Job Creation-- Or Another Opportunity To Give Our Tax Dollars To Wall Street Fascists Again?

Yesterday Politico published a scorching OpEd by neo-liberal economist Jeffrey Sachs. Sachs isn't a one-dimensional drooling right-wing ideologue and, although his overall theme is anti-Keynsian claptrap, there is plenty in what he says that can't be denied.

Almost the entire country seems to agree that the debt deal is miserable. Yet the shouting does little to clear up what is really wrong with the deal and with the U.S. economy. Democrats blame Republicans, and Republicans blame Democrats. But both parties are partners in America’s decline.

We need a new direction in the country, and that requires taking on the powerful interests represented by both political parties.

President Barack Obama has failed to lead the country out of crisis. This is not just because of right-wing opposition, but also because Obama has promoted the wrong ideas. He came to office following the end of a Wall-Street-fueled consumption binge that had started during the Clinton administration and collapsed in 2008.

...Obama surrounded himself with the Wall Street types who had deregulated the financial sector and thereby created the bubble economy under President Bill Clinton – Robert Rubin, Larry Summers, Gene Sperling and many others.

What kind of economic policy can one expect when nearly every senior administration official on the economic team is tied to Wall Street? The answer is predictable: One that is unfair, shortsighted and loaded with gimmicks. Yet in our exhausted, post-binge economy, the gimmicks don’t even create a blip in jobs and growth, much less a sustained recovery.

...The Republican opposition is, of course, far nastier and its economics are even worse. The GOP holds that there is one and only one answer to every problem: lower taxes on the rich.

In the Republican ideology, the super-rich are the job-creators and therefore deserve all the money we can shove their way, even as tens of millions of Americans struggle to make ends meet. There is also the idea that the poor are unworthy-- for example, an illegal minority migrant household.

The Republicans forever prey on a divide-and-conquer mentality, which is indeed leaving our country divided and conquered by hate and fear.

Sachs may be feted as a great thinker of the 21st Century but Matt Taibbi is a far keener analyst of real life politics and how it interacts with real life economics. There's probably a lot they agree on but Taibbi's work is more informative, more practical and better suited to a non-academic real world. His latest column in Rolling Stone takes on the dreaded corporate tax holiday concept still being pushed-- vigorously-- by neo-liberal freaks on Wall Street and K Street and in the offices of Republicans and Blue Dogs. In fact corporate whores Kevin Brady (R-TX) and Jim Matheson (Blue Dog-UT) are co-sponsoring a bill, the Freedom to Invest Act, which would “temporarily” lower the effective corporate tax rate to 5.25 percent for all profits being repatriated to America from overseas profits.

Essentially, this is a one-time tax holiday rewarding companies for systematically offshoring their profits since 2004-- the last time they did this “one-time” deal.

The Brady bill is still alive and in speaking to three different Hill staffers (on the House side) over the last few days, I’m hearing that it was “unaffected” by the debt deal and that it continues to gain momentum, thanks in large part to a lobbying effort that two different staffers described as intense and ongoing.

For people interested in this story, I definitely recommend reading this Bloomberg article focusing on Cisco, one of the biggest lobbyers in favor of the tax holiday. This is a company whose CEO, John Chambers, wrote an editorial last October in the Wall Street Journal predicting that the tax holiday would generate a trillion dollars in repatriated earnings, money that Chambers insisted would outdo even Barack Obama’s stimulus as a job-creation engine:

"The amount of corporate cash that would come flooding into the country could be larger than the entire federal stimulus package, and it could be used for creating jobs, investing in research, building plants, purchasing equipment, and other uses."

And yet: Chambers’s company, Cisco, would not commit to creating so much as a single job if the tax holiday is passed. As it is, the company has already committed to a wave of layoffs. When asked a question about Cisco's plans w/regard to a potential tax holiday, the company’s spokesman, John Earhardt, declined to answer. From the Bloomberg piece:

"It’s unclear whether any jobs would come from Cisco, which announced plans in May to shed an unspecified number of workers. Earnhardt, the spokesman, declined to comment on hiring plans for the company, whose customers include Verizon Communications Inc. (VZ) and AT&T Inc. (T)

Matt with Olbermann this week:

Who Lied About How They Would Vote On The Satan Sandwich?

