As is reported in here in Reuters.

The Wall Street Journal reported on
Friday that about $50 billion of more
than $173 billion that the U.S.
government has poured into American
International Group Inc (AIG.N) since
last fall has been paid to at least
two dozen U.S. and foreign financial
institutions.

The newspaper reported that some of
the banks paid by AIG since the
insurer started getting taxpayer
funds were: Goldman Sachs Group Inc
(GS.N), Deutsche Bank AG (DBKGn.DE),
Merrill Lynch, Societe Generale
(SOGN.PA), Calyon, Barclays Plc
(BARC.L), Rabobank, Danske
(DANSKE.CO), HSBC (HSBA.L), Royal
Bank of Scotland (RBS.L), Banco
Santander (SAN.MC), Morgan Stanley
(MS.N), Wachovia, Bank of America
(BAC.N), and Lloyds Banking Group
(LLOY.L).

And this is the main reason for it's continued existance
(if you can call it that).

Bankruptcy for AIG would have led to
complications and losses for
financial institutions around the
world doing business with the company
and policy holders that AIG insured
against losses.

Representative Paul Kanjorski told
Reuters on Thursday that he had been
informed that a large number of AIG's
counterparties were European.

"That's why we could not allow AIG to
fail as we allowed Lehman to fail,
because that would have precipitated
the failure of the European banking
system," said Kanjorski, a Democrat
from Pennsylvania who chairs the
House Insurance Subcommittee.

European and probably Asian, Middle Eastern, Austral Asian
....
So until the mess is sufficient cleaned up,  AIG will continue
to suck money from the treasury. After that, it' will be just a bad
footnote in history.

C

LaryH has stated, and I at least partially agree, that the
Powers that be should inform us of exactly what they are
doing vi-a-vis the AIG and the banks. However one point
needs to be made here.

We have the FDIC (another wonderful program thanks to
FDR) that at least promises to protect any money we have
in a bank should said bank fail.

Not every country has this or anything like it. Even the larger
ones like Germany and France don't have this. Should a
panic ensue do to a large number of banks over in Europe
or Asia or anywhere else going belly up and a run start, the
resulting mayhem would be significant to say the least.

And even the FDIC may not be able to stop or save peoples
money if a large number of banks here would fail all at once.

I know those who post and read these blogs dislike being
Saved from themselves but one must constantly view the larger
picture and plan or at least visualize a worst case situation.

As far as picking Geithner for treasury secretary goes let me
just say this. If I have a grave need to go after some computer
hackers, I would not pick a computer scientist...I would pick
a computer hacker. Someone who has extensive experience
in the trenches.

C

As Josh points out from reader SG's perspective,  this whole
propping up of AIG may well be just smoke to distract what's
really going on.

My claim is that this is just all
a hoax to let the wall street
buddies get out while the going
is good and then let these
institutions fail.  Outcome will
be the same whether the info is
released now or later...
"controlled-depression."

Rather what I suspected all along. I have found it very hard to
believe that anyone with two cents worth of brains is still
invested in these institutions. That this whole bit of propping
up AIG and CITI and the rest is merely a delaying tactic to
give Geithner's friends and others enough time to smoothly
Get out of town while they can.

C

At least that's what David Lindorff  thinks.

It's time to put a stop to this farce.

Restoring the American economy is not
going to be a matter of simply
jump-starting consumer spending, or even
business investment. It's going to take a
long, hard, focused effort to move away
from a parasitic consumer economy in which
profits are largely made through
speculation, and towards a real economy
that actually makes things that people
both here and around the world need.

The sooner this truth is recognized, the
more resources the government will still
have left to put into the kind of
investments that can help make that happen
- things like job creation, income
supports, home refinancings and medical
system reform that could help Americans
get back on their feet. Of course, it
would also be necessary to end the wars
overseas and to dramatically slash
military spending.

When former companies like Citicorp and
AIG are history, and when former Lehman
Brothers, Citibank and AIG managers, as
well as most of the Pentagon Brass, are
out working at civilian conservation corps
camps helping to restore watersheds or
replant forests, we will know that the
government has finally "gotten" it.

It's nice to see that I'm not the only one who thinks so.

C

He's right and spells it out here.

Why do officials keep offering plans that
nobody else finds credible? Because
somehow, top officials in the Obama
administration and at the Federal Reserve
have convinced themselves that troubled
assets, often referred to these days as
"toxic waste,"are really worth much more
than anyone is actually willing to pay for
them - and that if these assets were
properly priced, all our troubles would go
away.

Thus, in a recent interview Tim Geithner,
the Treasury secretary, tried to make a
distinction between the "basic inherent
economic value"of troubled assets and the
"artificially depressed value" that those
assets command right now. In recent
transactions, even AAA-rated
mortgage-backed securities have sold for
less than 40 cents on the dollar, but Mr.
Geithner seems to think they're worth
much, much more.

And the government's job, he declared, is
to "provide the financing to help get
those markets working," pushing the price
of toxic waste up to where it ought to be.

