School of Life Monday:POLITICAL THEORY - John Maynard Keynes

John Maynard Keynes was arguably the greatest economist of the 20th century. He discovered the idea that governments should stimulate demand during economic downturns – and was the creator of both the IMF and the World Bank.

How the Law Is Used to Destroy Equality and Protect the Powerful: (VIDEO) Noam Chomsky & Glenn Greenwald

The basis for power elite membership is institutional power, namely an influential position within a prominent private or public organization. About the book: https://www.amazon.com/gp/product/1250013836

One study of power elites in the USA under George W. Bush identified 7,314 institutional positions of power encompassing 5,778 individuals. A later study of US society found that the demographics of this elite group broke down as follows:

Age Corporate leaders average about 60 years of age. The heads of foundations, law, education, and civic organizations average around 62 years of age. Government-sector members about 56.
Gender Women are barely represented among corporate leadership in the institutional elite and women only contribute roughly 20 percent in the political realm. They do appear more among top positions when it comes to cultural affairs, education, and foundations.
Ethnicity White Anglo-Saxons dominate in the power elite, with Protestants representing about 80 percent of the top business leaders and about 73 percent of members of Congress.
Education Nearly all the leaders are college-educated with almost half having advanced degrees. About 54 percent of the big-business leaders and 42 percent of the government elite are graduates of just 12 heavily endowed, prestigious universities.
Social Clubs Most holders of top position in the power elite possess exclusive membership in one or more social clubs. About a third belong to a small number of especially prestigious clubs in major cities like New York, Chicago, Boston, and D.C.[16]

In the 1970s an organized set of policies promoted reduced taxes, especially for the wealthy, and a steady corrosion of the welfare safety net.[17] Starting with legislation in the 1980s, the wealthy banking community successfully lobbied for reduced regulation.[18] The wide range of financial and social capital accessible to the power elite gives their members heavy influence in economic and political decision making, allowing them to move toward attaining desired outcomes. Sociologist Christopher Doob gives a hypothetical alternative stating that these elite individuals would consider themselves the overseers of the national economy, appreciating that it is not only a moral but a practical necessity to focus beyond their group interests. Doing so would hopefully alleviate various destructive conditions affecting large numbers of less affluent citizens.

Mills determined that there is an "inner core" of the power elite involving individuals that are able to move from one seat of institutional power to another. They therefore have a wide range of knowledge and interests in many influential organizations, and are, as Mills describes, "professional go-betweens of economic, political, and military affairs."[19] Relentless expansion of capitalism and the globalizing of economic and military power binds leaders of the power elite into complex relationships with nation states that generate global-scale class divisions. Sociologist, Manuel Castells, writes in The Rise of the Network Society that contemporary globalization does not mean that "everything in the global economy is global."[20] So, a global economy becomes characterized by fundamental social inequalities with respect to "the level of integration, competitive potential and share of the benefits from economic growth."[21] Castells cites a kind of "double movement" where on one hand, "valuable segments of territories and people" become "linked in the global networks of value making and wealth appropriation," while, on the other, "everything and everyone" that is not valued by established networks gets "switched off... and ultimately discarded."[21] The wide-ranging effects of global capitalism ultimately affect everyone on the planet as economies around the world come to depend on the functioning of global financial markets, technologies, trade and labor.

Punk Freedom of Information Access ninja learns how to beat FBI obfuscation, so they shut him out

from Boing Boing

Mike sez, "In Mother Jones, Will Potter profiles Ryan Shapiro, a punk rocker-turned-PhD student who wanted to study how the FBI monitors animal-rights activists. Through trial and error, and a lot of digging, he devised a perfectly legal, highly effective strategy to unearth sensitive documents from the bureau's 'byzantine' filing system.

In short, he got too smart for the feds, so they've cut him off. Now Shapiro has sued the FBI to release some 350,000 documents he's requested under FOIA. If the court buys the FBI's argument here, open-government groups say it could make it harder for scholars and journalists to keep tabs on federal agencies. Potter explains:"

Evoking a legal strategy that had its heyday during the Bush administration, the FBI claims that Shapiro's multitudinous requests, taken together, constitute a "mosaic" of information whose release could "significantly and irreparably damage national security" and would have "significant deleterious effects" on the bureau's "ongoing efforts to investigate and combat domestic terrorism."

