Politics Plus

In order for Americans to have confidence in our economy, decisions made at the highest level must be made openly and subjected to public scrutiny.  Robert Reich questions why the new financial reform bill, currently under negotiation, allows so much power to the most secretive of organizations.

The Fed has finally came clean. It now admits it bailed out Bear Stearns — taking on tens of billions of dollars of the bank’s bad loans — in order to smooth Bear Stearns’ takeover by JP Morgan Chase. The secret Fed bailout came months before Congress authorized the government to spend up to $700 billion of taxpayer dollars bailing out the banks, even months before Lehman Brothers collapsed. The Fed also took on billions of dollars worth of AIG securities, also before the official government-sanctioned bailout.

The losses from those deals still total tens of billions, and taxpayers are ultimately on the hook. But the public never knew. There was no congressional oversight. It was all done behind closed doors. And the New York Fed — then run by Tim Geithner — was very much in the center of the action.

This raises three issues.

• First, only Congress is supposed to risk taxpayer dollars. The Fed is not part of the legislative branch. Its secret deals, announced almost two years after they were done, violate the democratic process, if not the Constitution itself. Thomas Jefferson put a stop to Alexander Hamilton’s idea of a powerful central bank out of fear it would be unaccountable to the public. The Fed has just proven Jefferson’s point.
• Second, if the Fed can secretly bail out big banks, the problem of "moral hazard" – bankers taking irresponsible risks because they know they’ll be rescued – is far greater than anyone assumed after Congress and the Bush and Obama administrations bailed out the banks. Big banks will always be too big to fail because they know the Fed will secretly back them up if they get into trouble, even if Congress won’t do it openly.
• Third, the announcement throws a monkey wrench into the financial reform bill now on Capitol Hill, which gives the Fed additional authority by, for example, creating a consumer protection bureau inside it. Only yesterday, Sen. Jim DeMint (R-S.C.) blasted the Dodd bill for expanding the Fed’s authority "even as it remains shrouded in secrecy."

The Fed has a big problem. It acts in secret. That makes it an odd duck in a democracy. As long as it’s merely setting interest rates, its secrecy and political independence can be justified. But once it departs from that role and begins putting billions of dollars of taxpayer money at risk — choosing winners and losers in the capitalist system — its legitimacy is questionable.

That it chose to reveal the truth about its activities during a week when Congress is out of town, when much of official Washington and the Washington media have gone on vacation, and only after several federal courts have held that the Fed must release documents related to its bailout of Bear Stearns, suggests it would rather remain secret than become transparent.

Much of what Ben Bernanke and Tim Geithner did (when Geithner was at the New York Fed) in 2008 was presumably necessary. But the public has no way of knowing…[emphasis added]

Inserted from <Huffington Post>

Reich is right.  If the fox is to guard the henhouse, who will guard the fox?  The Fed is not suited for the role of regulator.  In fact, it needs to BE regulated.

It seems that virtually every time we ‘save the people’ of a country, especially in the Muslim world, we commit the same error, over and over again.  We keep feeding rabid dogs.  They keep biting our hands.  Let’s remember that the CIA gave Osama $30 million to form Al Qaeda to commit terrorist acts against the USSR or that Donald Rumsfeld brokered the original deal that gave Saddam chemical weapons to use against Iran.  Now the latest dog in the kennel is not happy with us.

Hamid Karzai, the Afghan president, delivered extraordinarily harsh criticism on Thursday of the Western governments fighting in his country, the United Nations, and the British and American news media, accusing them of perpetrating the fraud that denied him an outright victory in last summer’s presidential elections.

Just days after meeting with President Obama, Mr. Karzai, who has increasingly tried to distance himself from his American backers, said the coalition troops risked being seen as invaders rather than saviors of the country.

The speech, later broadcast on local television, seemed a measure of Mr. Karzai’s mood in the wake of Mr. Obama’s visit, in which Mr. Obama rebuked the Afghan president for his failure to reform election rules and crack down on corruption. At points in the speech, Mr. Karzai used inflammatory language about the West.

“There is no doubt that the fraud was very widespread, but this fraud was not committed by Afghans, it was committed by foreigners,” Mr. Karzai said. “This fraud was committed by Galbraith, this fraud was committed by Morillon and this fraud was committed by embassies.” Mr. Karzai was referring to Peter W. Galbraith, the deputy United Nations special representative to Afghanistan at the time of the election and the person who helped reveal the fraud, and Philippe Morillon, the chief election observer for the European Union.

Later in the speech he accused the Western coalition fighting against the Taliban of being on the verge of becoming invaders — a term usually used by insurgents to refer to American, British and other NATO troops fighting in Afghanistan.

“In this situation there is a thin curtain between invasion and cooperation-assistance,” said Mr. Karzai, adding that if the perception spread that Western forces were invaders and the Afghan government their mercenaries, the insurgency “could become a national resistance.”

On Wednesday, Mr. Karzai suffered a political defeat when the lower house of Parliament rejected a revision of the election law that would have allowed him to appoint all the members of the agency that investigates election irregularities. Currently the United Nations appoints three of the five members.

