Five Dollar Christmas Eve

For today's Five Dollar Friday I'm giving $5 to Just Foreign Policy in gratitude for them pushing the work of Stephen Kinzer. I read his book All the Shah's Men a long time ago, but it's still the best treatment I've ever seen of the 1953 coup in Iran. And largely due to Just Foreign Policy, I'm in the middle of reading Overthrow: America's Century of Regime Change from Hawaii to Iraq, which is a masterpiece in the genre of uncovering lost history.

I have to admit that even someone like me, who spends every waking second trying to destroy Christendom and install an Islamic Caliphate in America, didn't know much of what's in Overthrow. Moreover, Kinzer writes history in a way that's far more human than (say) Noam Chomsky. Everyone Kizner writes about is recognizably human, with human foibles and human choices, rather than just a pawn of Inexorable Grinding Forces (even though Kinzer gives the IGFs their due).

Here's part one of a Just Foreign Policy video with Kinzer. Four more parts to this are available here.

Merry Imperial Christmas!

—Jonathan Schwarz

William Greider on Why the Media Hates You

This is from a must-read interview with William Greider, mostly about elite reporting on Social Security:

GREIDER: Reporters and editors are disturbed to learn that growing sectors of the public do not trust their reporting. But this is the natural result of one-sided reporting. It reflects the unconscious class bias of the media—looking up to selected expertise that’s in power and looking down on the everyday citizens...lots of citizens are finding their own ways to inform themselves, putting their faith in the bloggers or other renegade sources. Who can blame them?

Here's how I put it a little while ago:

Michael Kinsley Furious At Americans For Believing The Wrong Lies

There is nothing funnier than corporate liberals getting angry when lots of Americans believe the right-wing's lies.

For instance: Michael Kinsley is really mad at everyone for falling for all the lies told by McCain!

Why Do Lies Prevail? by Michael Kinsley

[T]he routine acceptance of obvious lies now corrodes our politics...

In a democracy, obvious lies and obvious liars should be self-defeating. Why aren’t they?

Of course, it IS terrifying how many people believe the right's craziest lies. But it's a little hard to take from Kinsley, who's spent his entire life trying to make Americans believe his own, preferred lies.

The rest of my wisdom is available here.

—Jonathan Schwarz

Ten Dollar Saturday

I haven't had time to post about who I've been giving five dollars to in Fridays recently, but will go back and update this when I can. Today I'm sending ten dollars more to Emily Henochowicz, because in terms of artistic talent and drive, she's clearly the real thing. Here's a recent video of hers:

Here's what she had to say few days ago:

So believe it or not, having newspaper articles written about me hasn’t stopped me from being a poor struggling artist. I just finished the project with Adam and I’m working hard at my personal film on love, life, Palestine, and vision - but I won’t be done with it for quite some time. And I, like an idiot, didn’t take care of any of the print orders. Sorry, I went through a lot in my life and I wasn’t being exactly professional. I'm working on getting it all organized/having my mom take care of it if anyone is still interested...

So would you like to please

or give me some work?

And by donate I mean like five bucks. Really if everyone who supports me gave me just five bucks I would set for a good while. Just saying...

Also do any of you have connections to Bill Plympton and could help me get an internship or job with him? I would just melt if I stepped into his studio.

And now, for your viewing pleasure, an old, old animation test:

—Jonathan Schwarz

We Support Wikileaks

From Fairness & Accuracy in Reporting:

As journalists, activists, artists, scholars and citizens, we condemn the array of threats and attacks on the journalist organization WikiLeaks. After the website's decision, in collaboration with several international media organizations, to publish hundreds of classified State Department diplomatic cables, many pundits, commentators and prominent U.S. politicians have called for harsh actions to be taken to shut down WikiLeaks' operations...

When government officials and media outlets declare that attacks on a particular media organization are justified, it sends an unmistakably chilling message about the rights of anyone to publish material that might rattle or offend established powers.

We hereby stand in support of the WikiLeaks media organization, and condemn the attacks on their freedom as an attack on journalistic freedoms for all.

You can read and add your name here.

—Jonathan Schwarz

Barack Obama, Trapped in a Hell of His Own Creation

Whenever I find myself angry at Barack Obama for his eager jump into the right-wing scum pit, I stop myself, and smile. Because he's already being tormented for his crimes in a way literally no one else on earth but him can truly understand...by his own DNA.

That's because men's DNA makes them do insane things like run for president for one reason only: because their DNA thinks it will give them the chance to have sex with lots and lots of women. Men's DNA doesn't care about extending health care to all Americans, or for that matter extending U.S. hegemony in the mideast. That's all cover for the DNA's real agenda.

And for Obama's DNA, his becoming president looked like a fantastically successful gambit. At least after he was first elected, there weren't many women on earth who would have turned down a romantic evening of POTUSing.