Congratulations to Gabby Giffords for making it back to Congress to vote and being the surprise-- except for Wasserman Schultz and Pelosi-- 95th Democratic Party vote for the Republican agenda, tying the 95 actual Democrats who opposed it. As my old pal Susan Klein remarked on Twitter, it was the most dramatic comeback performance since Judy Garland at Carnegie Hall in 1961. Gabby's appearance meant much more to the assembled politicians-- actually, of both parties-- than Judy's did to anyone but the gays. It was a good moment for the nation-- and a great smokescreen for the supposed defenders of working people, like Wasserman Schultz-- who could use it to change the subject when anyone wondered why she had just given John Boehner 98% of what he wanted.

Debbie Wasserman Schultz's vote was never in doubt of course. She's the ultimate political hack and always has been. Rahm didn't pick her for a leadership role at the DCCC and Obama didn't pick her to head the DNC because she's got an independent spirit or a conscience. She's very nice on women's issues, though... more than one can say about many of the Blue Dogs she relentlessly promotes. But at least Debbie never held out hope that she might take the side of working families and reject the Satan Sandwich. How about the duplicitous Democrats who signed the Grijalva-Ellison letter to Pelosi pledging to never vote for any bill that jeopardizes Social Security, Medicare and Medicaid, which, despite indignant protestations to the contrary by the likes of Debbie Wasserman Schultz, this bill certainly does? The Caucus itself only lost 15 members in the vote yesterday but some of the non-Caucus signers found Wasserman Schultz's and Obama's arguments to back everything Boehner wanted suddenly very persuasive.

The vast majority of the 87 Democrats who signed the letter were true to their word and voted NO-- against the Satan Sandwich. Who broke their word and betrayed their constituents?

Karen Bass (CA)
David Cicciline (RI)
William Lacy Clay (MO)
Jerry Costello (IL)
Mark Critz (PA)
Danny Davis (IL)
Ted Deutch (FL)
Lloyd Doggett (TX)
Chaka Fattah (PA)
John Garamendi (CA)
Luis Gutierrez (IL)
Mazie Hirono (HI)
Sheila Jackson Lee (TX)
Eddie Bernice Johnson (TX)
Hank Johnson (GA)
Dale Kildee (MI)
Jim Langevin (RI)
Stephen Lynch (MA)
Cedric Richmond (LA)
Steve Rothman (NJ)
Frederica Wilson (FL)
David Wu (OR)

A bigger shock came when three Blue Dogs who rarely take the side of working families over Big Business came over to the progressive side in Monday's night's vote-- Leonard Boswell (IA), Dennis Cardoza (CA) and, most shocking of all, Mike McIntyre (NC).


Even before Kissinger's infamous tweet, Matt Taibbi made the same point in Rolling Stone.

The popular take is that Obama is a weak leader of a weak party who was pushed around by canny right-wing extremists. Observers like pollster Sydney Greenberg portray Obama and the Democrats as a group of politically tone-deaf bureaucrats who fail because the public associates them with a corrupt government that benefits the rich and connected.

The Democrats, Greenberg argues, could change their situation by showing the public that they genuinely represent the interests of ordinary working people... But to a bunch of hired stooges put in office to lend an air of democratic legitimacy to what has essentially become a bureaucratic-oligarchic state, what good does such advice do? Would it have made sense to send the Supreme Soviet under Andropov or Brezhnyev a list of policy ideas for enhancing the civil liberties of Soviet citizens?

The Democrats aren't failing to stand up to Republicans and failing to enact sensible reforms that benefit the middle class because they genuinely believe there's political hay to be made moving to the right. They're doing it because they do not represent any actual voters. I know I've said this before, but they are not a progressive political party, not even secretly, deep inside. They just play one on television.

For evidence, all you have to do is look at this latest fiasco.

The Republicans in this debt debate fought like wolves or alley thugs, biting and scratching and using blades and rocks and shards of glass and every weapon they could reach.