What's more, officials seem to believe
that getting toxic waste properly priced
would cure the ills of all our major
financial institutions. Earlier this week,
Ben Bernanke, the Federal Reserve
chairman, was asked about the problem of
"zombies"- financial institutions that are
effectively bankrupt but are being kept
alive by government aid. "I don't know of
any large zombie institutions in the U.S.
financial system,"he declared, and went on
to specifically deny that A.I.G. - A.I.G.!
- is a zombie.

This is the same A.I.G. that, unable to
honor its promises to pay off other
financial institutions when bonds default,
has already received $150 billion in aid
and just got a commitment for $30 billion
more.

The truth is that the Bernanke-Geithner
plan - the plan the administration keeps
floating, in slightly different versions -
isn't going to fly.

I really hate the term Toxic Assets or even Toxic Waist.
Get flippin real here - It's worthless paper for crying out
loud. You use it to wrap dead fish, providing you don't
mind bad smelling fish.

And this means that the government would
have to lay out trillions of dollars to
bring the financial system back to health,
which would, in turn, both ensure a fierce
public outcry and add to already serious
concerns about the deficit. (Yes, even
strong advocates of fiscal stimulus like
yours truly worry about red ink.)
Realistically, it's just not going to
happen.

So why has this zombie idea - it keeps
being killed, but it keeps coming back -
taken such a powerful grip? The answer, I
fear, is that officials still aren't
willing to face the facts. They don't want
to face up to the dire state of major
financial institutions because it's very
hard to rescue an essentially insolvent
bank without, at least temporarily, taking
it over. And temporary nationalization is
still, apparently, considered unthinkable.

But this refusal to face the facts means,
in practice, an absence of action. And I
share the president's fears: inaction
could result in an economy that sputters
along, not for months or years, but for a
decade or more.

Paul..I'm afraid your going to have to get the 2x4 and
smack those to up against the head with it to get their
attention before they will listen to you.

C

Unfreaking believable !

The Fed refused yesterday to disclose the
names of the borrowers and the loans,
alleging that it would cast "a stigma" on
recipients of more than $1.9 trillion of
emergency credit from U.S. taxpayers and
the assets the central bank is accepting
as collateral.

Fed secrecy was the focus of a Senate
Banking Committee hearing today in which
the panel's top two members said the
central bank's reluctance to identify
companies benefiting from the American
International Group Inc. bailout risks
undermining public confidence in the
government.

"If the American taxpayer's money is at
stake, and it is, big time, I believe the
American taxpayers, the people, and this
committee, we need to know who benefited,
where this money went," said Senator
Richard Shelby of Alabama, the committee's
top Republican. "There is no transparency
here. We are going to find out."

Earth to FED..Earth to FED. We already don't trust you. But I
for one, would like to chase you all up a tree and set fire to it.

Don't be surprised if you hear about a run on pitch forks and
torches in the near future.

C

According to this entry on Huffington.

President Obama held a health-care
summit today at the White House where
he made clear that reform was an
administration priority. "If we want
to create jobs and rebuild our economy
and get our federal budget under
control, then we have to address the
crushing cost of health care this
year, in this administration," he
said. But he'll face some serious
Republican opposition, as this clip
from MSNBC makes clear.

Tennessee Republican was on the
network this morning, railing against
any health-care reform effort as move
toward "socialism" and "class
warfare."

"Health care is a privilege," Wamp
went on to say. "It's not necessarily
a right." He clarified that he had in
mind people who choose not to pay for
health care.

Well that follows. Since republicans consider life itself
a privilege. That is unless you a a fetus.

C

With out further a do. Here it is. Enjoy.

C

At least Janet Tavakoli thinks so. Here form Bloomberg.

Securitization consists of bundling loans and
slicing them into packages with different risk
profiles to be sold separately. Collateralized
debt obligations take already securitized loans
and further bundle them into packages. CDO-
squareds do the same process all over again.

How We Got Here

Rating agencies, which were being paid by the
investment banks doing the securitization, would
smack their best credit grade of AAA on the top
tranches of these bundles. Many of those ratings
have been cut to junk in the past two years as
defaults surged.

Tavakoli doesn't think the concept of
securitization is flawed; she says it was abused
by greedy financiers and turned into the monster
that led to the collapse of the financial
system.

In a telephone interview, the seasoned financial
engineer talked about how we got here, and the
future of securitization.

Tavakoli: It was a massive Ponzi scheme with
many players involved. At times you'd have the
CDO manager, an investment bank and a hedge fund
involved, all of them knowing they were doing
the wrong thing. These people all wanted to get
in on the fees, so they all went along with this
stuff. Some of the CDO- squareds that came out
in 2007 were nothing more than a way of avoiding
acknowledging losses. It's a scandal.

'It Was Massive'

When you raise money from new investors to pay
off old investors -- if you're an investment
bank and you have these rotting loans, and you
package them up and feed them to new investors
so you can pay your bonuses and dividends --
that's a Ponzi scheme. By every definition, this
is as bad as what Madoff was doing. It was
massive, bigger in size.

