Today's Stories

September 15, 2008

Peter Morici
Toxic Lehman

September 13 / 14, 2008

Alexander Cockburn
Panic!

Jeffrey St. Clair
Inside Dirk Kempthorne's Closet

Wajahat Ali
Playing with the Constitution

Robert Fantina
Cheney Scales New Heights of Hypocrisy

Marcus Rediker
Notes on a Visit to the Favelas of Medellín, Colombia

Richard Neville
The Baby Killers

Ed Gaffney
Breaking the Siege of Gaza

Carla Blank
Neglecting a Grand Old Lady

P. Sainath
The Almighty and the U.S. Elections

Lee Sustar
Working Harder; Falling Further Behind

Joshua Frank
Liberalism and Its Bounds

M. Junaid Levesque-Alam
The Guantanamoized Age

Dennis Loo
Shock and Awe Comes Home to Roost

Zach Zill
Squeezed Out in New York City

Omar Barghouti
So You Think You Can Dance? Israeli Profiling of African-American Dancers

Bill Quigley
Social Justice Quiz, 2008

Andy Worthington
Bush's Bitter Legacy

Stephen Dunifer
Free Radio: Liberating the Commons

Seth Sandronsky
Bailing Out Big Auto

David Yearsley
Portabella's Bach: Grim, Trite and Incredibly Boring

Patrick B. Barr
Obama's Punchless Campaign

Rannie Amiri
Tasting Ramadan

Niranjan Ramakrishnan
The Flight Not Taken

Richard Rhames
What, Me Reason?

Manuel Garcia, Jr.
The Large Hadron Collider Powers Up

Poets' Basement
Deer Cloud and Buknatski

Website of the Weekend
Wasilla Valley PTA?

September 12, 2008

Nikolas Kozloff
The Next Cuban Missile Crisis?

Michael Hudson
More Dangerous Than the A-Bomb? The Chicago School's Record of Infamy

Lloyd Miller
Palin and Alaskan Native and Tribal Rights: a Dismal Record

Steve Breyman
Georgia in NATO?

Maria Rivera
Cuba After Gustav and Ike: an Eyewitness Account

Jonathan Cook
Israel and the Dark Arts

Ayesha Ijaz Khan
U.S. Designs on Pakistan

M. Shahid Alam
The Mendacity of Missed Opportunities

Robert Weissman
Executive Pay and the "Market Economy"

Tanya Golash-Boza / David Brunsma
Immigration Raids Must Be Stopped

Website of the Day
Know Your Rights

September 11, 2008

Noam Chomsky
Towards a Second Cold War?

Sharon Smith
Afghanistan: You Call This a Good War?

Ron Jacobs
Palinomics: She Ain't No Working Class Hero

Marjorie Cohn
God, Guns and Oil: A Palin Theocracy?

Mike Whitney
Cheney in the Caucasus

Jeffery R. Webber
Bolivia: a Coup in the Making?

Paul Cantor
The Other 9/11

Peter Morici
The Surging Trade Deficit

Ray McGovern
Iran's Road Less Traveled to Nukes

Linn Washington, Jr.
Screening Mumia: The Suppression of Dissent in America

Website of the Day
Palin (Michael) for President!

September 10, 2008

Paul Craig Roberts
A Temporary Respite from Permanent Decline

Conn Hallinan
The Return of U.S. Death Squads

Ralph Nader
Who Needs Regulations When You've Got a Golden Parachute?

Peter Morici
Can the Bailout Work?

Joanne Mariner
The Horrendous Case of Aafia Siddiqui

Laura Tate Kagel /
Jen Marlowe
The Pending Execution of Troy Davis: a Case for Clemency

Chuck Spinney
Incestuous Amplification and the Madness of King George

Dave Lindorff
Lazy Thinking and Prejudice

Scott Campbell
Where Now for Oaxaca's Social Movement?

Paul Farmer
Haiti and the Hurricanes

Anne Kilkenny
Letters from Wasilla: the Sarah Palin I Know

Website of the Day
Democrats and Zombies

September 9, 2008

Michael Colby
The Obama Poll Drop

Chellis Glendinning
Retorno a 1968: From Berkeley to Mexico City

Vijay Prashad
Losing Game

Jeffery R. Webber/
George Ciccariello-Maher
Venezuela From Below

David Michael Green
Country Last

Brian J. Foley
The New Face of Republican Power

John Ross
Mexican Flag Wrap

Pierre M. Sprey /
Winslow T. Wheeler
Joint Strike Fighter: Another Defense Acquisition Disaster

Nicole Colson
Sami Al-Arian's Long Road to Freedom

Marc Gardner
California's Anti-Homosexual Laws are Alive and Unwell

William S. Lind
The Baltic States and Russia: Toy Armies or Accomodation?