The Democrats, despite sitting in the White House, the most awesome repository of political power on the planet, didn't fight at all. They made a show of a tussle for a good long time-- as fixed fights go, you don't see many that last into the 11th and 12th rounds, like this one did-- but at the final hour, they let out a whimper and took a dive.

We probably need to start wondering why this keeps happening. Also, this: if the Democrats suck so bad at political combat, then how come they continue to be rewarded with such massive quantities of campaign contributions? When the final tally comes in for the 2012 presidential race, who among us wouldn't bet that Barack Obama is going to beat his Republican opponent in the fundraising column very handily? At the very least, he won't be out-funded, I can almost guarantee that.

And what does that mean? Who spends hundreds of millions of dollars for what looks, on the outside, like rank incompetence?

It strains the imagination to think that the country's smartest businessmen keep paying top dollar for such lousy performance. Is it possible that by "surrendering" at the 11th hour and signing off on a deal that presages deep cuts in spending for the middle class, but avoids tax increases for the rich, Obama is doing exactly what was expected of him?

So let me go back to the Blue America statement penned for us by Alan Grayson:

We who sign this make the following pledge, to the voters of our districts and to all the American People:

We Are Against Any and Every Cut to Social Security, Medicare and Medicaid benefits. Not today, not tomorrow, and not ever. No way, no how. Not on your life, and not on mine, because both your life and my life may depend on it.

N-E-V-E-R.

Every Blue America candidate has either signed this letter or issued their own statement in their own words equally powerful. Blue America won't be endorsing any incumbents who voted for the Satan Sandwich and won't be endorsing any challengers who don't embrace this pledge to the American people. It's the bottom line. I still hope Mazie Hirono beats Ed Case in Hawaii, of course, but as of yesterday, Blue America ceased raising funds for her. Give your donations to Bernie Sanders instead. One of our Blue America-endorsed candidates, Nick Ruiz (D-FL), the first to sign the pledge, went on to explain what's gone wrong the day after the vote:

All of the American people can’t be wrong.

All of their needs can’t be wrong.

What is wrong is the turn down the Republican rabbit hole. Lost, we are. BHO abdicates executive responsibility by refusing to act to the point of inertia. Republican John Boehner (OH-8) and Company acted extremely. All Cuts are therefore “IN.” In accompaniment, HSBC announces they will shed 30,000 jobs in 2011-2012. This is the coming Age of Austerity. What a howler- cut New Deal programs at the very same time that practically every large corporation in America is cutting jobs and hording cash. ‘Satan sandwich’ anyone?

The American people could be celebrating a democratic victory, if there was one to recognize. Instead, we are faced with the nuts and bolts of the reality of being sold-out under the auspices of a short term ceiling hike and a long term hatchet committee with an appetite for New Deal destruction.

How to put it back together again, as they tear it apart? 2012.

The 2012 playbook is very simple: reject any and every candidate that stands in the way of progressive democracy. Reserve your support; however you give it, for those progressive Democratic candidates that would act in your interest.

You’ll have to be savvy-– because the all too corporate party machinery will be out to trick you with the ruse of mechanical candidates and party-line robots. But the power to represent us is yours to take or give. The power is in your vote. It’s in your contributions. It’s in the time you volunteer. It’s in your letters to the editors of newspapers and blogs.

Hope? Change? No, we haven’t. But I promise you-- we will.

Polar Opposites: Dave Lutrin And Sean Duffy (AKA- Paul Ryan, Jr.)

Sean Duffy, clearly a mindless acolyte of Paul Ryan, himself a mindless acolyte of admitted Jesus-hater Ayn Rand, was reminded, if just subliminally, by the SEIU this week, that Gore, Kerry and Obama all carried, by increasingly large margins, Wisconsin's 7th congressional district. Perhaps his boyfriend Paul saved his ass by directing the gerrymandering of the district to include more Republicans and fewer Democrats. Perhaps. But McCain only won 43% of the district and next year Duffy's opponent, state Senator Pat Kreitlow, is widely acknowledged one of Wisconsin's most talented political leaders-- as well as the adored and respected longtime evening news anchor for WEAU-TV in Eau Claire, the heart of the district. And he has an impressive legislative record of accomplishment for Wisconsin working families... unlike Duffy, who just "me-too's" everything Ryan ever says and was the lead sponsor this week on the bill to eviscerate Dodd-Frank, making it easier for his Wall Street campaign donors to prey on unsuspecting consumers. Matt Taibbi didn't mention Duffy in his latest Rolling Stone piece, but he was certainly describing him.