So-called mosaic theory has been used in the past to stop the release of specific documents, but it has never been applied so broadly. "It's designed to be retrospective," explains Kel McClanahan, a DC-based lawyer who specializes in national security and FOIAlaw. "You can't say, 'What information, if combined with future information, could paint a mosaic?' because that would include all information!"

Meet the Punk Rocker Who Can Liberate Your FBI File (Thanks, Mike!)

(Photo: Stephanie Crumley)

dig the Dischord T-shirt!

political cartoon of the year.

The Scam Wall Street Learned From the Mafia

From the infamous, great writer, Matt Taibbi at RollingStone

How America's biggest banks took part in a nationwide bid-rigging conspiracy - until they were caught on tape

Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won't hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. If you heard about it at all, you're probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government's massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony "Tony Ducks" Corallo.

But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.

The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being ­cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.

In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What's more, in the manner of old mob trials, Wall Street's secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves' cant, or Italian mobsters who talked about "getting a button man to clip the capo," on tape after tape these Wall Street crooks coughed up phrases like "pull a nickel out" or "get to the right level" or "you're hanging out there" – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime.

USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we've seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordi­nated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – "an open-and-shut case of anti-competitive behavior," as one former regulator described it.

More recently, a major international investigation has been launched into the manipulation of Libor, the interbank lending index that is used to calculate global interest rates for products worth more than $3 trillion a year. If and when that case is presented to the public at trial – there are several major civil suits in the works here in the States – we may yet find out that the world's most powerful banks have, for years, been fixing the prices of almost every adjustable-rate vehicle on earth, from mortgages and credit cards to interest-rate swaps and even currencies.

But USA v. Carollo marks the first time we actually got incontrovertible evidence that Wall Street has moved into this cartel-type brand of criminality. It also offered a disgusting glimpse into the enabling and grossly cynical role played by politicians, who took Super Bowl tickets and bribe-stuffed envelopes to look the other way while gangsters raided the public kitty. And though the punishments that were ultimately handed down in the trial – minor convictions of three bit players – felt deeply unsatisfying, it was still a watershed moment in the ongoing story of America's gradual awakening to the realities of financial corruption. In a post-crash era where Wall Street trials almost never make it into court, and even the harshest settlements end with the evidence buried by the government and the offending banks permitted to escape with no admission of wrongdoing, this case finally dragged the whole ugly truth of American finance out into the open – and it was a hell of a show.

1. THE SCAM
This was no trial scene from popular lore, no Inherit the Wind or State of California v. Orenthal James Simpson. No gallery packed with rapt spectators, no ceiling fans set whirring to beat back the tension and the heat, no defense counsel's resting a sympathetic hand on the defendant's shoulder as opening statements commence. No, the setting for USA v. Carollo reflected the bizarre alternate universe that exists on Wall Street. Like so many court cases involving big banks, the proceeding looked more like a roomful of expensive lawyers negotiating a major corporate merger than a public search for justice.

The trial began on April 16th in a federal court in Lower Manhattan. The courtroom, an aerielike setting 23 stories up, offered a panoramic view of the city and the East River. Though the gallery was usually full throughout the three-plus weeks of testimony, the spectators were not average citizens come to witness how they had been robbed blind by America's biggest banks. Instead, there were row after row of suits – other lawyers eager to observe a long-awaited case, one that could influence the outcome in a handful of civil suits pending across the country. In fact, the defendants themselves, whom the trial would reveal as easily replaceable cogs in a much larger machine of corruption, were barely visible from the gallery, obscured by the great chattering congress of prosecution and defense attorneys.

Only the presence of the mostly nonwhite and elderly jury, which resembled the front pew of a Harlem church, served as a reminder that the case had any connection to the real world. Even reporters from most of the major news outlets didn't bother to attend. The judge in the trial, the right honorable and amusingly cantankerous Harold Baer, acknowledged that the case was not likely to set the public's pulse racing. "It is unlikely, I think, that this will generate a lot of media publicity," Baer sighed to the jury in his preliminary instructions.

Once opening statements began, it was easy to see why the press might stay away. One of the main lines of defense for corrupt Wall Street institutions in recent years has been the extreme complexity of the infrastructure within which these crimes are committed. In order for prosecutors to win convictions, they have to drag ordinary Americans, people who watch and enjoy reality TV, up the steepest of learning curves, coaching them into game shape with regard to obscure financial vehicles like swaps and CDOs and, in this case, Guaranteed Investment Contracts.