But here's what Obama's DNA did not foresee: HE CAN'T. As the first Democratic president since Bill Clinton was impeached, HE ABSOLUTELY MUST NOT.

I think most men can appreciate that being in this situation must be its own unique form of torture. So when I see Obama letting torturers walk, I enjoy the fact that at least he's suffering himself. I'm not kidding or making light of it when I say that if I myself had to choose between the two situations, I might rather be waterboarded.

P.S. I also think it's interesting that this aspect of Obama's existence isn't spoken about in public (at least as far as I've heard). I don't think acknowledging this means that men are bad or life on earth is irredeemable. But it's a significant aspect of existence, as well as being extremely funny. So it seems like someone could mention it.

—Jonathan Schwarz

The Invisible Bailout

Mary Bottari of BanksterUSA has written a post over here about how the Fed—not TARP—was the main channel through which the financial system was bailed out. Here's a chart she uses to make her point:

This is an tremendously underappreciated aspect of the financial meltdown. I actually wrote up an explanation of how it worked back in June, 2009, complete with an extremely similar chart. I think it stands up well and is complementary to what Bottari is writing about. So here you go.

Note that the media fell for the scam I describe completely. Even This American Life, which has done amazing journalism about the financial meltdown, produced an episode called "Another Frightening Show About the Economy" on October 3, 2008 that might as well have been dictated by the Federal Reserve (except no one at the Fed has the talent to present it this well). Moreover, to this day essentially no one in the media understands what happened.

Why Did the TARP Bailout Happen the Way It Did?

Here's my answer. It's partly conjecture, but the circumstantial evidence is very strong, and there should be more available with just a little digging.

After the bankruptcy of Lehman and the bailout of AIG in mid-September, Ben Bernanke and Hank Paulson were genuinely worried -- it was now obvious it would require gargantuan amounts of money, starting immediately, to bail out the banking system. Some of the money spent would eventually come back to the government, but inevitably the final losses would be in the hundreds of billions.

BUT -- what worried them was not finding the money. The weird truth is the Fed can literally create money from nothing. That's the way they expand the money supply.

In normal times, the Fed does this by purchasing government bonds. If they want to buy a bond for $100, they just electronically credit the seller, who then has $100 more in their bank account. And the Fed then has the bond in its portfolio. In the past, the total Fed portfolio (almost all government bonds) had been just under $1 trillion.

But in emergencies, the Fed has the legal authority to buy almost anything. As it had demonstrated up to last September, it can buy Citigroup bonds. It can buy $30 billion in crappy mortgage-backed securities from Bear Stearns. It can pay $85 billion for AIG.

So the money wasn't the problem. The problem was that they were going to spend over a trillion dollars, more than doubling the Fed portfolio. Now, if had been possible, the financial industry would have loved it if the Fed could have just taken care of it on its own. That would have been the best possible solution, with no meddling congress members asking questions about executive bonuses.

But $1-2 trillion is so much that even congress and the media would notice. Nancy Pelosi was already complaining about the AIG bailout. And Bernanke and Paulson were well aware that every person in America who didn't work for Goldman Sachs was going to loathe what was coming.

So what did Bernanke, Paulson, and the financial industry need at this point, if not the money?

THEY NEEDED SOMEONE TO SHARE THE BLAME.

That's the first rule of political catastrophes: if everyone's guilty, no one can be punished.

This was an opportunity to get everyone else on the hook with them: both parties in congress, and both presidential candidates, each of whom would be under enormous pressure not to look "irresponsible." Even better, getting some TARP money from congress would create a huge distraction from the gigantic amounts of non-TARP money the Fed was shoveling out the door.

So all they had to do now was make congress terrified the economy was about to collapse. And to do this, they needed a plausible story.

This part was tough. After all, if a few banks failed here or there, so what? Depositors were protected, and we were headed into a recession anyway, with a lower need for medium-term credit.

But there was one excellent candidate to be the WMD of the TARP bailout: the commercial paper market.

That's what the Fed, Paulson, and White House were selling to congress and the media. If you go back and look at all the cable news about the bailout, it's obvious "commercial paper" was the talking point. It comes up over and over again. Tom Brokaw, CNN's money reporter, Sen. John Kyl, Mitt Romney -- they all repeated the story like robots. Just like the scary WMD.

It goes like this: big corporations are like rich people with lots of assets and money coming in at irregular intervals but not much cash in the bank. In the same way a rich person like that would use a credit card to buy groceries and gas, big corporations borrow money in the commercial paper market to make payroll, pay vendors, etc. They're continually borrowing money and paying it back the next day or next week.

In normal times, the commercial paper market is extremely boring and extremely safe. But in the same week Lehman went bankrupt and AIG was bailed out, the commercial paper market was collapsing. The pension funds and university endowments that supply the money were spooked, pulling it out, and putting it in government bonds.