"We're seriously talking about defaulting on our debt, and cutting Medicare and Social Security, so that Google can keep paying its current 2.4 percent effective tax rate and GE, a company that received a $140 billion bailout en route to worldwide 2010 profits of $14 billion, can not only keep paying no taxes at all, but receive a $3.2 billion tax credit from the federal government. And nobody appears to give a shit. What the hell is wrong with people? Have we all lost our minds?"

I doubt Duffy-- or even his mentor for that matter-- would understand a word of any of that. These are purely political creatures out to make a buck for themselves. They get their marching orders from Wall Street and Big Business-- the folks who finance their careers. When Obama was still insisting Ryan was "serious" and worth paying attention to, Nobel Prize-winning economist Paul Krugman had already alerted the country to the fact that Ryan's ideas were worthless and that Ryan himself is nothing but a Flimflam Man. Duffy is just a Flimflam wanna-be. Thursday Krugman was on Ryan and all the little nihilistic Ryan wanna-be's again.

[W]e’re looking at not one but two looming crises, either of which could produce a global disaster. In the United States, right-wing fanatics in Congress may block a necessary rise in the debt ceiling, potentially wreaking havoc in world financial markets. Meanwhile, if the plan just agreed to by European heads of state fails to calm markets, we could see falling dominoes all across southern Europe-- which would also wreak havoc in world financial markets.

We can only hope that the politicians huddled in Washington and Brussels succeed in averting these threats. But here’s the thing: Even if we manage to avoid immediate catastrophe, the deals being struck on both sides of the Atlantic are almost guaranteed to make the broader economic slump worse.

In fact, policy makers seem determined to perpetuate what I’ve taken to calling the Lesser Depression, the prolonged era of high unemployment that began with the Great Recession of 2007-2009 and continues to this day, more than two years after the recession supposedly ended.

Let’s talk for a moment about why our economies are (still) so depressed.

The great housing bubble of the last decade, which was both an American and a European phenomenon, was accompanied by a huge rise in household debt. When the bubble burst, home construction plunged, and so did consumer spending as debt-burdened families cut back.

Everything might still have been O.K. if other major economic players had stepped up their spending, filling the gap left by the housing plunge and the consumer pullback. But nobody did. In particular, cash-rich corporations see no reason to invest that cash in the face of weak consumer demand.

Nor did governments do much to help. Some governments-- those of weaker nations in Europe, and state and local governments here-- were actually forced to slash spending in the face of falling revenues. And the modest efforts of stronger governments-- including, yes, the Obama stimulus plan-- were, at best, barely enough to offset this forced austerity.

So we have depressed economies. What are policy makers proposing to do about it? Less than nothing.

The disappearance of unemployment from elite policy discourse and its replacement by deficit panic has been truly remarkable. It’s not a response to public opinion. In a recent CBS News/New York Times poll, 53 percent of the public named the economy and jobs as the most important problem we face, while only 7 percent named the deficit. Nor is it a response to market pressure. Interest rates on U.S. debt remain near historic lows.

Yet the conversations in Washington and Brussels are all about spending cuts... For those who know their 1930s history, this is all too familiar. If either of the current debt negotiations fails, we could be about to replay 1931, the global banking collapse that made the Great Depression great. But, if the negotiations succeed, we will be set to replay the great mistake of 1937: the premature turn to fiscal contraction that derailed economic recovery and ensured that the Depression would last until World War II finally provided the boost the economy needed.

Did I mention that the European Central Bank-- although not, thankfully, the Federal Reserve-- seems determined to make things even worse by raising interest rates?