Well good old Madoff goes to jail and the banks get bailed out.
And AIG..the con game extraordinară  just keeps going and going.
Figures.....

C

Gordon Brown is try to convince the US it needs to be done.

Furthermore, he had a specific mission to carry
out with the Obama administration - to persuade
it to give more attention to the international
aspects of the unfolding financial and economic
crisis and to explore ideas for global
regulation in particular. Here, analysts agree,
he faced his greatest obstacles.

"This is probably the least significant visit by
the least significant prime minister in modern
British history," said Ted Bromund, Margaret
Thatcher Senior Research Fellow at the
conservative Heritage Foundation. "The reality
is that Brown is desperately unpopular in the UK
and has made no impact in popular opinion in the
US."

This should be obvious to anybody. The problem is that far
to many in this country have a US-centric view and with trade
and finance being nearly totally global, this narrow view simply
will no longer work. The world is far to interdependent. We may
be a continent, but we surely are not an island.

C

At least in the UK according to this piece in the Independent.

The sudden change is disconcerting. For years I
might suggest society would be improved if we
sacked these vastly overpaid bankers, and the
response would be some variety of "Here he goes
again".

Now if you say the same thing the response is
"SACK them? I'll tell you what we should do, we
should cover them in marmalade and lock them in
a greenhouse full of wasps, then scour the
stings with a Brillo pad. Then prick them with
hedgehog spikes, smear them with fish paste and
dip them in Sydney Harbour, then glue them to a
pig and send them into an al-Qa'ida training
camp with a letter announcing they're a work of
art, never mind sack them."

Hey..works for me. But continuing...

Even the Daily Mail exclaimed on its front
page, "I'm keeping every penny" in outrage at
Fred Goodwin's pension. Maybe the paper is
planning a change of direction, and will be
sold in shopping precincts by left-wing groups,
yelling "SMASH the bosses, get the WORKER'S
Mail, for suburban fashion tips, 20 ways to
cook a parsnip and an all-out GENERAL strike."

Even Karl Marx himself is in vogue. Most papers
have had articles about him in their business
sections, commending his analysis of booms and
slumps, and he was on the front page of The
Times. Soon a Times editorial will begin: "As
the global downturn gathers pace, perhaps one
economic remedy to be considered by our
esteemed guardians is a violent workers'
revolution as envisaged by Mister Karl Marx,
and championed with consummate aplomb on page
32 by William Rees-Mogg."

A passage from Marx about the insatiable greed
of bankers was quoted on Radio 2 one morning by
Terry Wogan. For all I know he's doing it every
day now, muttering: "Now here's a jolly old
lesson from the old boy Karl \u2013 about those
rascals of the bourgeoisie, it seems they've
been robbing us blind all along and no mistake,
so let's overthrow the nitwits for a bit of
mischief. In the meantime this is 'Surrey with
the Fringe on Top'."

Sales of Marx's Capital are at an all-time
high, and this can't just be due to the current
rage against characters such as Fred Goodwin
and his merry bonus. It must also be because
Marx fathomed that under capitalism, boom and
slump would remain a perpetual cycle, as
opposed to those such as Gordon Brown, who said
once an hour for five years, "We have abolished
boom and bust", a theory which is now in need
of a minor tweak.

But Marx might be surprised at the way he
usually appears in these articles, as if he was
mostly an analyst, a Robert Peston of his day.
As a professional analyst, Marx would have been
a disaster. For example, one year after Capital
was due, his publishers asked him when it would
arrive and he wrote back: "You'll be pleased to
know I have begun the actual writing."

But he might also dispute the idea attributed
to him, that slumps make the collapse of
capitalism inevitable. Because while he said
SLUMPS were inevitable, he also said the
outcome wasn't inevitable at all, but depended
on whether the poor allow the rich to make them
pay for it.

Which is to say an abridged version of the
1,100 pages of Capital would go: "I'll tell you
what we should do, spray them with wildebeest
odour and make them run through the Serengeti,
with a commentary by Attenborough, then..."

This from the normally sedate and sometimes stuffy
Britts.  Disconcerting is an understatement.

C

North Dakota has one. And it is working quite well.

What does the State of North Dakota have
that other states don't? The answer seems
to be: its own bank. In fact, North
Dakota has the only state-owned bank in
the nation. The state legislature
established the Bank of North Dakota in
1919. Fleetham writes that the bank was
set up to free farmers and small
businessmen from the clutches of
out-of-state bankers and railroad men. By
law, the state must deposit all its funds
in the bank, and the state guarantees its
deposits. Three elected officials oversee
the bank: the governor, the attorney
general, and the commissioner of
agriculture. The bank's stated mission is
to deliver sound financial services that
promote agriculture, commerce and
industry in North Dakota. The bank
operates as a bankers' bank, partnering
with private banks to loan money to
farmers, real estate developers, schools
and small businesses. It loans money to
students (over 184,000 outstanding
loans), and it purchases municipal bonds
from public institutions.