This WAS a real, frightening problem. No commercial paper market, and Wal-Mart can't pay for everything being delivered to its stores. Big grocery chains can't pay for food. And no one is paying their workers. The entire economy could grind to a halt, and no one knew how hard it would be to start it again.

But there's one thing Bernanke and Paulson left out, and that all the people talking about on TV didn't know: there was no need for congress to pass a bill to save the commercial paper market, because the Fed could buy it directly. We know this because the Fed DID buy giant amounts of it, over $300 billion -- but not until October, well after TARP had passed.

So in September, Bernanke was saying: "Help! We need $700 billion or else the commercial paper market will destroy the world!"

Then a month later in October, Bernanke quietly went ahead and saved the commercial paper market, using non-TARP money -- something he could have easily done the month before.

This can all be seen in the above graph that I made. The Fed balance sheet exploded starting in mid-September. They spent $500 billion by October 1st, two days before TARP passed. They spent $1 trillion by the time the first trickles of TARP money were allocated in late October. (This in itself is damning -- we had to give them the money or else Planet Earth would explode, and yet it took Paulson three weeks to dole out the first TARP sliver.) All along, the Fed side of the bailout had dwarfed TARP.

Yet it's been completely invisible. While we were all screaming about that little pink line, the Fed was carrying out the real bailout via the blue line and we never noticed.

And most of amazing of all, to this day the Fed refuses to say exactly what they've bought for $1.3 trillion. Seriously -- congress has asked, and the Fed has basically said: screw you. (NOTE: Since I wrote this, the Fed was forced, over its loud objections, to disclose what it purchased.)

Now, for the final proof this was a scam: several months after TARP passed, the New Yorker profiled Ben Bernanke. In the article, Bernanke claims he said this to Paulson on September 17th, after the AIG bailout: "We can’t keep doing this. Both because we at the Fed don’t have the necessary resources and for reasons of democratic legitimacy, it’s important that the Congress come in and take control of the situation."

Sounds good, doesn't it? But if you think about it for two seconds, it's obvious crap. #1, look at the graph --the Fed had the resources and wasn't shy about using them. #2, the high-pressure way they sold TARP and the Fed's ongoing secrecy demonstrates how much Bernanke cares about "democratic legitimacy."

—Jonathan Schwarz

"The End of Social Security"

Please read "The End of Social Security" by Nancy Altman, about the payroll tax holiday that's part of the deal Obama just made with Republicans. If we had a functioning political system this wouldn't have the dire implications that Altman predicts, but if we had a functioning political system I would be writing and directing plays about the inevitable heat death of the universe. So maybe we're all better off in this branch of reality.

—Jonathan Schwarz

Howls of Derisive Laughter

I've returned from my Fortress of Solitude to snort at the hilariously transparent lies of the U.S. government generally, and Democratic politicians specifically.

1. Glenn Greenwald looks at the completely lawless attacks on Wikileaks via Amazon, Paypal, Mastercard, their Swiss bank, etc., even as top U.S. political figures call for Julian Assange to be assassinated.

2. Assange was arrested this morning in England. I didn't previously believe this, but I'd say the chances the Swedish charges are an intelligence operation are at least 50%. And of course even if not, the chance is 0% that Sweden would be sending Interpol after him if he weren't the face of Wikileaks.

3. Barack Obama bloviated about his hatred for internet censorship when asked about it by Chinese students on a visit there, November 16, 2009:

I'm a big believer in openness when it comes to the flow of information. I think that the more freely information flows, the stronger the society becomes, because then citizens of countries around the world can hold their own governments accountable. They can begin to think for themselves. That generates new ideas. It encourages creativity.

And so I've always been a strong supporter of open Internet use. I'm a big supporter of non-censorship. This is part of the tradition of the United States that I discussed before, and I recognize that different countries have different traditions. I can tell you that in the United States, the fact that we have free Internet -- or unrestricted Internet access is a source of strength, and I think should be encouraged.

4. Hillary Clinton bloviated more at the Newseum, aka The Museum That's Like Living Inside Cable TV, on January 21, 2010:

...technologies with the potential to open up access to government and promote transparency can also be hijacked by governments to crush dissent and deny human rights.

In the last year, we've seen a spike in threats to the free flow of information. China, Tunisia, and Uzbekistan have stepped up their censorship of the internet...

On their own, new technologies do not take sides in the struggle for freedom and progress. But the United States does. We stand for a single internet where all of humanity has equal access to knowledge and ideas. And we recognize that the world's information infrastructure will become what we and others make of it.

Well, the internet was nice while it lasted.

P.S. Until this morning I thought the Monty Python Bruces sketch included the line "hails of derisive laughter." But now I believe it's actually "howls," although it sounds like hails thanks to their mock-Australian accents. And Assange is Australian. IT ALL FITS TOGETHER.

—Jonathan Schwarz