There’s an old quotation, attributed to various people, that always comes to mind when I look at public policy: “You do not know, my son, with how little wisdom the world is governed.” Now that lack of wisdom is on full display, as policy elites on both sides of the Atlantic bungle the response to economic trauma, ignoring all the lessons of history. And the Lesser Depression goes on.

The fiscal catastrophe of the 30's brought on something else in much of the world, the rise of Big Business financed faux populist movements-- fascists-- that have too many similarities to our own Teabaggers to ignore. So be better not. However, at the same time, there was a heightened consciousness among working families that weren't sucked in by the allure of fascism. While Hitler, Franco and Mussolini rose in Europe, Franklin Roosevelt vanquished the Republican fascists here in America. Obama is no FDR by any stretch of anyone;s imagination, but there are political leaders in every part of America, some in Congress, some in state government, some not in any governmental positions, ready to fight back. I want to point one out I hope we'll be hearing a lot more from this year.

David Lutrin was a Democratic candidate for Florida's 16th CD in 2006... until Rahm Emanuel forced him out of the race to make way for a self-funding Republican willing to switch his party registration. Emanuel's candidate won, went on to be as big a pervert as the Republican he replaced (Mark Foley) and lost reelection-- after voting with the GOP for two miserable years. Now the district is represented by a rich right-wing asshole, Tom Rooney, perhaps the worst member of Florida's congressional delegation (not counting Allen West). I wonder if we could persuade Dave Lutrin to run again. From the sound of this video, he's still as passionate about the issues the country faces as ever:

Making War In Libya... For Goldman Sachs And J.P. Morgan?

An overwhelming majority of Americans don't like our involvement in the bombing campaign against Libya but whether you think that what looks like the congressional wrist slap goes far enough, the resolution Webb and Corker are proposing on that war, it certainly guarantees that there will be a debate on U.S. policies there and-- at least in theory-- if Obama can't make an argument on the merits (and so far he hasn't been able to), then Congress will be bound to restrain the executive branch over reach. That would be a first in many decades. This is the press release that went out with S.J.Res, 18 this week:

Senators Jim Webb (D-VA) and Bob Corker (R-TN) today introduced a joint resolution requiring the Administration to provide a detailed justification of U.S. operations in Libya and prohibiting the deployment of U.S. troops on the ground there. It further calls on the President to request authorization for the continuation of U.S. involvement in NATO activities and states that Congress should fully debate such a request expediently. Nearly 90 days after the initiation of force in Libya, such debate has not occurred.

The bipartisan resolution states, “The President has failed to provide Congress with a compelling rationale based upon United States national security interests for current United States military activities regarding Libya.” It calls for an unclassified report to provide essential information to Congress and the American public to evaluate U.S. involvement in Libya and appropriately debate it.

“When we examine the conditions under which the President ordered our military into action in Libya, we are faced with the prospect of a very troubling historical precedent that has the potential to haunt us for decades,” said Senator Webb. “The issue for us to consider is whether a President-- any President-- can unilaterally begin, and continue, a military campaign for reasons that he alone defines as meeting the demanding standards worthy of risking American lives and expending billions of dollars of our taxpayers’ money. It is important for Congress to step in and clearly define the boundaries of our involvement.”

“It has now been more than 80 days since the United States first launched military action in Libya in what was supposed to be only a very limited operation, but neither the Congress nor the American people have any clearer view of the administration’s stated mission or end game for our military involvement in Libya. Having been denied answers, repeatedly, to these fundamental questions or even a comprehensive debate to consider the merits of U.S. involvement in such an engagement, it’s long past time to set a final deadline to get the information every man and woman who puts on a uniform and every taxpayer who funds the operation deserves,” Senator Corker said.

The joint resolution, which would have the force of law, requires the Administration to publicly answer a detailed series of questions about the Libya operation within 14 days of enactment. Parts of the resolution mirror bills passed in the House of Representatives.

