The House Capitalism Built

Newsnight investigates the sudden rise in commodities prices and the fall in equity despite the recent promise by the Federal Reserve to inject a further 200Bn US$ into the US Banking system.

Report and review interviewing Stephen King (Chief Economist HSBC) and Sushil Wadhwani (Wadhwani Asset Management).

Followed by a Panel discussion by Jeremy Paxman, including Gillian Tett (Assistant Editor Financial Times), Dr. Irwin Stelzer (Senior Fellow, Hudson Institute) & Prof. Robert Reich (Author of "Supercapitalism").

Part 1:

Part 2:

FOOL’S GOLD by Gillian Tett

FOOL’S GOLD: How the Bold Dream of a Small Tribe at J. P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe

By Gillian Tett (293 pages. Free Press. $26)

The New York Times reviewed this book in an article entitled, "Greed Layered on Greed, Frosted With Recklessness" by Michiko Kakutani (read the entire review here).

In her useful new book, Gillian Tett of The Financial Times writes that the global financial meltdown, which economists estimate could result in total losses from $2 trillion to $4 trillion, was “self-inflicted.” Unlike many banking crises, she adds, “this one was not triggered by a war, a widespread recession, or any external economic shock.” Rather, the “entire financial system went wrong as a result of flawed incentives within banks and investment funds, as well as the rating agencies; warped regulatory structures; and a lack of oversight.”

To put it another way, the crisis was, in the words of the Newsweek business columnist Daniel Gross, “a man-made product that turned out to be immensely toxic and damaging” — not, as so many in the “Smart Money crowd” insisted, “a random, once-in-a-lifetime thing that fell out of the sky.”

It was also a disaster, he notes, with “plenty of blame to go around,” including “poor regulation, eight years of a failed Republican economic philosophy, Wall Street-friendly Democrats who helped stymie reform, misguided bipartisan efforts to promote home ownership, Wall Street greed, corrupt C.E.O.’s, a botched rescue effort” and poor judgment calls on the part of the Fed, and top bankers who in many cases did not even understand the derivatives their firms were trading in.

In short the current global financial crisis is a story about people who thought they were the smartest guys in the room and who turned out to be remarkably naïve, reckless or, in some cases, downright stupid. It’s a story — novelistic in its narrative and moral arc — about hubris and greed and heedlessness, about people, as Fitzgerald wrote in “The Great Gatsby,” who “smashed up things and creatures and then retreated back into their money or their vast carelessness” and “let other people clean up the mess they had made.”

Author Gillian Tett


Shameless Paparazzi

Poor Prince Harry can't even have a private comfort break in one of those classy Port-O-Potties.

GOP's Double Standards

The Washington Post writes, "Double Standard: Funny how the achievements on Sonia Sotomayor's resume suddenly count for so little."

ON PAPER, Supreme Court nominee Sonia Sotomayor resembles one of her would-be colleagues on the high court: Princeton undergrad, Yale Law School, an editor on the Yale Law Journal, experience as a prosecutor and years of service on the federal bench.

Yet Judge Sotomayor, President Obama's pick to replace retiring Justice David H. Souter, is not being compared by some conservatives to Princeton/Yale alum Samuel A. Alito Jr., widely acclaimed as smart and qualified when he was nominated. Instead, they are trying to peg her as "President Obama's Harriet Miers," after the nominee of President George W. Bush who took herself out of contention as conservatives savaged her reputation and raised doubts about whether she was smart enough for the job.

Why is that? After all, Judge Sotomayor boasts the very qualifications that these conservatives claimed Ms. Miers lacked. Ms. Miers was in part lambasted by conservatives -- unfairly, we noted at the time -- because she did not meet the now-cliched criteria of graduation from elite schools and experience as a judge. Judge Sotomayor's educational pedigree is top-notch, and she served six years on the U.S. District Court for the Southern District of New York before spending the past 11 years on the U.S. Court of Appeals for the 2nd Circuit.

Ms. Miers, conservative critics complained, lacked a substantial paper trail, leading some to worry about whether she was more liberal than her record let on. Judge Sotomayor can't be tagged as a stealth candidate, given her two-decade track record of opinions on topics as varied as immigration, eminent domain, corporate law and the First Amendment.

Because it is difficult to dismiss her academic credentials and her professional experience, some on the right have resorted to the politics of personal destruction. Curt Levey of the Committee for Justice said in a radio interview that Judge Sotomayor was picked because "she's a woman and Hispanic, not because she was the best qualified." Former congressman Tom Tancredo sank to even greater depths when he called Judge Sotomayor a "racist" for her past affiliation with the Hispanic advocacy group, the National Council of La Raza; Mr. Tancredo called La Raza "a Latino KKK without the hoods or the nooses." Former Bush adviser Karl Rove implicitly questioned Judge Sotomayor's intelligence, saying in an interview with PBS host Charlie Rose that "I know lots of stupid people who went to Ivy League schools." No doubt, but would Mr. Rove have said the same thing in connection with Justice Alito?