Website of the Day
All Hope Rests with Piper Palin

September 8, 2008

Mike Whitney
An Interview with Michael Hudson on the Worsening Debt Crisis

Tariq Ali
The Godfather as President

Pam Martens
The Man Who Vetted Palin

Bill Quigley
The Weary Road Home: Displaced Poor Continue to Return to New Orleans

Malini Johar Schueller /
Ed White
Not About Me: Obamamania, Racial Porn-fest and Palinama

Robert Jensen
Pop Music and 9/11

Uri Avnery
Lonely Rider

Win McCormack
Palin Family Values

Howard Lisnoff
How Far From a Police State?

Maria C. Khoury
Taybeh Oktoberfest in Palestine

Website of the Day
Scaring Students from Voting in Virginia

September 6 / 7, 2008

Alexander Cockburn
Sarah Palin and the Good Book

Jeffrey St. Clair
That Dam Senator: A River Ran Through Him

Linn Washington, Jr.
The GOP Excluded Black-Owned Businesses from Contracts at St. Paul Convention

Patrick Cockburn
Did Bush Spies Monitor Iraqi Allies?

Gary Leupp
The September 3 Attack on Pakistan: a Precursor to More War Crimes?

Nancy Kurshan
CHI-town Lowdown: Memories of 1968

William Blum
Has Obama Already Lost?

Michael Winship
The St. Paul Police vs. the Independent Media

Fred Gardner
Joe Biden, Drug Warrior

Nikolas Kozloff
Sarah Palin and the Wal-Mart Moms: the Cultural Packaging of VP Candidates

Wajahat Ali
The Cryptkeeper and His Pitbull: the Past and Future of the GOP

Robert Fantina
Change Agents?

Karyn Strickler
Palin by Comparison: Sarah and the Hillary Voters

David Yearsley
What Their Fanfares Told Us About the Candidates

Richard Rhames
Bad Campaign Moon Rising

James L. Secor
Bandwagon Politics

Missy Beattie
Missy for Vice POTUS

Eric Patton
Baseless in Obamaland

Ben Terrall
Haiti and the Washington Consensus

Thom Rutledge
Mr. Magoo and the Kind Stranger: a Serious Political Problem

Dan Bacher
Arnold and the Manufactured Drought

David Macaray
Is Union Democracy at Risk?

Jane Stillwater
The Admiral's Child: a Psychological Reason for McCain's Flip Flops

Grady Harper
Should Hunting Really be High on Our Priority List?

Poets' Basement
Wolff, Payne and Holt

Website of the Weekend
We'll See Your Sarah Palin and Raise You With Maria McKee

September 5, 2008

Elizabeth Walters
Old Fears, New Worries in Louisiana

Bill Quigley
Gustav's Path of Destruction

Alan Farago
Nothing Means Anything: The Fantasy of John and Sarah

Dave Lindorff
The Things They Left Behind (Including McCain's First Wife)

Ira Glunts
A Lesson Before Lying: How Republicans Solved Sarah Palin's Jewish Problem

Peter Morici
The Big Slump

Deepak Tripathi
Politics, Morality and the GOP: John McCain as John Major?

Manuel Garcia, Jr.
The Energy of a Hurricane

Michael Donnelly
Change. God. POW.: a Summary of McCain's Big Speech

Martha Rosenberg
Free to Good Home, SUVs

Website of the Day
Sarah Palin's Air War: On Wolves and Bears

September 4, 2008

Jeffrey St. Clair
The Real McCain

Paul Craig Roberts
Who is Wrecking America?

Ron Jacobs
The Perishing Republicans, the RNC 9 and the Twin Cities Cops

M. Junaid Levesque-Alam
The Soft Surge

Andy Worthington
Rendered to Egypt for Torture

Osama Dawoud
How I Lost My Fulbright Scholarship

Stephen Lendman
Katrina Redux: the Militarization of New Orleans

Fidel Castro
Hurricane as Nuclear Strike

Website of the Day
Is McCain Palin's Bitch?

September 3, 2008

Patrick Cockburn
The Fake U.S. Victory in Iraq

Sen. Mike Gravel
Good Luck, Sarah!

Vijay Prashad
The Indian Left and the Indo-US Nuclear Deal

Nikolas Kozloff
Palin, Hunting and the American Psyche

Ralph Nader
Repeal Taft-Hartley

Howard Lisnoff
Forty Years in the Streets (And They're Still Beating Up Journalists)

Steve Early / Cal Winslow
Can SEIU Members Exorcize the Purple Shades of Jackie Presser?

