart enough as people. We just cannot see events that far in advance."
The only problem is, many people did see events that far in advance.
Unlike Greenspan, I don't believe the problem is that we are "not smart enough as people." As we've seen time after time, smart enough people are all too willing to ignore facts they don't like. Or, even worse, they construct oversight systems designed to be ineffective -- and unable to provide to those in power information they don't really want to know.
Much has been made of the smartness of Obama's new team. But I'm hoping that their defining characteristic won't be their IQs but their willingness to confront reality and take responsibility for their decisions.
It's time to say goodbye to the "Who Could Have Known?" era. It's time to know things again. And to know that you know them.
HuffPost Action Alert:
For Small Business Owners: Please read Tim Berry's latest post and take this HuffPost survey about how the recession is affecting your business.
For Everyone: Check out Jesse Kornbluth's terrific post on what we can all do the week after Christmas to "jump start the Obama years" by helping those who are struggling during these hard economic times.
http://www.huffingtonpost.com/arianna-huffington/will-the-madoff-debacle-f_b_151219.html
Frum my new love at Huffington Post;
------------
See if this sounds familiar:
An ambitious and risky undertaking carried out with hubris, and featuring the weeding out of anyone who raises alarm bells, little-to-no transparency, an oversight system in which no central authority is accountable, and the deliberate manufacturing of ambiguity and complexity so that if -- when -- it all falls to pieces, the excuse "who could have known?" can be used....
Is it Iraq? Fannie Mae? Citigroup? Bernie Madoff?
The correct answer is: all of the above.
When you look at the elements that were crucial to the creation of each of these debacles, it's amazing how much in common they all have. And not just in how they began but in how they ended: with those responsible being amazed at what happened, because...who could have known? Well, to paraphrase James Inhofe, I'm amazed at the amazement.
In fact, when historians look for a name that sums up the Bush II years, they could do worse than calling them The "Who Could Have Known?" Era.
Each of the disasters listed above was entirely predictable. And, indeed, was predicted. But those who rang the alarm bells were aggressively ignored, which is why it's important that we not let those responsible get away with the "Who Could Have Known?" excuse.
Let's start with Iraq -- specifically the reconstruction of Iraq. This weekend the New York Times got its hands on the unpublished 513-page federal history of the reconstruction. It's not pretty. As the Times puts it: it was "an effort crippled before the invasion by Pentagon planners who were hostile to the idea of rebuilding a foreign country, and then molded into a $100 billion failure by bureaucratic turf wars, spiraling violence and ignorance of the basic elements of Iraqi society and infrastructure." As a result, almost six years and $117 billion later, many essential services are only now reaching pre-war levels.
The report quotes Colin Powell on how the Pentagon, to cover up its failures, "kept inventing numbers of Iraqi security forces [that had reached readiness] -- the number would jump 20,000 a week! 'We now have 80,000, we now have 100,000, we now have 120,000.' "
Hmm, making up numbers to realize a short-term gain, but which end up making the inevitable long-term reckoning much worse? Sounds a lot like what was happening at Citigroup at around the same time.
In late 2002, Charles Prince was put in charge of the company's corporate and investment bank. The banking giant was already knee deep in toxic paper and aggressively looking the other way.
He was so successful at averting his eyes that when, five years later, as Wall Street began to feel the initial shocks of the mortgage meltdown, he was told that the bank owned $43 billion in mortgage-related assets -- it was the first he'd heard of it. Isn't that something he should have known? Or did he prefer not knowing?
Prince had plenty of help ignoring the obvious, particularly from Robert Rubin. According to a former Citigroup executive quoted in the long New York Times analysis of Citi's downfall, despite ascending to the top of the Citi food chain, Prince "didn't know a C.D.O. from a grocery list, so he looked for someone for advice and support. That person was Rubin."
When it all came tumbling down, both Rubin and Prince portrayed themselves as helpless victims of circumstance, because...Who Could Have Known?
"I've thought a lot about that," Rubin said when asked if he made mistakes at Citigroup. "I honestly don't know. In hindsight, there are a lot of things we'd do differently. But in the context of the facts as I knew them and my role, I'm inclined to think probably not."
What he means, of course, is the facts as he chose to know them.
Prince's head is even higher in the clouds: "Anything," he said, "based on human endeavor and certainly any business that involves risk-taking, you're going to have problems from time to time."
Sounds like he's reading from the same damage control playbook as former Fannie Mae CEO Franklin Raines. According to Raines, he can't be blamed for what happened at Fannie Mae because mortgage stuff is so, well, complicated. In fact, he can't even understand his own mortgage: "I know I can't and I've tried," Raines told a House committee last week. "To this day, I don't know what it said... It's impossible for the average person to understand" mortgage terms such as negative amortization. In other words, Who Could Have Known?