Still, you may ask, how does that solve
the solvency problem? Isn't the state
still limited to spending only the money
it has? The answer is no. Certified,
card-carrying bankers are allowed to do
something nobody else can do: they can
create "credit" with accounting entries
on their books.

Of course there might be a little resistance from some
private banks. But if no National Bank, then a State Bank.
In fact this might work out better for some obvious and not
so obvious reasons. Even the colony of Pennsylvania had
one.

Update:

Another reason why a State Bank would be a good idea.
To keep these mortgage sharks at bay.

Brodetsky then shows the group at the Hyatt a
redacted photocopy of a loan modification he
recently secured. It cuts the borrower's
monthly payment to about $1,500 -- half of what
it would have been if he or she had to pay the
full amount owed.

Unfortunately for the borrower, however, is
that the remaining debt doesn't vanish. Those
unpaid tens of thousands are waiting there to
be reckoned with down the road, plus years of
additional interest. "Isn't that predatory
lending?" gasps one of the attendees at the
Hyatt. Vondran and Brodetsky change the subject.

Giving people another place to get their loans besides the
commercial snakes in the grass.

C

With some very interesting charts here.

The last time GDP equaled household debt (i.e.,
mortgage debt, consumer debt, etc) was in 1929
right before the epic crash preceding the Great
Depression.  The above chart clearly depicts
this end game of the debt bubble.  If you bring
this down to a more understandable level it
makes complete sense.  Just imagine a family
making $40,000 a year but having $40,000 in
debt.  Unless they have a sizable amount of
savings (which the above charts shows they do
not) then they are virtually living month to
month.  Any shift in home prices or stock market
values is enough to make them insolvent.  And
this is what is happening with banks.  You have
banks like Citigroup with total assets of $1.9
trillion and liabilities of $1.8 trillion.  That
gives them a working capital buffer of roughly
$100 to $150 billion depending on what sources
we are looking at.  And many of those so-called
assets are mortgages.  Let us just assume that
their assets decline by 10%.  A modest number
since some of these assets include mortgages and
mortgage backed securities.  So that $1.9
trillion is now $1.71 trillion.  They are now
insolvent.  And that is virtually what is
happening in the system and why the U.S.
Treasury and Federal Reserve are flooding banks
with capital.

So on a micro and macro scale this is playing
out thousands of times a day.  Yet while the
balance sheet of Americans gets pummeled, the
savings of banks increases courtesy of the
taxpayer:

So as the Treasury is try to TARPaper over the problem,
we get the shaft.

C

A very good take on it here.

The work of recovery is done in the blast
furnace of Truth. There is no shortcut.
Sobriety means not drinking.  Slipping booze
into milk does not mean that it's not booze.
Moving to another town where I don't know anyone
does not mean I am no longer an alcoholic.
Other people drinking does not matter - whether
or not I drink is what dictates whether or not I
am sober.  There is only one person responsible
for my actions and my drinking - me.

I wanted there to be an easy way, but there was
not. The only way to recover was to take an
honest inventory of my deeds and their
consequences.  I could not skip the painful
honesty and go straight to the sobriety.  I
needed to fully understand the consequences of
my actions.  The people I had hurt and the debts
I must pay.

Our country is in need of recovery. Like my own
personal recovery, we must face the consequences
of our actions. I hear people talking about jobs
and investment in the country.  Yes, I want all
of those things.  I want them so much, I believe
that in order to achieve them, we must look at
our misdeeds as a nation.  We must make an
honest accounting of our addictions.

Debt - This is arguably our most dangerous
problem.  We spend tomorrow's money today and
enter a future of indentured servitude.  That
borrowed money?  Where does it go?  It does not
go into things for the future like roads, power,
food or transportation.  It goes into the
pockets of the very wealthy manipulators of
wealth and finance.  Entire populations fooled
into spending money that they do not have to
make a few people very rich.  The false
prosperity of one bubble after another distracts
us from realizing that we are being bribed to
participate in our own future misery.

Oil - The obscene amounts of money that resource
rapists like oil, coal, gold & mineral mining
industries have at their disposal is
irresistible.  We are programmed to drive huge
cars that we believe make us into 'real
Americans' or 'successful' or 'cool looking'.
When all we're really doing is polluting the air
& water, siphoning off our wealth into the
pockets of oil & mineral companies and waiting
until it's too late to save cities, towns and
states from poverty.

Killing - The USA has been taken over by the
military.  US Defense Dept. spending dwarfs that
of every other country in the world - combined.
We bomb, shoot, attack any country we want
(usually one that a US oil or mining company is
busy stealing from).  When that is not enough,
they are spying on US Citizens, arming
mercenaries to operate outside of the law and
building private prisons to make fortunes from
incarcerating all the unhappy unemployed.  We
spend more money on killing people than anything
else.  Not food, not healthcare, not water, not
space exploration, not roads: killing people.
We are given words to make it OK, like
"defending American interests", "supporting our
troops" & "protecting our freedom".  Nice,
patriotic way to say murder.