Shepherd Bliss
A Field Report From Slow Food Nation

Bill Quigley
Living in the Car After Gustav

Website of the Day
Growing Up Okie: an Interview with Roxanne Dunbar-Ortiz

September 2, 2008

Marjorie Cohn
Raiding Democracy in St. Paul

Jonathan Cook
Palestinian Village Faces Army Reign of Terror

Robert Weitzel
Biden and Israel

Corey D. B. Walker
Where Do We Go From Here?

John Ross
The Kidnapping Boom in Mexico

Eric Walberg
Wag the Dog in Georgia

Judith Scherr
No Day in Court for Ronald Dauphin

Richard Morse
Haiti, 2008

B. R. Gowani
What If the Israel Lobby was the African-American Lobby?

Michael Greenberg
Loofah Day in Cleveland

Website of the Day
Thanks for the Memories!

September 1, 2008

Nikolas Kozloff
Making a Killing in Iraq: McCain and the Telecoms

C. G. Estabrook
The War Will Go On

Manuel Garcia, Jr.
Will a Russo-American Nuclear War Happen (Soon)?

David Macaray
An Elegy for Labor Day

B. R. Gowani
The Lobby as Juggernaut

Saul Landau
Real Gold Winners

Charles Orloski
Going Down to Hell's Cul-de-Sac

Gloria La Riva
Profit and Disaster in New Orleans

Website of the Day
Springsteen: Factory

August 30 / 31, 2008

Alexander Cockburn
Obama's Speech; McCain's Palinomy

Bill Quigley
Gustav is Coming

Jeffrey St. Clair
Valley Boy: The Rise and Fall of Richard Pombo

Andy Worthington
Shining a Light on the Dark Prison

Deepak Tripathi
The Race for the White House: Notes From a European Observer

Stanley Howard
A Prisoner's Tale of Abuse

Dave Lindorff
Troopergate in Alaska

Wajahat Ali
Palin on the Prowl: a Cougar for the PUMAs?

Robert Fantina
McCain and Palin

Josh Schlossberg
A Bias for Life: the Role of the Environmentalist

Benjamin Dangl
Beyond Voting

Missy Beattie
Stars, Stripes, War and Shame

Howard Lisnoff
Better Cuba Than Florida?

Suzan Mazur
Rethinking Evolution with Stuart Newman

Rev. Jim Rigby
What Would Jesus Ride to the Conventions?

David Yearsely
Katy Perry Meets Mozart

Serge Quadruppani
Italy's Years of Lead

B.R. Gowani
What If the Israeli Lobby Was the Islamic Lobby?

Richard Rhames
Empty Political Calories

Poets' Basement
Holt, Davies, Corsale and Landau

Website of the Day
Return of the Druids

August 29, 2008

Mike Whitney
How the Chicago Boys Wrecked the Economy

Brian Cloughley
Resurgent Russia

David Ker Thomson
Jacko and Me: Dispatches From Fifty

Joanne Mariner
A UK Window on CIA Abuses

Neve Gordon
The Ordeal of Sahar Vardi, Refusenik

Chris Genovali
Of Whales and Off-Shore Drilling

Ron Jacobs
What's a Godfearing Country to Do?

Michael Donnelly
Honest Abe in Denver?

August 28, 2008

Judy Gumbo Albert
The Battle of Chicago

Paul Cantor
Who Killed Victor Jara?

Saul Landau /
Farrah Hassen
Axis of Evil Defeats Neocons

Andy Worthington
Clearing Out Guantánamo

Ben Terrall
Return to Port-au-Prince

Leonard Peltier
Message to Obama: Symbolism Alone Will Not Bring Change

Niranjan Ramakrishnan
The Miasma of Bi-Partisanship

Donna J. Volatile
The Obama Construct

Website of the Day
Ishmael Reed, Alice Walker and Maya Angelou on the Meaning of Obama

August 27, 2008

Anthony DiMaggio
The Myths of Joe Biden

Jordan Flaherty
Three Years After Katrina

Ralph Nader
The Politics of Avoidance

Melissa Checker
Carbon Offsets, More Harm Than Good?

Bob Sommer
Blaming the Sixties

Cynthia McKinney
How the Democrats Helped Bush Hijack the Country

Ali Khan
Pakistan's Flawed Presidency

M. Junaid Levesque-Alam
The Only Good Muslim is the Anti-Muslim

Dave Lindorff
Strip-Search Nation

David Macaray
Labor's Hard Lessons

Website of the Day
Stagnant Income in an Eroding Economy

August 26, 2008

Patrick Cockburn
The Big Questions About Iraq

Michael D. Yates
Obama and the Working Class

Paul Craig Roberts
Is War With Russia on the Agenda?