Someplace Webb and Corker don't have the imaginations or the will to go is to ask what the hell we're doing bombing the hell out of this small country in the first place. Why Libya instead of, say, Syria or Bahrain, each of which is doing far worse to its citizens, the ostensible "reason" we're involved with this massive attack on Libya? In a pair of powerful investigative articles that would do far more credit to the Senate than the toothless joint resolution, journalist Russ Baker posits that evidence makes it clear that Qaddafi has been set up and that the U.S. in part of a plan to create an “Arab Spring” for the Good Old Boys-- CIA, banks, oil companies. Hopefully, you've been following Matt Taibbi's exciting reporting on the relationship between Qaddafi and the bandits at Goldman Sachs.

Libya was eager to join the big leagues of finance, and its investors were “awed” by an Arabic-speaking Goldman executive who urged them into an options deal that bet on the fortunes of companies including Citigroup Inc. C +0.23% , Allianz DE:ALV -1.33% and Italy’s UniCredit IT:UCG +2.08%.

The LIA, Libya’s sovereign wealth fund, was charmed by the demonstration and decided to go all-in with a $1.5 billion bet. Goldman very quickly lost them 98 percent of that money.

I never knew it was even possible to lose 98 percent of an investment that quickly. If you sent a blind, three-legged donkey into Caesar’s palace with $1.5 billion in chips, it could probably stay solvent longer than this options package Goldman sold to Qaddafi.

How could the Libyans be enticed to take such a crappy deal? See if this sounds familiar: according to the Wall Street Journal, the Libyan fund manager felt that Goldman had "misrepresented" the fantastic investment opportunity Goldman sold to them, and also made trades "without proper authorization."

...Having managed to get their bankers out of Libya with their heads still attached to their shoulders, Goldman decided to make up for losing $1.5 billion of Qaddafi’s money by offering the international pariah a $3.7 billion equity stake that would have made him one of the largest single owners of the bank.

In con-man parlance, this is called the reload. You beat someone in a Ponzi scheme for his life’s savings, and when he shows up at your door with an axe, you get him to mortgage his house to buy a stake in the Brooklyn Bridge. After blowing $1.5 billion of Libya’s money almost instantaneously, Goldman’s solution to the problem was to immediately get Qaddafi reaching back into his pocket for a cash sum over twice the size of the original losses. It’s really hard not to admire the sheer balls of the whole deal.

Baker starts by asking if there is any actual evidence that the claims by Qaddafi’s defecting Justice Minister, Mustafa Mohamed Abud Al Jeleil, that Qaddafi was the culprit behind the bombing of Pan Am 103 are true. "This story," he points out, "made it into major news media throughout the world, without anyone stopping to raise questions about the propaganda benefit of the statement, or of the timing." And though no one has seen any of the promised "evidence," the original headlines did the trick-- anyone watching television or reading stories then would have been led to believe that Qaddafi was behind the Lockerbie tragedy. That's when Obama called on Qaddafi to step down and started down the road to the "humanitarian" attacks on Tripoli.

By December 2010, when a Tunisian man set himself on fire, the Arab Spring revolt was under way—in Egypt, Bahrain, and elsewhere. Pretty quickly, it was clear to everyone that the Western powers were in danger of losing crucial oil suppliers—and vital military bases.
It certainly was convenient that, right about that time, Libya showed signs of moving in the opposite direction-- into the US camp. Read our piece here about the CIA ties to the Libyan uprising.

Then consider the timing of February’s ramped-up claim by the defecting Libyan official, that Qaddafi himself had ordered the Lockerbie bombing.

If that wasn’t enough in the propaganda department to get the global public worked up, next came the Libya rape story. The average person doesn’t have the time or appetite to follow the kinds of complex corporate maneuverings that fascinate us here, but they do understandably get upset about bombs on civilian aircraft and rape.

...We noted the timing of the story, the alacrity with which the Western press grabbed it and spread it, and the simple fact that there’s no evidence tying Qaddafi in any way to any such act. Even the woman herself doesn’t claim that.  Yet it infuriated untold millions and postings all over the Web show that it moved a lot of public opinion into the column supporting military action to remove the Libyan leader.

That the corporate media cannot see what is going on here, or refuses to see, tells us how far we have not come since the Gulf of Tonkin Resolution.