Drugs & Alcohol - The war on drugs is a war on
the American citizen.  US anti-drug policy,
combined with covert CIA drug harvest operations
is responsible for more drugs on US streets than
ever before.  It is no coincidence that entire
cities are devastated by drugs, crime, health &
education issues as a result of the horrible
failure and direct culpability of US anti-drug
efforts.  Any population too messed up on drugs
or legal alcohol is not going to be in a
position to challenge the status quo.  Entire
cities are doomed for this generation and the
next because of drugs and alcohol.

Empire - Capitalism does not need to be: .01% of
the population accruing all the wealth while the
remaining 99.9% do all the work and pay all the
debt.  Yet, that is what have.  The tyranny of
the wealth-hoarding elite has brought wars,
slavery, drugs, indentured servitude, corruption
and hatred - foreign and domestic.  The NeoCon
vision of American Empire is an extension of the
Confederate States vision for the same, which
was an extension of the British Colonial
ambitions.  These groups all have one central
goal: Privatized wealth and socialized debt.

Organized Crime Religion - the gold standard for
propaganda and delusion.  Especially
fundamentalist religions.  The narrow dogmatic
views of intolerance, disinformation, literal
adherence to fairy tales with conflicting
conclusions all aimed at one thing: money.
These grifters holy-rollers pile on the sacred
word of an invisible being like a truckload of
manure.  Look at the religions in the way the
FBI looks at mobsters - follow the money. They
go to Washington, DC and come back with
funding.  They go to church on sunday and come
away with money.  They preach abstinence only
sex-ed. and tell us that God wants women to be
in the home, pregnant and servile (and
uneducated). Interesting how the one thing that
breaks the cycle of poverty is the education of
women and all fundamentalist religions oppose
that very thing.  Hmmm....follow the money.
Poor people and uneducated people are in no
position to challenge authority, thereby keeping
Religion and their associates sitting firmly on
top of the money again.   And we fall for it
because we think God will punish us for calling
these lying thieves out for what they are.  We
get lies and live deluded lives while they get
privilege, wealth and power.  Our deal sucks,
people.

We, the People have abdicated our responsibility
and participated in our own genocide.  300
million Americans have stood by since the 1950's
and allowed our government to be stolen.  We
have allowed over 1 million Iraqi deaths for two
oil men to become more wealthy.  We are addicted
to the delusion that we have a chance to become
one of the Great American Success stories.  The
truth is that unless we own the top .01% of this
country's wealth, we are either house negroes or
field negroes.

If we are going to work our way out of these
addictions, we need to be honest in all the
places we have lied.  Yes, we lied.  We are all
liars.  Get used to it.  It's uncomfortable, sad
and depressing.  It is all those things and it
is true. We punch the clock, go to work, pay our
taxes and complain about our neighbors. Our tax
money (and our great-grandchildren's tax money)
is spent lining the pockets of the top .01% and
people are murdered with bullets, bombs and
knives that are funded by us.

This economic collapse is our fault.  Not Wall
St.  Not Washington, DC.  Me, you and the people
next door.  We sat on our asses, took the bribes
offered to us by real estate bubbles, tech
bubbles, mortgage bubbles, banking bubbles and a
50-year orgy of war profiteering. We used those
bubbles to ignore what was going on with our tax
money.  We allowed ourselves to be bribed with
promises of riches in the stock market, the
possibility that we could be on Lifestyles of
the Rich and Famous one day, if we caught the
right trend.  It was a delusion.  We were
tricked with greed and the only money were
allowed to have were mere fractions of the
hoards of wealth plundered from other countries
and our own future.

The only way we sober up is to start with
honesty.  If we try to take shortcuts, we will
only do what every addict does when they avoid
responsibility for their real actions - we will
relapse and prolong our addiction.  There isn't
anything easy about this.  We won't be able to
just go to work and not think about it much and
then suddenly pick up a paper to see that things
are getting better.  That has never worked.
That is how we got here in the first place.
That is delusional thinking.

The war-profiteers, oil barons and other wealth
hoarders are not going away simply because we
want them to.  They need to be publicly shamed,
dragged out of the corridors of power, kicking
and screaming because that is the only way they
will leave.  Our country has been stolen by
people that are happy to make billions off the
cultivation of human misery.  These are the
idealogical descendants of slave owners, tyrants
and robber barons.

The cold, hard truth is that we went to sleep on
the job and let them steal America.  These
people have existed since the dawn of time and
we did not invent them.  There may have never
been a country that lived free of their foul
manipulation of innocent lives, shepherding us
like cattle for their profit and our doom.
However, this country may finally be the one to
break their influence and truly create a society
where justice and liberty and the law of the
land exist in place of delusion and tyranny.

The price for this dream, paid here in the very
dark hours of despair, poverty and fear - is
honesty.

