Today's Stories

March 30, 2009

Michael Hudson
Financing the Empire: Do US Face G20 Mutiny?

Patrick Cockburn
What Next in Afghanistan?

Paul Craig Roberts
Obama's War on the (Upper) Middle Class

March 27-29, 2009

Alexander Cockburn
Obama's Fall Guy

Arno J. Mayer
Too Big to Fail?

Michael Hudson
How the Scam Works

José Pertierra
Gesture for Gesture: How to Free the Cuban Five

Andy Worthington
A Letter to Obama From a Guantánamo Uighur

Mike Whitney
Geithner's Hog Wallow

Winslow T. Wheeler
What Does an F-22 Cost?

Souad N. Al-Azzawi
Iraq: Let the Numbers Speak for Themselves

Dave Lindorff
A Financial History Lesson

Ian Masters
The Zombie Presidency

Barbara Rose Johnston
Water Culture Wars

Jami Tarn
Smearing Tristan Anderson

Diane Farsetta
The Nuclear Industry Targets Wisconsin

David Ker Thomson Against Democracy

Ramzy Baroud
Netanyahu and the Future of the Peace Process

Rannie Amiri
Saudi Shiites' One-Word Demand

Wajahat Ali
Writer as Fighter: the Genius of Ishmael Reed

Nick Egnatz
Whatever Happened to the Fierce Urgency of Now?

Gregory A. Burris
The Insolents Abroad: a Defense of Iceland

Missy Beattie
This Land

Stephen Martin
The Broken Stone of Corporatism

Charles R. Larson
Obama, Smoking and Me

David Yearsley
How They Built Bach's Face (Is the Bard Next?)

Ben Sonnenberg
Won't You Please Get Thee Behind Me? Buñuel's Simon of the Desert

Kim Nicolini
The Mafia Without Moralizing: Garrone's Gomorrah

Lorenzo Wolff
Pat Boone Syndrome

Poets' Basement
Four Poems by Paulann Petersen

Website of the Weekend
Ann Coulter: a Portrait by Ben Tripp

March 26, 2009

Paul Craig Roberts
Is the Bail Out Breeding a Bigger Crisis?

Sharon Smith
Another Blow to Labor ... from the Democrats

Neve Gordon
Avigdor Lieberman, Israel's Shame

Patrick Madden
Why the Geithner Plan Will Fail

Gareth Porter
The Big Con on Iraq

Dave Lindorff
Why Do We Need a Health Insurance Industry?

Hannah Safran
The Israeli Resistance: "Ready to be Traitors"

Keith Newell
Will the Cellphone Please Take the Stand?

Todd Chretien
Behind the Green Collar

Nelson P. Valdés
When It Comes to Cuba and the Media Anything Goes

Website of the Day
G20 Meltdown

March 25, 2009

Robin Blackburn
Media Revolution or Mirage?

Conn Hallinan
Europe in Crisis

David Rosen
Sexting: a First Amendment Challenge for Obama

Jonathan Cook
Turkey's Fallout with Israel Deals Blow to Settlers

Dean Baker
Billions More for Failed Banks

Ron Jacobs
Karzai on a String

Russell Mokhiber
Corporate Liberals vs. Single-Payer

David Macaray
Slice and Dice on Card Check

Dave Lindorff
Geithner's Power Grab

Sarah Knopp
LA Teacher's Sit-In Over Layoffs

Website of the Day
How to Create an Animal Rights "Terrorist"

March 24, 2009

Robert Sandels
Obama and Cuba: Real Change or Minor Tweaks?

Harvey Wasserman
People Died at Three Mile Island

Franklin Lamb
Who Tried to Kill Palestinian Ambassador Abass Zaki and Why?

Michael Donnelly
Obama's Team of Losers

Norman Solomon
Denial and Evasion on Afghanistan

Elizabeth Schulte
The Stark Facts About Violence Against Women

John Goekler
The Most Dangerous Person in the World?

Nicole Colson
Is Justice Finally in Sight for Sami Al-Arian?

Global Balkans
NATO's 78-Day Bombing of Yugoslavia: Ten Years On

William S. Lind
Cat-and-Mouse Off Hainan Island

Website of the Day
Video: IDF Fired on Medics in Gaza

March 23, 2009

M. Shahid Alam
Capitalism From the Standpoint of Its Victims

Uri Avnery
Israel's Most Revolting Law?