There are plenty of lines of inquiry that should be explored to better discern Judge Sotomayor's qualifications and judicial philosophy. We look forward to a vigorous debate about Judge Sotomayor's more controversial and consequential cases. We would like to hear more from Judge Sotomayor on how gender and ethnicity might help -- as she put it -- a "wise Latina" judge come to a "better" conclusion in some cases than a white, male jurist. (The president recently said Judge Sotomayor regretted her choice of words.) Above all, we'd welcome a confirmation process that sets aside rancid stereotypes and sexist assumptions in order to explore the record and philosophy of a woman whose work could affect the country for some time to come.

Prolifers Condone Extralegal Vigilantism?

The unhinged GOP base condones extralegal vigilantism?

Vigilantism does have deep roots in the USA. Let's see, Emmit Till, Medgar Evers, Malcolm X, JFK, Robert Kennedy, Martin Luther King, Jr., Abraham Lincoln, The Uni-bomber, Timmothy McVey.......I guess it's just the American way. Forget the laws, forget the court system, just sell military grade weapons and gin-up the bitter gun-toting GOP base.....and insto presto dead doctors in churches all across America.

Shoud we sing "America the Beautiful" or "God Bless America" for our special brand of vigilantism.

Frank Schaeffer Exposes "Pro-Life" Movement's Domestic Terror Role

Gitmo Woes

Up from the Projects

Richard Cohen of the Washington Post writes: With the nose of a trained columnist, I detect the whiff of elitism-cum-racism emanating from the nomination of Sonia Sotomayor to the Supreme Court. The whiff does not come -- Rush Limbaugh and Newt Gingrich notwithstanding -- from Sotomayor's own statements; nor does it come from her controversial decision upholding race-based affirmative action. It comes, instead, from the general expression of wow about her background. Imagine, someone from the projects is a success!

"Nobody expects you to be chosen someday for the Supreme Court when your father was a welder with a third-grade education," wrote Richard Lacayo in Time magazine. He is right -- the expectations are all otherwise. You can see them on display in many of the reports about Sotomayor's background. She was raised in public housing projects. She grew up in the Bronx, which the average person must think of as a particularly nasty part of Mumbai, and she is, finally and incriminatingly, Puerto Rican. This is all, apparently, very hard to imagine.

It once was not. It was generally recognized that being poor was not necessarily destiny. This was the gift of liberalism, especially New York City-style liberalism. The city would provide housing -- about 400,000 now live in public housing -- and it would provide good schools, and later, with good grades and the proper attitude, it would offer an excellent higher education: City College, Brooklyn College, Queens College and my own beloved Hunter College. The vast poor were the city's oil fields. Any kid could be a gusher.

The New York Times recently supplied us with the names of some public housing alumni. They included Jay-Z, the rapper, and Wesley Snipes, the actor, and Mike Tyson, the brute. They also include Gary Ackerman, the wittiest person in Congress (sorry, Barney), and Lloyd C. Blankfein, who runs Goldman Sachs. Howard Schultz, who conceived the current Starbucks, came out of the projects and so did Ursula M. Burns, who is black and a woman and now is the CEO of Xerox. Copy that, please.

The projects also produced Kareem Abdul-Jabbar and the former Caryn Elaine Johnson, who performs as Whoopi Goldberg. She lived in the Chelsea Houses. The Times mentioned them both. It did not mention, though, Millie Torado, who grew up in the Redfern projects and is an old, old family friend, or Joel Klein, the New York City school chancellor, who lived in Woodside Houses (Queens) and was told when he entered Columbia University that not all that much was expected of him. He disappointed by going on to Harvard Law School. No mention was made either of Ken Auletta, the media writer for the New Yorker. Obviously, there are far too many to list.

Inevitably, what these people have in common are one or two dedicated parents or guardians who knew that housing, public or otherwise, is where your body spends its time. Your mind can live anywhere. In the case of the young Sotomayor, it was between the covers of Nancy Drew novels and watching Perry Mason on television. She imagined she could become a lawyer. Now, maybe, a girl like her can imagine becoming a Supreme Court justice.

Franklin D. Roosevelt was a true American aristocrat, rich and landed, yet the poor never had a greater champion. The man who preceded him in the presidency, Herbert Hoover, was raised in poverty yet forgot who he had been. He feared government welfare programs would sap the poor of their industry. It's always dangerous to generalize. It is impossible to predict.