"Brother, can you spare a truth?"

"Rarely have we seen a person fail who has thoroughly followed
our path. Those who do not  recover are people who cannot or will
not completely give themselves to this simple program, usually men
 and women who are constitutionally incapable of being honest with
themselves. There are such unfortunates. They are not at fault; they
seem to have been born that way. They are naturally incapable of
grasping and developing a manner of living which demands rigorous
honesty. Their chances are less than average. There are those, too,
who suffer from grave emotional and mental disorders, but many of
 them do recover if they have the capacity to be honest."

C

People are worth less than red tape.

The Boston Globe explains here with the Mass. system as a bad
example.

MASSACHUSETTS HAS been lauded for its
healthcare reform, but the program is a
failure. Created solely to achieve universal
insurance coverage, the plan does not even
begin to address the other essential components
of a successful healthcare system.

What would such a system provide? The
prestigious Institute of Medicine, part of the
National Academy of Sciences, has defined five
criteria for healthcare reform. Coverage should
be: universal, not tied to a job, affordable
for individuals and families, affordable for
society, and it should provide access to
high-quality care for everyone.

The state's plan flunks on all counts.

First, it has not achieved universal
healthcare, although the reform has been a boon
to the private insurance industry. The state
has more than 200,000 without coverage, and the
count can only go up with rising unemployment.

Second, the reform does not address the problem
of insurance being connected to jobs. For
individuals, this means their insurance is not
continuous if they change or lose jobs. For
employers, especially small businesses, health
insurance is an expense they can ill afford.

Third, the program is not affordable for many
individuals and families. For middle-income
people not qualifying for state-subsidized
health insurance, costs are too high for even
skimpy coverage. For an individual earning
$31,213, the cheapest plan can cost $9,872 in
premiums and out-of-pocket payments. Low-income
residents, previously eligible for free care,
have insurance policies requiring unaffordable
copayments for office visits and medications.

Fourth, the costs of the reform for the state
have been formidable. Spending for the
Commonwealth Care subsidized program has
doubled, from $630 million in 2007 to an
estimated $1.3 billion for 2009, which is not
sustainable.

Fifth, reform does not assure access to care.
High-deductible plans that have additional
out-of-pocket expenses can result in many
people not using their insurance when they are
sick. In my practice of child and adolescent
psychiatry, a parent told me last week that she
had a decrease in her job hours, could not
afford the $30 copayment for treatment sessions
for her adolescent, and decided to meet much
less frequently.

In short Health Reform that keeps the Insurance companies
in charge is just another Chinese fire drill and accomplishes
nothing.

C

James Baker in the financial Times has a solution.

Unfortunately, the US may be repeating
Japan's mistake by viewing our current
banking crisis as one of liquidity and
not solvency. Most proposals advanced
thus far assume that, once confidence in
financial markets is restored, banks will
recover.

But if their assumption is wrong, we risk
perpetuating US zombie banks and
suffering a lost American decade.

Evidence - a mountain of toxic assets,
housing market declines, a sharp economic
recession, rising unemployment and
increasing taxpayer exposure through
guarantees, loans, and infusion of
capital - strongly suggests that some
American banks face a solvency problem
and not merely a liquidity one.

We should act decisively. First, we need
to understand the scope of the problem.
The Treasury department - working with
the Federal Reserve - must swiftly
analyse the solvency of big US banks.
Treasury secretary Timothy Geithner's
proposed "stress tests" may work. Any
analyses, however, should include
worst-case scenarios. We can hope for the
best but should be prepared for the
worst.

Next, we should divide the banks into
three groups: the healthy, the hopeless
and the needy. Leave the healthy alone
and quickly close the hopeless. The needy
should be reorganised and recapitalised,
preferably through private investment or
debt-to-equity swaps but, if necessary,
through public funds. It is time for
triage.

To prevent a bank run, all depositors of
recapitalised banks should be fully
guaranteed, even if their deposit exceeds
the Federal Deposit Insurance Corporation
maximum of $250,000 (E197,000, £175,000).
But bank boards of directors and senior
management should be replaced and,
unfortunately, shareholders will lose
their investment. Optimally, bondholders
would be wiped out, too. But the risk of
a crash in the bond market means that
bondholders may receive only a haircut.
All of this is harsh, but required if we
are ultimately to return market
discipline to our financial sector.

Leave the healthy ones alone and bury the dead ones. What a
concept. Now why hasn't anyone else though of this ?

C

As put forth by Jim Kunstler. The party is over and the
hang over has just begun.

  The public perception of the ongoing
fiasco in governance has moved from
sheer, mute incomprehension to
goggle-eyed panic as the scrims of
unreality peel away revealing something
like a national death-watch scene in
history's intensive care unit. Is the USA
in recession, depression, or collapse?
People are at least beginning to ask.
Nature's way of hinting that something
truly creepy may be up is when both Paul
Volcker and George Soros both declare on
the same day that the economic landscape
is looking darker than the Great
Depression.