Mike Whitney
Zombie Economics: Judgment Day for Geithner

Ralph Nader
Bush the Teacher

Brian Cloughley
Tilting at Afghan Windmills

Dave Lindorff
Toxic Bailouts

Amira Hass
The Rules of Engagement in Gaza: Open Fire on Rescuers

Chris Irwin
When Nonprofit Groups Go Bad

Binoy Kampmark
The Celebrity of Celebrity

Michael Dickinson
Tollbridge Over Troubled Waters

Website of the Day
State of the Birds

March 20-22, 2009

Alexander Cockburn
On the Edge of the Volcano

Paul Craig Roberts
When Things Fall Apart

P. Sainath
Slumdogs vs. Billionaires

Robert Weissman
Lessons From AIG

Saul Landau
Sliding Down in Anger: If We Bail Out the Banks, Why Shouldn't We Own Them?

David Michael Green
Obama and the Altar of Greed

Greg Moses
Winter Soldiers Come to Texas

Ron Jacobs
Pakistan in Turmoil: an Interview with Farooq Tariq

Michael D. Yates
A Nation of Immigrants

John V. Whitbeck
Happy New Year, Iran!

Andy Worthington
The Case of Ahmed Zuhair

Linn Washington Jr.
Supreme Test: the Latest Twist in the Mumia Case

David Ker Thomson
Actions: Things to Do Instead of Hailing the Chief

Laurent Jacque
Is the Euro Doomed?

Rannie Amiri
The Middle East's Jittery Monarchies

Reiko Redmonde /
Larry Everest
The Cold-Blooded Murder of Oscar Grant

David Macaray
The Myth of the Powerful Teachers' Union

Kenneth Couesbouc
Where has the Consumption Gone?

Martha Rosenberg
Meltdown in the Drug Industry

Alan Farago
The Recession, the Developers and Baseball

Missy Beattie
Still Waiting for Change

Richard Rhames
Invisible But Not Completely Insolvent

Stephen Martin
Barack and the Jets

Charles R. Larson
Impeach Obama!

David Yearsley
On Bach's Birthday

Lorenzo Wolff
Manic Levity

Poets' Basement
Three Poems by Gary Corseri

Website of the Weekend
Teachers for CEO Merit Pay!

March 19, 2009

Dave Marsh
Sir Bono: the Knight Who Fled From His Own Debate

Paul Craig Roberts
Was the Bailout Itself a Scam?

Mike Whitney
Why Business is Hysterical About Card Check (And Why America Needs It)

Sam Smith
The Economy in Two Eras of Democrats

Harvey Wasserman
The Crash of France's Nuclear Poster Child

Binoy Kampmark
Back Into NATO: the End of French Exceptionalism

Kathy Sanborn
Broken Culture: the Desecration of Iraq's Art Treasures

Christopher Brauchli
Taxing Problems

George Wuerthner
Permanent Damage From Temporary Logging Roads

Diann Rust-Tierney
New Mexico Abolishes the Death Penalty

Website of the Day
Bailout Plan: "Cross Your Fingers and Hope"

March 18, 2009

Michael Hudson
The Real AIG Conspiracy

Paul Craig Roberts
Israel's American Chattel

Nelson P. Valdés
Why Obama's New Cuba Rules Violate the Constitution

Jonathan Cook
Bedouin Villages Left in the Dark Ages

John Ross
The Death of the American Newspaper

Yifat Susskind
Where Are We Leaving Iraqi Women?

Dave Lindorff
Who's Calling the Shots Now?

Frances Moore Lappé
The City That Ended Hunger

Richard Grossman
Beware the Madoff Diversion!

Rev. William E. Alberts
On Being Whole Not Holy

Website of the Day
Three Weeks in Cuba: a Painter's Perspective

March 17, 2009

Michael Hudson
Mr. Bernanke Spreads the Fire

James G. Abourezk
Show Business: AIG and the Posturing Democrats

Harry Browne
Ireland's Blast From the Past

Joanne Mariner
U.S. Human Rights Abuses in the War on Terror

Alan Farago
The National Ponzi Scheme

Dean Baker
Getting Lehman Bros. Wrong ... Again

Peter Morici
Cuts for Autoworkers, Bonuses for Derivatives Traders

Bill and Kathleen Christison
Obama and the Empire

Richard Gott
Victory for the Left in El Salvador

Walter Brasch
Dog Mutilations vs. Cosmetics

Website of the Day
Single-Payer Action

March 16, 2009

Pam Martens
Has a Comedian Just Saved America?