Andy Worthington
The Guantánamo Suicide Report

Rev. Jesse L. Jackson
Obama's Promised Land?

Huwaida Arraf
Sailing into Gaza

Joseph Grosso
Back to the Future: New York's Housing Crisis

Sheldon Richman
What About the Ossetians?

Binoy Kampmark
Impasse at Singur

Website of the Day
Taser Bait in Denver

August 25, 2008

Patrick Cockburn
US Out of Iraq by "2011"

Bill Quigley
Katrina, the Pain Index

Jonathan Cook
Israeli Outposts Seal Death of Palestinian State

James McEnteer
Death by Paranoia

Uri Avnery
The Devil's Hoof

Will Potter
The State Deparment's Green Scare Wing

Robert Jensen
Technological Fundamentalism

Stephen Lendman
Reinventing the Evil Empire

Wajahat Ali
Biden His Time

Carl Finamore
The Future of Trade Unions in China

Website of the Day
Don't Blow Up the Mountain, Boys

August 23 / 4, 2008

Alexander Cockburn
"Change," "Hope"...Why They Must be Talking About Joe Biden!

Jeffrey St. Clair
Killing Salmon with Paul O'Neill: Power, Profits and the Future of the Columbia River

Patty O'Grady
John McCain in a New Context: Why the Senator is No War Hero

Nicole Colson
Obama and Big Corn

Steve Conn
Obama and the Mining Cartel

Deepak Trapathi
Pakistan in Uncertain Times

Robert Fantina
Once Upon a Time in America: a McCain Administration

Jonathan M. Feldman
Obamanomics: Does the Left Have Anything to Say?

Joshua Frank
Targeting Pelosi (and the War Machine): an Interview with Cindy Sheehan

Osama Qashoo
Sailing to Gaza

Howard Lisnoff
The Long Silence: American Jews and the Palestinians

David Michael Green
Sen. McShame and the Wreckage: John McCain Discovers America

Dave Lindorff
Why Not Let the Republicans Deal With This Mess?

Christopher Brauchli
A Banner Month for Passports

Alan Farago
Who Crippled the Government?

Michael Winship
Cash Register Conventions

Richard Rhames
Vlad the Derailer: Can Putin Save America From Itself?

David Rosen
The Culture Wars Are Over: But Culture Warriors Are Still Terrorizing America

Patrick B. Barr
Don't Try to Tame the Lightning Bolt

Jamie Newlin
Western Turf Wars: the Politics of Public Lands Ranching

Poets' Basement
Glendinning, McEnteer and Bonner

Website of the Weekend
Cafe Reconcile, New Orleans

August 22, 2008

Boris Kagarlitsky
Fallout from the Georgian War

Laura Carlsen
Obama and Latin America: Change or Continuity?

Bob Barr
No War for Georgia

Marwan Bishara
From Russia with Love: Putin Hits Georgia, Bloodies Bush

Peter Morici
Is the Fed Still a Central Bank?

Manuel Garcia, Jr.
The Big Heat

Charles Mostoller
The Battle for the Amazon

Sumbul Ali-Karamali
Obama is Not a Muslim: But Would It Be So Terrible If He Were?

Keith Rosenthal
Standing Up to Union-Bashing

John F. Miglio
The Devolution of the Baby Boom Generation

Website of the Day
Fire Sale in the Markets!

August 21, 2008

Allan J. Lichtman
Is Georgia 2008 a Repeat of Hungary 1956?

Dave Lindorff Loserville: How Obama Blew It

Ralph Nader
The Problem with Problem Banks

Joanne Mariner
The Military Commissions, So Far

Wajahat Ali
Descent Into Chaos: an Interview with Ahmed Rashid on Pakistan, Afghanistan and the Taliban

Ron Jacobs
Georgia and Historical Farce

Rostam Purzal
The Left and Iran

Anthony Papa
Unlocking the Power of Art to Counter Injustice

Website of the Day
Rocky Mountain Way

August 20, 2008

Michael Neumann
Russia and Georgia: Proportion and Distortion

Ray McGovern
Musharraf Out Like Nixon

Eric Walberg
Georgia's Ossetian Debacle

Fidaa Abed
Blocking a Gazan's Path to San Diego

Daniel Haack
The Pentagon's Most Prolific Pundit

Mike Whitney
Greenback Surges, Euro Shrivels

Website of the Day
Hands Off South Africa's Centre for Civil Society

August 19, 2008

Paul Craig Roberts
Are You Ready for Nuclear War?