 Those tuned into the media-waves were
enchanted, in a related instance, by Rick
Santelli's grand moment of theater in the
Chicago trader's pit last week when he
seemed to ignite the first spark of
revolution by demonstrating that bail-out
fatigue had morphed into high emotion --
and that the emotion could be marshaled
against public policy. The traders in the
pit on-screen seemed to color up and buzz
loudly, like ordinary grasshoppers
turning into angry locusts preparing to
ravage a waiting valley. "Are you
listening, President Obama?" Mr. Santelli
asked portentously.

  In the broad blogging margins of the
web that orbit the mainstream media like
the rings of Saturn, an awful lot of
reasonable people have begun to ask
whether President Obama is a stooge of
whatever remains of Wall Street, with
Citigroup and Goldman Sachs's puppeteer,
Robert Rubin, pulling strings behind an
arras in the Oval Office. Personally, I
doubt it, but it is still a little hard
to understand what the President is up
to. For one thing, the stimulus package,
so-called, looks more and more like
national sub-prime mortgage itself, a bad
bargain made under less-than-realistic
terms, with future obligations fobbed
onto whoever inhabits this corner of the
world for the next seven hundred years --
and all to pay for a bunch of granite
counter-tops and flat-screen TVs.

  I suppose Mr. Obama is burdened with
the knowledge that the economic truth is
so much worse than he imagined back in
November that there is simply nothing to
do at this point except pretend to serve
up a "tasting menu" of rescue plans in
the hope that markets and mechanisms
might be conned back into compliance with
our wish keep getting
something-for-nothing forever. FDR
already used the fear of fear itself
trope, so Mr. O is left with little more
than displaying pluck and confidence in
the face of overwhelming bad news.

  The sad truth is that banking has
become a Chinese fire drill -- a frantic
act of futility -- as insolvent companies
persist in covering up their losses in
order to avoid the counter-party hell of
credit default swaps that would ring the
world's "game over" bell. This can only
go on so long. All the chatter about
"nationalizing" the banks really boils
down to what kind of bankruptcy work-out
will they be put through, how destructive
will the process be, and how much of the
pain can be shoved forward in time to
people now in diapers and their
descendants.


 Among the questions that disturb the
sleep of many casual observers is how
come Mr. O doesn't get that the
conventional process of economic growth
-- based, as it was, on industrial
expansion via revolving credit in a
cheap-energy-resource era -- is over, and
why does he keep invoking it at the
podium? Dear Mr. President, you are
presiding over an epochal contraction,
not a pause in the growth epic. Your
assignment is to manage that contraction
in a way that does not lead to world war,
civil disorder or both. Among other
things, contraction means that all the
activities of everyday life need to be
downscaled including standards of living,
ranges of commerce, and levels of
governance. "Consumerism" is dead.
Revolving credit is dead -- at least at
the scale that became normal the last
thirty years. The wealth of several
future generations has already been spent
and there is no equity left there to
re-finance.

  If contraction and downscaling are
indeed the case, then the better question
is: why don't we get started on it right
away instead of flogging rescue plans to
restart something that is DOA?
Downscaling the price of over-priced
houses would be a good place to start.
This gets to the heart of Rick Santelli's
crowd-stirring moment. Let the chumps and
weasels who over-reached take their lumps
and move into rentals. Let the bankers
who parlayed these fraudulent mortgages
into investment swindles lose their jobs,
surrender their perqs, and maybe even go
to jail (if attorney general Eric Holder
can be induced to investigate their
deeds). No good will come of propping up
the false values of mis-priced things.

  No good, in fact, will come of a
campaign to sustain the unsustainable,
which is exactly what the Obama program
is starting to look like. In the folder
marked "unsustainable" you can file most
of the artifacts, usufructs, habits, and
expectations of recent American life:
suburban living, credit-card spending,
Happy Motoring, vacations in Las Vegas,
college education for the masses, and
cheap food among them. All these things
are over. The public may suspect as much,
but they can't admit it to themselves,
and political leadership has so far
declined to speak the truth about it for
them -- in short, to form a useful
consensus that will allow us to move
forward effectively. One of the sad
paradoxes of politics is that democracies
do not seem very good at disciplining
their citizens' behavior. The wish to
please voters and the influence of
campaign money overwhelm even leaders
with mature instincts. In America's case,
this could lead to what I like to call
corn-pone Naziism a few years down the
road. Someone will design snazzy uniforms
and get us all marching around to "God
Bless America." At the point of a gun.

  It's not too late for President Obama
to start uttering these truths so that we
can avoid a turn to fascism and get on
with the real business of America's next
phase of history -- living locally,
working hard at things that matter, and
preserving civilized culture. What a lot
of us can see now staring out of the
abyss is a new dark age. I don't think
it's necessarily our destiny to end up
that way, but these days we're not doing
much to avoid it.

In short Things will become very unpleasant, as the Japanese
would say.

C

A bit from Raw Story claims that the so called "Tea Parties"
that have been arranged around the country maybe of the
..uhum...instant variety.