Uri Avnery
The Rape of Washington

Mike Whitney
Bernanke's Witness Protection Program

Ralph Nader
Americans Want Justice for Wall Street Crooks

Nikolas Kozloff
Down But Not Out: the Latin American Right

John Walsh
Redbaiting on the Left

Ron Jacobs
A Call for Common Sense

Binoy Kampmark
The Case of Tim K

Stephen Fleischman
Coxey's Army Will March Again!

Christian Christensen
A 25-Year Misunderstanding: Springsteen's "Born in the USA"

Scott Handleman
Shooting Tristan Anderson

Website of the Day
Clean, Green, Sustainable

March 13 / 15, 2009

Alexander Cockburn
The Parable of the Shopping Mall

Peter Lee
What the Chas Freeman Fight Was Really About

Diana Johnstone
NATO's Global Mission Creep

David Harvey
Is This Really the End of Neoliberalism?

Petrino DiLeo
Inside Obama's Housing Plan: Will Millions be Left Out in the Cold

David Ker Thomson
Tender to the Earth

Eric Ruder
Massacre in Slow Motion: an Interview with Haider Eid on Gaza

Fred Gardner
Cannabidiol Now!

David Yearsley
Music Torture

Saul Landau
How Israel Gives Jews a Bad Name

Laura Carlsen
Drug War Doublespeak

Robert Weissman
We Told You So

John Goekler /
Merle Lefkoff
The Struggle in Saffron

Tom Barry
Imprisoning Immigrants for Profit

Kathy Sanborn
Money Out of Thin Air

Chris Mobley / Leela Yellesetty
Criminalizing Poverty: the Jail Seattle Doesn't Need

David Michael Green
The Perils of Being Right and Wrong

Alan Maass /
Lee Sustar
A Socialist Moment?

Christopher Brauchli
Pity, the Poor Tax Collectors

Richard Morse
Clinton in Haiti

Lorenzo Wolff
Taking It From the Streets: From Springsteen to the Wu-Tang Clan

Poets' Basement
Springate and Johnston

Website of the Weekend
Hear the Buffalo

March 12 , 2009

Sharon Smith
Bottom Feeders at the Trough

Christopher Ketcham
Full Spectrum Penetration: Israeli Spying in the United States

Mike Whitney
Haircut Time for Bondholders

Ray McGovern
Obama Caves to the Lobby

Eric Toussaint /
Damien Millet
The Doublespeak of a Discredited IMF

John Ross
The War is Not Over

M. Reza Pirbhai
Men in Black: Another View of Pakistan

Chris Floyd
Lost Liberty Blues: Prisons, Profits and the Banality of Evil

Steve Early
Why Labor Doesn't Need a "House of Lords"

Quentin Gee
Hiding the Costs of Coal

Website of the Day
Amadee Coral Reef: a Spherical Panorama

March 11 , 2009

Mike Roselle
From Birmingham to Coal River: Why is the Environmental Movement So Timid?

Paul Craig Roberts
The Criminal Injustice System

Henry A. Giroux
Academic Labor in Dark Times

Nikolas Kozloff
The Death Cries of the Salvadoran Right

Norm Kent
I am Patient Number 380206011

Mitu Sengupta
Reforming the World Bank: Different Image, Same Tune?

Ludwig Watzal
The Structure of Israel's Occupation

David Macaray
The Battle Over EFCA Has Begun

William S. Lind
Rounding Up the Usual Suspects

Martha Rosenberg
A Merger From the Folks Who Brought You Vytorin

Website of the Day
American Indicator: One in Fifty Kids are Homeless

March 10 , 2009

Franklin Spinney
What Israeli Peace Process?

Vijay Prashad
What Did Hillary Clinton Do?

Stan Cox
There's No Free Lunch on Your Browser: the Internet's Energy Drain

Zoltan Grossman
Coffee Strong: Listening to the G.I. Voice at Fort Lewis

Reuven Kaminer
Pure and Unadulterated Racism

Jonathan Cook
Memoricide in the West Bank

Dave Lindorff
Business Rules

Brian McKenna
How Anthropology Disparages Journalism

Harvey Wasserman
Is This the End of the Age of the Automobile?

Corey Pein
He Told You So

Website of the Day
AIG and Systemic Failure: $1.6 Trillion in Insured Deriviatives

March 9 , 2009

Pam Martens
Madoff and the Sorkin Affair

Ralph Nader
Too Big...Period

Peter Lee
Meet Gulbuddin Hekmatyar: the US's Worst/Best Hope for Afghanistan?