Committee chair Henry Waxman wasn't buying it: "These documents make clear that Fannie Mae and Freddie Mac knew what they were doing. Their own risk managers raised warning after warning about the dangers of investing heavily in the subprime and alternative mortgage markets."
Ignoring warning after warning is an essential element of the "Who Could Have Known?" excuse, as are rewriting history and shamelessly disregarding the foresight shown by those who sounded the alarm bells.
We're seeing the same ingredients in the Madoff affair. "We have worked with Madoff for nearly 20 years," said Jeffrey Tucker, a former federal regulator and the head of an investment firm facing losses of $7.5 billion. "We had no indication that we...were the victims of such a highly sophisticated, massive fraudulent scheme." It's a sentiment echoed by Arthur Levitt, the former chairman of the Securities and Exchange Commission: "I've known [Madoff] for nearly 35 years, and I'm absolutely astonished."
Who Could Have Known?
Well, Harry Markopoulos, for one. In 1999, after researching Madoff's methods, Markopolos wrote a letter to the SEC saying, "Madoff Securities is the world's largest Ponzi Scheme." He pursued his claims with the feds for the next nine years, with little result.
Jim Vos, another investment adviser who had examined Madoff's firm, says: "There's no smoking gun, but if you added it all up you wonder why people either did not get it or chose to ignore the red flags."
The answer comes from Vos's cohort Jake Walthour Jr., who told HuffPost blogger Vicky Ward: "In a bull market no one bothers to ask how the returns are met, they just like the returns."
Hasn't the "Who Could Have Known?" excuse been exposed as a sham enough times to render it obsolete?
Apparently not. Here come the Bush Legacy Project's revisionists expecting us to believe that everyone thought Saddam had WMD -- even though many were on record saying he didn't.
In the wake of 9/11, Condi Rice assured us nobody "could have predicted" that someone "would try to use an airplane as a missile." Except, of course, the government report that in 1999 said, "Suicide bomber(s) belonging to al Qaeda's Martyrdom Battalion could crash-land an aircraft packed with high explosives (C-4 and semtex) into the Pentagon, the headquarters of the Central Intelligence Agency (CIA), or the White House."
After Katrina, the White House read from the "Who Could Have Known?" hymnal: No one could have predicted that the storm would be a Category 5, and that this could result in the levees being breached. We now know, of course, that plenty of people knew that the levees could be breached and said so before the storm hit.
Then there is Alan Greenspan, who, looking back in October of this year on the makings of the financial crisis he helped create (I mean, that just happened to come out of nowhere) delivered this "Who Could Have Known?" classic: "If all those extraordinarily capable people were unable to foresee the development of this critical problem...we have to ask ourselves: Why is that? And the answer is that we're not smart enough as people. We just cannot see events that far in advance."
The only problem is, many people did see events that far in advance.
Unlike Greenspan, I don't believe the problem is that we are "not smart enough as people." As we've seen time after time, smart enough people are all too willing to ignore facts they don't like. Or, even worse, they construct oversight systems designed to be ineffective -- and unable to provide to those in power information they don't really want to know.
Much has been made of the smartness of Obama's new team. But I'm hoping that their defining characteristic won't be their IQs but their willingness to confront reality and take responsibility for their decisions.
It's time to say goodbye to the "Who Could Have Known?" era. It's time to know things again. And to know that you know them.
HuffPost Action Alert:
For Small Business Owners: Please read Tim Berry's latest post and take this HuffPost survey about how the recession is affecting your business.
For Everyone: Check out Jesse Kornbluth's terrific post on what we can all do the week after Christmas to "jump start the Obama years" by helping those who are struggling during these hard economic times.
http://www.huffingtonpost.com/arianna-huffington/will-the-madoff-debacle-f_b_151219.html
Sunday, December 7, 2008
Note to Myself / Article Idea / Meat Eating Me
Confessions of a MeatEater
or
The Evolution of Me
How do I reconcile my love of animals with my meat-eating habit?
I dont. I struggle with it all the time.
Reasonings and/or Questions: If you had to kill the animal youself to satisfy your habit, would you be able to do it?
My ans: a definate NO
Everytime I am tempted by the urge to eat meat, I immediately am overwhemled with a distinct feeling of self-loathing, well, er, ah., even moreso than usual, I mean.
LOL
2 B Continued (I hope)
or
The Evolution of Me
How do I reconcile my love of animals with my meat-eating habit?
I dont. I struggle with it all the time.
Reasonings and/or Questions: If you had to kill the animal youself to satisfy your habit, would you be able to do it?
My ans: a definate NO
Everytime I am tempted by the urge to eat meat, I immediately am overwhemled with a distinct feeling of self-loathing, well, er, ah., even moreso than usual, I mean.
LOL
2 B Continued (I hope)
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