The American Embassy and the United Nations mission in Kabul had no comment on Mr. Karzai’s speech… [emphasis added]

Inserted from <NY Times>

We should not be surprised that Karzai is thoroughly corrupt.  He was appointed President to represent US corporate interests, because he was a Unocal employee.  Also, had he the slightest shred of integrity, GW Bush would never have made him our designated puppet.

I have long said that a foreign policy that respects the cultures and includes the well-being of the people, not corporate economic exploitation, is the only path to peace.  Mohammed ElBaradei echoes my view.

Western governments risk creating a new generation of Islamist extremists if they continue to support repressive regimes in the Middle East, the former head of the UN nuclear watchdog, Mohamed ElBaradei, has told the Guardian.

In his first English-language interview since returning to Cairo in February, the Nobel peace prize-winner said the strategy of supporting authoritarian rulers in an effort to combat the threat of Islamic extremism had been a failure, with potentially disastrous consequences.

"There is a need for re-evaluation … the idea that the only alternative to authoritarian regimes is [Osama] Bin Laden and co is a fake one, yet continuation of current policies will make that prophecy come true," he said. "I see increasing radicalisation in this area of the world, and I understand the reason. People feel repressed by their own governments, they feel unfairly treated by the outside world, they wake up in the morning and who do they see – they see people being shot and killed, all Muslims from Afghanistan, Iraq, Somalia, Sudan, Darfur."

ElBaradei said he felt vindicated in his cautious approach while head of the International Atomic Energy Authority. He revealed that all his reports in the runup to the Iraq war were designed to be "immune from being abused" by governments. "I would hope that the lessons of Iraq, both in London and in the US, have started to sink in," he said.

"Sure, there are dictators, but are you ready every time you want to get rid of a dictator to sacrifice a million innocent civilians? All the indications coming out of [the Chilcot inquiry] are that Iraq was not really about weapons of mass destruction but rather about regime change, and I keep asking the same question – where do you find this regime change in international law? And if it is a violation of international law, who is accountable for that?"

ElBaradei, who has emerged as a potential challenger to the three-decade rule of Egypt’s president, Hosni Mubarak, said western governments must withdraw the unstinting support for autocrats who were seen to be a bulwark against extremism.

"Western policy towards this part of the world has been a total failure, in my view. It has not been based on dialogue, understanding, supporting civil society and empowering people, but rather it’s been based on supporting authoritarian systems as long as the oil keeps pumping."

The 67-year-old added: "If you bet on individuals, instead of the people, you are going to fail. And western policy so far has been to bet on individuals, individuals who are not supported by their people and who are being discredited every day."… [emphasis added]

Inserted from <Common Dreams>

The war in Afghanistan is just the tip of this iceberg.  The cost of trying to impose the will of US corporations on captive peoples is too high.  If the US is to be a world leader, and we should be, we mist lead by example, not by fiat.

Do you remember when Snake in the Grassley “negotiated” with Max Baucus on health care, only to pull out at the last moment, bragging about how he stalled HCR long enough to mobilize the GOP brown-shirts, aka Teabaggers, to attack during town halls?  The dancers have changed, but I hear the same tune playing.

Where have we heard this before? "I couldn’t support the bill in its current form. I am absolutely not throwing in the towel. I have no plans to support the current legislation. I hope we’ll get back to the negotiating table."

Let’s just get back to the negotiating table and spend more time talking about maybe eventually passing a financial reform bill, the kinder, gentler way of Republican obstructionism as practiced by Olympia Snowe for months, and months, and months in health insurance reform. It could have been different, as last week Corker broke ranks with his party, saying that Republicans had made "a very large strategic mistake" in not working in the Banking Committee toward a bipartisan deal. He’s now back in line after straying.

Last week Mr. Corker, of Tennessee, said he expected a bill would pass, infuriating Republicans and many bank executives who thought he was making it easier for Democrats to push the bill through.

No Republican has yet signaled support for the bill and Mr. Corker’s latest comments could reflect a new GOP resolve to oppose it unless changes are made.

For his part, Banking Committee chair Chris Dodd says he’s still open to a bipartisan deal, and the White House open, but not particularly optimistic:

Axelrod made clear that invitation exists from the Obama administration too, but he sounded far from optimistic about the chances of a bipartisan financial regulatory reform package.

“We’re certainly going to invite them to participate with us,” Axelrod said of the Republicans. “There’s enormous pressure from the financial industry, huge army of lobbyists on the Hill. The Republican Party has generally been very responsive to that lobby and one hopes that some of them will break loose here and say we can’t allow the country to get into the same situation we were in the last few years because of the reckless speculation on Wall Street,” he added.

…

Inserted from <Daily Kos>

I hear an echo.But the GOP is in big trouble here.  The only thing that Democrats, mainstream Republicans, Independents, and even Teabaggers have in common is that we are all angry at banksters.  If GOP politicians want to openly support these corporate criminals in an election year, let them.  If they want to filibuster and vote unanimously against financial reform, let them.  Then let them try to defend their votes in November. Keith Olbermann and Barney Frank agree:

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