Mike Whitney
Geithner's Charade

Peter Morici
Fixing the Banks: Treasury's Doomed Strategy

Dean Baker
Why Do We Need a Private Health Insurance Industry, Anyway?

Steve Ault
Kiss Thailand's Tolerance for Gays Goodbye

Stephen Lendman
Guantánamo Under Obama

Farooq Sulehria
Tennis Without Spectators

Belén Fernández
Chávez, a Cockfight and the Caracazo

Website of the Day
How Lincoln Learned to Read

March 6-8 , 2009

Alexander Cockburn
Harlots High and Low

Chris Floyd
Tangled Up in Karl

Uri Avnery
Remember Ophira?

Dave Lindorff
Kiss the Banks Goodbye

Mark Weisbrot
The Crisis vs. the Dogma

David Ker Thomson
Against Work

Phil Aliff
Soldier Suicides

Rebekah Ward
Georgia Injustice: Another Young Life Wrecked

Tracey Briggs
How Capitalism Feels in the Head

Dean Baker
Depression Nostalgia?

Daniel P. Wirt, M.D.
Remove the Handle From the Health Insurance Misery and Death Pump

Carl Finamore
The Recovery Plan: Save Us From Those Who Would Save Us

Wajahat Ali
The Pakistani Monster

David Michael Green
Smart is the New Stupid

David Macaray
The Minimum Wage Revisited

Michael Dickinson
On Financial Fools Day

Susie Day
Line in the Sand

Bob Sommer
Echoes of the Townhouse Explosion

Ben Sonnenberg
No Forgiveness for the Bourgeoisie: Buñuel's "The Exterminating Angel"

David Yearsley
Sonic Fakery in "Slumdog" From the Mozart of Chennai

DC Larson
They're Writing Those Depression Songs, Again

Lorenzo Wolff
Live Truth: Music Sans Headphones

Poets' Basement
Dominquez, MacNeil and Buknatski

Website of the Weekend
The Environment & Obama: a Conversation with Jeffrey St. Clair

March 5 , 2009

James G. Abourezk
This Time It's Mrs. Clinton's Turn

Kathleen and Bill Christison
U.S. Military Aid to Israel

Robert Weissman
Wall Street's Best Investment: Paying for Public Policy

Patrick Cockburn
My Day at the Terror "Charity"

William Blum
Being Serious About Torture...Or Not

Robert Fantina
From Iraq to Afghanistan: Augmentation All Over Again

Saul Landau
The Unseen Crisis

Benjamin Dangl
Striking a Blow Against the Beer Cartel: a Grassroots Victory in Utah

Christopher Brauchli
The New Leaders of the GOP

Website of the Day
The Angola 3: 36 Years of Solitude

March 4, 2009

Marjorie Cohn
Blueprints for a Police State

Mike Whitney
Blowing Up the Economy: How Securitization Lit the Fuse

Ron Jacobs
The Banality of Occupation: the Rand Papers

Ashley Smith
War by Another Name

Joanne Mariner
Obama's War on Terror

Dan Bacher
The California Water Wars: Why It's Not a Conflict Between Fish and People

Mark Engler
Will the Winds of Change Reach El Salvador?

Franklin Lamb
"What's Hezbollah Done for Us Lately?"

Cal Winslow
Slugging It Out in California

David Mandelzys
Apartheid Week

Website of the Day
Guantánamo: the Definitive Prisoner List

March 3, 2009

Conn Hallinan
Ethnic Cleansing and Israel

Fawzia Afzal-Khan
The Long, Dark Night of Pakistan

Brian M. Downing
The Changing Game in Afghanistan

Robert Larson
External Damnation: Companies are Designed for Destruction

Daniel P. Wirt, MD
Single-Payer Health Reform

Russell Mokhiber
Burn Your Health Insurance Bill!

William Loren Katz
Obama, One Ape and Two Newspapers

Kathy Sanborn
The Lazy Man's Guide to the Economic Crisis

Pauline Imbach
A New Start for the World Social Forum?