I do not agree with Sotomayor on the New Haven affirmative-action case and have written a column saying why. But if it can be said she sided with minorities over white men, recognize that two of the New Haven firefighters unjustly affected on the basis of race are Hispanic. But I agree with what Sotomayor meant when she said in her famous 2001 speech, "I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion than a white male who hasn't lived that life." Yes, in some cases. That is the virtue of diversity. You're instructed by your own life.

Sotomayor's life instructs her that the projects are chock-full of people like her. They are propelled by the greenest of fuels, their indomitable parents, and they are nourished by wonderful teachers, determined principals -- and the opportunities provided by a generous government. Sotomayor's coming out of the projects is no miracle. The tragedy is that we think it is.

The GOP's Feigned Outrage

From the editorial pages of Wall Street Journal: Those who followed news coverage of the "tea party" protests last month will recall that one target of the partiers' ire was the TARP bailout of the banking system -- a policy of the Bush administration that President Obama has carried on.

And yet, in a television interview last month, we find no less a representative of the late administration than former Vice President Dick Cheney endorsing the protesters' accusations with what is, for him, considerable enthusiasm. "I thought the tea parties were great," he told Fox News's Sean Hannity. "It's basically a very healthy development."

Former House Speaker Newt Gingrich, one of the Republican Party's few remaining stars, has also cheered the public's willingness to "fight back against Wall Street and Washington insiders."

A Republican who wants to fight Wall Street! A Bush official who thinks protesting Bush policies is "great"! Contemplating these curiosities, we begin to realize how easy it has been for conservatives to swing back into full-throated opposition only months after their cataclysmic defeat. And also to understand why the obituaries for the GOP might be just a tad premature.

After all, there's something about conservatives' ferocious "No" that precisely fits the temper of the times. For all the past year's Democratic victories, the GOP still owns outrage, still has an enormous capacity to summon up offense, to elevate every perceived slight into an unprecedented imposition upon both the hard-working citizen and freedom itself.

What really dazzles the observer, though, is conservatives' fury over things for which they are themselves responsible.

As an example of this habit of mind, consider the essay that Mr. Gingrich published in Human Events last week. "The current liberal bloodlust over interrogations," he wrote, referring to the Nancy Pelosi-CIA flap, is merely "the Left's attempt to hunt down and purge its political opponents." And yet, in a different essay he published on the very same day (this one in the Washington Times), Mr. Gingrich regretted that, in all the years of Republican rule, "there was a strategic failure to root out the left and the special interests of the left."

Mr. Gingrich's side failed to "root out" and destroy their opponents; now he imagines that this is what is being done to his team.

Psychotherapists might call this "projection," and something similar pervades the essay the remarkable Mr. Gingrich published only two days later in the Washington Post. Here the former speaker can be found calling for a populist revolt in the "great tradition of political movements rising against arrogant, corrupt elites."

A healthy sentiment, to be sure, except for the fact that "elites" are exactly what decades of conservative rule gave us by unleashing the banks, smashing the unions, and funneling the economy's gains into the hands of the rich.

Then there are the "lobbyists" whom Mr. Gingrich accuses of running state governments here and there. By this he means "lobbyists for the various unions" who get their way "through bureaucracies seeking to impose the values of a militant left."

Even so, rule by lobbyists is a subject Mr. Gingrich should know well. It was while he was House speaker, for example, that his No. 3, Tom DeLay, launched the famous "K Street Strategy," which sought to make Gucci Gulch the exclusive preserve of the Republican Party.

It was Mr. Gingrich's own beloved House freshmen of 1994, the last bunch of conservative populists to come down the pike, who made the Republican Revolution into a fundraising bonanza. And it was public outrage over the conspicuous purchase of government favors by the moneyed that led to the Democratic triumphs of 2006 and 2008.

Turning to the government of New York state, Mr. Gingrich declares that it has "impoverished the Upstate region to the point where it is a vast zone of no jobs and no opportunities." Oddly, Mr. Gingrich appears to believe that deindustrialization is the direct result of governance by a political machine in Albany.

In fact, deindustrialization also occurred all across the Midwest. As it ground on through the Reagan years and the '90s, it was the investor class who called the shots, not the hirelings of organized labor.

And as our factories and steel mills were shuttered an army of politicians and management theorists assured us that the waning of industrial America was the next stage in human development, the coming of the glorious age of information. The most ecstatic and even otherworldly of these was, of course, Newt Gingrich.

In his much-discussed speech last Thursday, Mr. Cheney intoned, "We hear from some quarters nothing but feigned outrage based on a false narrative." And so we do: A form of protest that persistently misses the point, a type of populism that only empowers the elite, and a brand of idealism that cohabits comfortably with corruption. (source: The Wall Street Journal)