Still, we can hear the other shoe dropping if we listen carefully enough. For example, the website Politico ran a little item the other day on a powwow between Hillary Clinton and corporate executives over business opportunities in Iraq.

FIRST LOOK: WALL STREET IN IRAQ? – Secretary of State Hillary Clinton and Deputy Secretary Tom Nides (formerly chief administrative officer at Morgan Stanley) will host a group of corporate executives at State this morning as part of the Iraq Business Roundtable. Corporate executives from approximately 30 major U.S. companies-- including financial firms Citigroup, JPMorganChase and Goldman Sachs-- will join U.S. and Iraqi officials to discuss economic opportunities in the new Iraq. Full list of corporate participants.

Give it a couple of years, and they’ll be having the same party celebrating a more sympathetic regime in Libya.

Ready For Another Goldman Sachs Wrist Slap?

J.P. Morgan was never tried for treason... so no one remembers what he did-- and people still do it

I've been reading Glen Yeadon's book, Nazi Hydra in America and everyday I come across more and more iconic American names complicit in the rise of fascism, certainly in Italy, Spain and Germany but also in attempts to bring fascism to America in the 1920s and '30s-- right up to and including an attempted coup d'etat against President Roosevelt by Wall Street and Big Business titans with names like duPont, Rockefeller, Bush, Mellon and Morgan.

Yeadon quotes Newsweek here:

The fresh look at wartime culpability may extend to other American icons. In 1940 one of the nation's most prestigious law firms, Sullivan & Cromwell, joined together with the Wallenberg family of Sweden--famed for producing Raoul, a Holocaust martyr who saved Jews in Budapest--to represent Nazi German interests, says Abe Weissbrodt, a former Treasury Department lawyer who prosecuted the case in 1946. The scam? Sullivan & Cromwell drafted a voting trust agreement making the Wallenbergs' Enskilda Bank a dummy owner of the U.S. subsidiary of Bosch, a German engine-parts maker, so the Nazis could retain control. The papers were drawn up by John Foster Dulles, a Germanophile who later became secretary of State and whose name today graces Washington's international airport. (The scheme worked during the war, but in 1948 Bosch was finally auctioned to a U.S. buyer.) The record is compelling in terms of warranting questions about Dulles's motives and his own allegiances," says historian Masurovsky. "One might say about him what Treasury said about Chase and J.P. Morgan, that they had allegiance to their own corporate interests and not to their country."

None of the worst culprits were ever punished. In fact, they or their progeny went on to attain the highest levels in our society, mostly still working towards fascism. Never punished... it just keeps me awake at night. We never seem to punish the rich and powerful no matter how heinous their crimes against society. So it was with an "I'm believe it when I see it" attitude that I took in Wednesday's announcement by Carl Levin (D-MI) that one of the decades-long institutional grand criminals of American life, Goldman Sachs might be in for a rough time. I'm not sure if Senator Levin is being duplicitous or naive... we'll see. Tom Braithwaite covered it for the Financial Times.

Carl Levin, chairman of the Senate investigative subcommittee, said there was “real hope” law enforcement authorities would act on his panel’s report accusing Goldman Sachs of misleading investors and Congress.

The Senate report criticised rating agencies, regulators and other banks. But Goldman has drawn particular focus. Eric Holder, attorney-general, said this month the justice department was looking at the report “that deals with Goldman."

The possibility of more legal and regulatory issues at the bank has weighed on its stock in recent weeks. Dick Bove, analyst at Rochdale Securities, wrote last week that “pressure on the justice department to bring a criminal lawsuit against Goldman [appeared to be] building to a high pitch."

Mr Levin added to that in an interview with the Financial Times on the Senate report, which examined Wall Street practices in the run-up to the crisis. The senator was confident officials were taking it seriously. “There’s real hope here that there’s going to be a good scrub by a number of law enforcement entities, so I am not pessimistic about this.”

The senator said Goldman’s payment of $550m to settle fraud allegations from the Securities and Exchange Commission in connection with the marketing of one structured debt product did not preclude other allegations. He said Goldman executives misled his committee but suggested they might have stopped short of lies with “wiggle words."