Deepak Tripathi
A New Age of Torture

Marwan Bishara
The Politics of Evil in the US Elections

Saul Landau
Baseball Diplomacy or Just Baseball?

William S. Lind
Leave Georgia Alone, George

Martha Rosenberg
Whole Foods and Other Food Offenders

James Brittain
The Road to Tyranny in Colombia

Pratyush Chandra
Krugman's Great Illusion

David Macaray
AFSCME's Strike Against the University of California

Website of the Day
McCain Plagiarizing Solzhenitsyn

September 15, 2008

Reasons to Cheer the Fall of a Giant

Toxic Lehman

By PETER MORICI

Lehman Brothers appears headed for liquidation and that may hasten needed reforms on Wall Street.

Efforts to find a buyer or dismember the company in an orderly fashion failed this weekend for the same reasons that CEO Richard Fuld’s earlier proposal to reorganize Lehman generated little enthusiasm.

Lehman has a negative net worth. Any accounting that said otherwise to create a deal would have been a fantasy of Wall Street bankers who refused to reckon with the full scope of their conundrum.

Fuld proposed selling Lehman’s toxic real estate and mortgage-backed securities and taking huge write downs, and selling its lucrative investment management unit, which includes Neuberger Berman, to offset those losses.

That would have left intact Lehman’s investment banking business.
 
An investment bank really only has three things—working capital, smart finance guys and client trust.

Capital can be raised and American business schools educate lots of sharp minds. Trust is tougher to find.

In the world of mergers and acquisitions, initial stock and bond offerings, and the like, clients often navigate complicated, perilous transactions requiring complete confidence in the integrity of their investment bankers.

After all of Fuld’s shenanigans in real estate and mortgage- backed securities, only a foolish CEO would trust Lehman to handle his prized assets. Hence, Lehman’s investment banking business is not worth much in the hands of its current management.

Less its toxic real estate assets and investment management unit, Lehman’s only real value is its client relationships. Those must be transferred to a more trustworthy firm to have any value.

No other large firm could buy Lehman whole—its toxic real estate and securities are too difficult to value. Only a fool would think he could fairly assess their value, unless those are assigned them a value of zero.

Most of the major banks hold similar toxic assets. If another major financial firm enters similar straits as Lehman, which is likely, the second fire sale would mandate an even lower book value for Lehman’s mortgage-backed securities than could be assigned now.

This explains why one of the solutions offered stalled—peeling off Lehman’s investment bank and investment management unit for sale, creating another bank holding with its toxic assets, and shoring up the latter with cash injections from other banks.
 
Most other banks need all the cash they have to cover their own bad securities, and any money they put into a crippled holding company would likely just be lost.  

Federal Reserve loans to such a holding company would have led to bailing most of the money center banks and securities companies out with subsidies up to $400 billion. Broadly speaking several Wall Street firms are likely as insolvent as Lehman, and its demise may siren a broader financial sector restructuring.

Sunday, the International Swaps and Derivatives Association held a special trading to help banks and securities companies unwind their counterparty deals with Lehman. It remains to be seen how successful that effort was, but stock market turbulence is certain to follow.  Nevertheless, that turbulence is a necessary cost to force positive reforms in the U.S. financial sector.

Lehman executives will find it difficult to replicate their generous compensation elsewhere but the readjustment of banking compensation to more realistic levels and responsible schemes is necessary to return Wall Street to sanity.

Performance-based compensation practices at Lehman and throughout Wall Street, which pay big bonuses when bankers bet right but only imposes losses on shareholders when they bet wrong, has propagated the kind of toxic financial engineering that caused mortgage-backed securities meltdown, general credit crisis, and the near death experience of many Wall Street banks and securities dealers.
 
Paying bankers more reasonably is as necessary to restoring the normal operation of credit markets as the general deleveraging Ben Bernanke talks about.

Sadly, Vikram Pandit at Citigroup, John Thane at Merrill Lynch, and others can’t let go of the delusion that their 35-year old MBAs are worth as much as New York Yankee shortstop Derek Jeter and they in turn are worth multiples of that.

The shareholder value they have destroyed repudiates that conclusion.

As Lehman exits, attention now turns to AIG and Merrill Lynch. They will likely be reorganized, acquired, broken up or go through bankruptcy.

Sooner or later after enough dominos fall, compensation structures and business practices will return to more conservative norms of ten and twenty years ago. Only then will the credit crisis resolve and the economy have a decent shot at full recovery.

Peter Morici is a professor at the University of Maryland School of Business and former Chief Economist at the U.S. International Trade Commission.

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