Christopher Ketcham
The Best Journalism You'll Write is Priceless

Website of the Day
The Surveillance Self-Defense Project

March 2, 2009

Andrea Peacock
A Poisoned Town's Shot at Justice

Paul Craig Roberts
Obama's Budget

Peter Lee
Pakistan Lurches Toward the Abyss

John Blair
Locking Down Big Coal

Peter Morici
Treasury's Flawed Plan for Citigroup

Uri Avnery
10 Ways to Kill Fatah

Michael Donnelly
Resistance to the War on the Wild

Fred Gardner
The Judge Who Ruled Marijuana is Medicine

Sonia Nettnin
Middle East Medical Mission Heroes

Andrew Lehman
A New Deal for the Web

Website of the Day
Pentagon Papers II?

Eric Holder and the Whitewashing of Racism

Tom Barry
Napolitano's Hard Line

Harvey Wasserman
Obama's Excellent Atomic Omission

Adam Turl
The Enemies of Unions and the Lies They Tell

David Macaray
When People are Fired Illegally

James McEnteer
Rush to the Rescue: Limbaugh's Secret Plan to Save the Economy

Website of the Day
The Carbon Casino

March 30, 2009

Wanted: Bulldog

Where's Eliot Spitzer Now That We Need Him?

By MIKE WHITNEY

The former governor of New York might have some rocky moments in his confirmation hearings, but if Obama really wanted to police Wall St – which of course he doesn’t - he’d replace current SEC chief Mary Schapiro with Eliot Spitzer. Schapiro is another Wall Street toady who believes that the markets can regulate themselves. As the head of the Financial Industry Regulatory Authority, or Finra, she stood by while the financial giants increased their leverage to unsustainable levels and spread their derivatives-contagion to every part of the system.

Schapiro also missed the Madoff scandal, the auction-rate bond fraud, the blow up at Lehman Brothers, and the mortgage meltdown. She was blindsided at every turn. Her dismal performance as a private-sector regulator proves that she's the wrong person for the job. Even the far-right Wall Street Journal has lambasted Schapiro. In an article titled "Obama's pick to head SEC has record of being a Regulator with a Light Touch" the WSJ relayed this revealing anecdote:

The Financial Services Institute, a trade group, was meeting, and Ms. Schapiro addressed the crowd about Finra's efforts to fight frauds aimed at senior citizens. Frank Congemi, a financial adviser, asked what Finra was doing to regulate "packaged products" such as complex mortgage securities. Mr. Congemi says that Ms. Schapiro replied: "We have rating agencies that rate them." The credit-rating agencies, by this time, were being heavily criticized for having given triple-A ratings to mortgage bonds that became unsalable as foreclosures rose.

 Mr. Congemi says that at the May 7 meeting he retorted: "What is that going to do to markets and people's trust when these things go to zero?" He says Ms. Schapiro replied that she couldn't answer hypothetical questions. (Wall Street Journal, Obama's pick to head SEC has record of being a Regulator with a Light Touch")

This story sums up Schapiro's do-nothing attitude perfectly. She's doomed to follow in the footsteps of her feckless predecessor, Christopher Cox, who stuck his head in the sand while the five biggest investment banks levered up to 30 to 1 and brought the whole global house of cards crashing to earth. Schapiro will undoubtedly torpedo any effort to police the markets or to bring charges against any of the Wall Street Godfathers.

And what is the SEC up to now? Where are the regulators and what steps have been taken to clean up Wall Street?

Nothing. Obama hasn't changed a thing. Treasury is full of bank loyalists and the SEC is loaded with brokerage-friendly flunkies. The only difference is that the SEC's rubber stamp has been passed from laughing stock Cox to lapdog Schapiro. Other than that, it's business as usual.

If Spitzer was running the SEC, the Pinkertons would be swarming the investments houses right now, thumbing through the off-balance sheet paperwork, overturning filing cabinets and tasering bloated banksters as they scuttle away clutching their briefcases stuffed with taxpayer loot.

The public is not in the mood for any more lame excuses or windy oratory from President Inspiration. Just get on with it. Governing is more than just gliding from one teleprompter to the next pointing at rainbows and promising Utopia. There has to be action, accountability, and justice.

What people want is to see a cop on every corner of lower Manhattan. They want regulators snooping through e mails and digging through trash cans to uncover any scrap of evidence that will build a case for investor fraud or criminal malfeasance. They want bloodhoundsposted in every boardroom, in every penthouse, on every private jet; breathing down the necks of every CEO, every CFO, and every dodgy, derivatives-peddling scam-artist.

This is not the time for namby-pamby, weak-kneed Schapiro. Spitzer's tough tactics made him big business's most hated man. In fact, in January 2005, the president of the US Chamber of Commerce described Spitzer's approach as "the most egregious and unacceptable form of intimidation we've seen in this country in modern times."