Now fresh revelations suggest that the
skepticism may be well-placed. Mark
Ames and Yasha Levine allege in their
blog at Playboy.com that the protests
were planned well in advance,
coordinated by old-line anti-tax
organizations, and funded by right-wing
corporate interests.

"What hasn\u2019t been reported until
now is evidence linking Santelli\u2019s
'tea party' rant with some very
familiar names in the Republican
rightwing machine," they write, "from
PR operatives who specialize in
imitation-grassroots PR campaigns
(called 'astroturfing') to bigwig
politicians and notorious billionaire
funders. As veteran Russia reporters,
both of us spent years watching the
Kremlin use fake grassroots movements
to influence and control the political
landscape. To us, the uncanny speed and
direction the movement took and the
players involved in promoting it had a
strangely forced quality to it. If it
seemed scripted, that's because it
was."

As described by Ames and Levine,
Santelli's call for a "tea party" in
Chicago next summer was quickly picked
up by a website called
ChicagoTeaParty.com and spread from
there to the Drudge Report. However,
the ChicagoTeaParty.com domain is not
new. It was registered last summer by
the producer of a right-wing radio show
in Chicago and, the writers allege, is
one of several tied to the anti-tax
group FreedomWorks, which is among the
sponsors of the current protests.

FreedomWorks is the latest incarnation
of an organization formerly known as
Citizens for a Sound Economy, which was
founded in 1984 "to anonymously
leverage corporate contributions into
debates on public policy." CSE had
close ties to Koch Industries and
became one of the major recipients of
grant money from conservative
foundations and major corporations such
as Exxon, Philip Morris, and General
Motors.

How utterly convenient for those of the right wing corporate
wackos. Wonder how much they got payed for their...protest.

Oh..excuse me. They don't pay their protester, do they. Or anyone
else they can horn swoggle.

C

That Democrats and progressives will take away their porn.

A new nationwide study (pdf) of
anonymised credit-card receipts from a
major online adult entertainment
provider finds little variation in
consumption between states.

"When it comes to adult entertainment,
it seems people are more the same than
different," says Benjamin Edelman at
Harvard Business School.

However, there are some trends to be
seen in the data. Those states that do
consume the most porn tend to be more
conservative and religious than states
with lower levels of consumption, the
study finds.

"Some of the people who are most
outraged turn out to be consumers of
the very things they claimed to be
outraged by," Edelman says.

What we all suspected all along.

C

He takes a while to get there but Rich sees the problem.

But that good news for Obama is
countered by the bad. The genuine
populist rage in the country - aimed
at greedy C.E.O.'s, not at the
busted homeowners mocked as "losers"
by Santelli - cannot be ignored or
finessed. Though Obama was crystal
clear on Tuesday that there can be
"no real recovery unless we clean up
the credit crisis," it was telling
that he got fuzzy when he came to
what he might do about it. He waited
two days to drop that shoe in his
budget: a potential $750 billion in
banking "asset purchases" on top of
the previous $700 billion bailout.

Therein lies the Catch-22 that could
bring the recovery down. As Obama
said, we can't move forward without
a functioning financial system. But
voters of both parties will demand
that their congressmen reject
another costly rescue of it.
Americans still don't understand why
many Wall Street malefactors remain
in place or why the administration's
dithering banking policy lacks the
boldness and clarity of Obama's
rhetoric.

And it's their (the voters) opinion that got him elected.
Screw Wall Street...listen to the people. They are pissed
as hell.

Nor can a further bailout be easily
sold by a Treasury secretary,
Timothy Geithner, whose lax
oversight of the guilty banks while
at the New York Fed remains a
subject of journalistic inquiry. In
a damning 5,600-word article from
Bloomberg last week, he is portrayed
as a second banana, a timid protégé
of the old boys who got us into this
disaster. Everyone testifies to
Geithner's brilliance, but Jindal, a
Rhodes scholar, was similarly hyped.
Like the Louisiana governor, the
Treasury secretary is a weak public
speaker not because he lacks brains
or vocal training but because his
message doesn't fly.

More like a fly in the ointment. Far too cozy with the
very people he is supposed to be dealing with.

Among the highlights of Obama's
triumphant speech was his own
populist jeremiad about the "fancy
drapes" and private jets of Wall
Street. But talk is not action. Two
days later, as ABC News reported,
the president of taxpayer- supported
Bank of America took a private jet
to New York to stonewall Andrew
Cuomo's inquest into $3.6 billion of
suspect bonuses.

Just one more arrogant move to stick in the throats
of the populous. 

Handing more public money to the
reckless banks that invented this
culture and stuck us with the
wreckage is the new third rail of
American politics. If Obama doesn't
forge a better plan, neither his
immense popularity nor even
political foes as laughable as
Jindal can insulate him from getting
burned.

Chased up a tree and set a flame, I would say. Those
that got him elected and undo this in four years. More
of them than there is of those hanging around the NYSE.

C