Matt Taibbi has been prone to use stronger terms than "wiggle words" in describing the banksters in his powerful, muckraking Rolling Stone series. This week he held open the possibility that the hammer could possibly be coming down-- and he's neither duplicitous nor naive. His hope: New York state's crusading and brilliant new Attorney General, Eric Schneiderman (who we first met here at DWT early in 2008 when he was a state senator in upper Manhattan. Taibbi posits that Schneiderman's investigation "looks like it might be the first for-real attempt at a prosecution of the systemic corruption that led to the financial crisis," targeting the banks’ mortgage securitization process during the bubble years and focuses on Morgan Stanley, Bank of America, and Goldman Sachs.

This investigation has the potential to be a Mother of All Nightmares situation for the banks for a couple of reasons. For one thing, the decision to go after the securitization process is a total prosecutorial bullseye. This is the ugly heart of the wide-scale fraud scheme of the bubble era. Again, the business model during this time was a giant bait-and-switch scam. Sleazy lenders like Countrywide and New Century first created huge masses of bad loans, committing every conceivable kind of fraud to get people into loans (from doctoring income statements with white-out to phonying FICO scores to engineering fake appraisals). They then moved the bad loans quickly to the big banks, which pooled them and chopped them up (this is the “securitization” process), sprinkled hocus-pocus math on them, and them sold them to suckers around the world as AAA-rated securities.

The questions Schneiderman will seek to answer are these: did the banks securitize loans they knew were fraudulent, throwing the rotten mortgages into the stew before serving them to customers? Did they also commit insurance fraud by duping the bond insurers (known as “monoline” insurers) into thinking the mortgages were not as risky as they really were? And did they participate in the fraud scheme on a more basic level by lending huge amounts of money to the Countrywides of the world, knowing that they in turn would immediately use that money to create the bad loans? In other words, did the banks finance the fraud in addition to brokering it?

The reason this is such a potentially deadly investigation for the banks is that they seemed to be so close to getting away scot free. There is another investigation into the banks’ mortgage abuses by the states’ Attorneys General, led by Iowa AG Tom Miller, that was rumored to be headed toward a settlement, despite the fact that nothing like a complete investigation has been done. The expectation for some time has been that the banks would eventually have to pay a significant, but eminently survivable, settlement for abuses during the bubble era. Although the Miller probe was focused on practices like robo-signing and other such documentation abuses, it could theoretically have covered securitization as well.

But if the AGs were to sign off on a friendly global settlement for mortgage abuses prematurely, it would be like a DA offering a millionaire murderer a 2-year plea bargain before the cops even had a chance to interview all the eyewitnesses. It would be a blatantly political arrangement. Such a desire to get some kind of deal done and sweep the mortgage mess under the rug once and for all seems almost universal among high-ranking politicians, and particularly in the Obama administration, which has acted throughout like it wants more than anything to simply get all of this over with and put in the past.

Schneiderman’s investigation throws a monkey wrench into all of this. The banks cannot enter into a settlement with 49 states. They need all 50 at the table. But if Schneiderman breaks ranks and goes off on an end-run investigation that plunges right into the rotten core of the fraud era, then the whole pipe dream of an easy settlement vanishes in an instant. This is particularly true since Schneiderman is the most important AG, being from the state of New York, where most of the crime was probably committed.

The amount of money investors lost in this fraud scheme is probably gigantic. The ill-gotten money the banks made off that same fraud is probably similarly huge. And the damage to society, in the form of mass foreclosures and other losses, is incalculable. If the banks end up being found liable for all of these offenses, they could face truly crippling fines and penalties. This goes far beyond the question of whether one bank like Goldman defrauded a client or two or lied to investigators. This probe could be asking whether the banks’ entire revenue model during the crisis years was based on fraud.

Taibbi says Schneiderman is serious. He always has been in the past. I might caution that the banksters have paid politicians-- on both sides of the aisle-- direct bribes of $1,515,876,043 since 1990 (protection money) and have also been active in lobbying politicians as well. Take a look and how they have corrupted our entire political system:

All those billions are perfectly legal efforts by the finance sector to influence legislators