If that isn't a ringing endorsement for SEC chief, than what is?

In March 2008, Spitzer resigned as Governor of New York when he was caught with a high-priced prostitute named Ashley Dupre. The story made headlines across the country. Spitzer accepted full responsibility for his conduct and did not challenge the allegations even though the information was gathered via a federal wiretap.

The Spitzer case brings up some unsettling questions about Bush's surveillance programs; mainly whether they are really being used to investigate potential terrorists or simply a means of destroying political enemies.  Spitzer made a name for himself by sticking it to bigshot business tycoons and Wall Street kleptocrats, the very type of people who fill out Bush's campaign donor list. That's why many people believe that the Bush Justice Department was simply carrying out a vendetta on behalf of Spitzer's many powerful enemies.
    
Just days before the scandal broke, the Washington Post published an article by Spitzer which linked the Bush administration to the mortgage fiasco. He showed how Bush had blocked all efforts to save loan applicants from being fleeced by mortgage lenders. Spitzer was joined by many other state attorneys general who noticed early on that predatory lending was on the rise and that there was a concerted effort to keep the mortgage swindle going whether applicants had the ability to make their payments or not.

Here’s some of that Spitzer op-ed in the Washington Post:

"Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye....

In 2003, during the height of the predatory lending crisis, the Office of the Comptroller of the Currency (OCC) invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. The curbs we sought... would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.

When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers." (Eliot Spitzer, “Predator Lenders’ Partner in Crime" Washington Post)

If the allegations are true, then the Bush administration was directly and maliciously involved in duping thousands, if not millions, of credulous borrowers into fraudulent loans.

Spitzer gave his enemies all the ammo they needed to put him away for good, and they took full advantage of it. No one expected that he would pop up just a year later.

Last Sunday, Spitzer was interviewed on Fareed Zakaria's GPS on CNN. The ex-Gov showed a better grasp of the details of the financial situation than of any of the 535 members of Congress. Spitzer understands the problems and knows what needs to be done to fix them. Here's a small part of the interview:

Fareed Zakaria: What made you look at AIG and say something is wrong here?

Eliot Spitzer: Their fundamental accounting structure was wrong, and when we prosecuted them we brought a case that they had allegedly manufactured fictitious reinsurance contracts designed to create the appearance of capital on the books which was not there and this was was a structure that had been designed and orchestrated at the very top of the company.

Fareed Zakaria:  So they were basically fudging the numbers to make it look like they had a stronger balance sheet than they actually had?

Spitzer: Precisely. That is exactly right. The underlying effort was to create the  illusion of financial strength that was not actually there. And as we dug more deeply into the underlying structure and organization and accounting that was ongoing at the company we knew there was a problem. Four people have been convicted in this and the former CEO was called an unindicted co-conspirator in the federal courtroom by the federal prosecutor. So, this was a fundamental effort to alter the facts and lie to the public."

ZAKARIA: So, do you think the problems that AIG got into later on stemmed from some of the same practices that you were trying to get at?

SPITZER: They stemmed from an effort at the very to to gin up returns whenever, wherever possible, and to push the boundaries in a way that would garner returns almost regardless of risk. Back then, I told people that AIG is at the center of the web. The financial tentacles of this company stretched to every major investment bank. The web between AIG and Goldman Sachs is something that should be pursued. And as I've written...

Consider what Spitzer is saying; that the lumbering Goliath, AIG, is at the very center of the gigantic derivatives fraud which took trillion of dollars of undercapitalized credit default swaps (CDS) and sold them (as insurance) to myriad other financial institutions to help them maintain artificially high ratings on complex securities whose real value was always in doubt since the underlying collateral was connected to uncreditworthy borrowers who were more likely to default or go into foreclosure. These CDS are the paper claims to fictive wealth which greatly inflated the world's biggest speculative bubble. These unregulated swaps are the tissue that holds together the failing shadow banking system which both Geithner and Bernanke are committed to preserve. Spitzer understands how this complex system works and what it will take to bring it under control. This alone should put him at the top of the list of candidates for the SEC.

If the Obama team was serious about defending the little guy and restoring confidence in the markets, then a real bulldog has to run the SEC. But since the real objective appears to be keeping the same basic power-structure in place at all costs; the present course will do just fine. One unmistakable sign of imperial decline is the inability to make critical changes when the country's future depends on it. 

Mike Whitney lives in Washington state. He can be reached at fergiewhitney@msn.com

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