So it was no surprise that both the prosecution and the defense began their opening remarks to the jury by apologizing for the hellishly dull maze of "convoluted" and "boring" and "tedious" financial transactions they were about to spend weeks hearing about. Only Wendy Waszmer, the feisty federal prosecutor with straight brown hair and an elfin build who presented the government's case, succeeded in cutting through the mountainous dung heap of acronyms and obfuscations and explaining what the case was about. "Even though some aspects of municipal bond finance are complex, the fraud here was simple," she told the jurors. "It was about lying and cheating cities and towns in a bidding process that was in place to protect them."

The "simple fraud" Waszmer described centered around public borrowing. Say your town wants to build a new elementary school. So it goes to Wall Street, which issues a bond in your town's name to raise $100 million, attracting cash from investors all over the globe. Once Wall Street raises all that money, it dumps it in a tax-exempt account, which your town then uses to pay builders, plumbers, the chalkboard company and whoever else winds up working on the project.

But here's the catch: Most towns, when they raise all that money, don't spend it all at once. Often it takes years to complete a construction project, and the last contractor isn't paid until long after the original bond is issued. While that unspent money is sitting in the town's account, local officials go looking for a financial company on Wall Street to invest it for them.

To do that, officials hire a middleman firm known as a broker to set up a public auction and invite banks to compete for the town's business. For the $100 million you borrowed on your elementary school bond, Bank A might offer you 5 percent interest. Bank B goes further and offers 5.25 percent. But Bank C, the winner of the auction, offers 5.5 percent.

In most cases, towns and cities, called issuers, are legally required to submit their bonds to a competitive auction of at least three banks, called providers. The scam Wall Street cooked up to beat this fair-market system was to devise phony auctions. Instead of submitting competitive bids and letting the highest rate win, providers like Chase, Bank of America and GE secretly divvied up the business of all the different cities and towns that came to Wall Street to borrow money. One company would be allowed to "win" the bid on an elementary school, the second would be handed a hospital, the third a hockey rink, and so on.

How did they rig the auctions? Simple: By bribing the auctioneers, those middlemen brokers hired to ensure the town got the best possible interest rate the market could offer. Instead of holding honest auctions in which none of the parties knew the size of one another's bids, the broker would tell the pre­arranged "winner" what the other two bids were, allowing the bank to lower its offer and come in with an interest rate just high enough to "beat" its supposed competitors. This simple but effective cheat – telling the winner what its rivals had bid – was called giving them a "last look." The winning bank would then reward the broker by providing it with kickbacks disguised as "fees" for swap deals that the brokers weren't even involved in.

The end result of this (at least) decade-long conspiracy was that towns and cities systematically lost, while banks and brokers won big. By shaving tiny fractions of a percent off their winning bids, the banks pocketed fantastic sums over the life of these multimillion-dollar bond deals. Lowering a bid by just one-100th of a percent, called a basis point, could cheat a town out of tens of thousands of dollars it would otherwise have earned on its bond deposits.

That doesn't sound like much. But when added to the other fractions of a percent stolen from basically every other town in America on every other bond issued by Wall Street in the past 10 to 15 years, it starts to turn into an enormous sum of money. In short, this was like the scam in Office Space, multiplied by a factor of about 10 gazillion: Banks stole pennies at a time from towns all over America, only they did it a few hundred bazillion times.

Given the complexities of bond investments, it's impossible to know exactly how much the total take was. But consider this: Four banks that took part in the scam (UBS, Bank of America, Chase and Wells Fargo) paid $673 million in restitution after agreeing to cooperate in the government's case. (Bank of America even entered the SEC's leniency program, which is tantamount to admitting that it committed felonies.) Since that settlement involves only four of the firms implicated in the scam (a list that includes Goldman, Transamerica and AIG, as well as banks in Scotland, France, Germany and the Netherlands), and since settlements in Wall Street cases tend to represent only a tiny fraction of the actual damages (Chase paid just $75 million for its role in the bribe-and-payola scandal that saddled Jefferson County, Alabama, with more than $3 billion in sewer debt), it's safe to assume that Wall Street skimmed untold billions in the bid-rigging scam. The UBS settlement alone, for instance, involved 100 different bond deals, worth a total of $16 billion, over four years.

Contracting corruption has been around since the construction of the Appian Way. The difference here is the almost unimaginable scope of the crime – and the fact that it's mobsters from Wall Street who are getting in on the action. Until recently, such activity has traditionally been the almost­exclusive domain of the Mafia. "When I think of bid rigging, I think of the convergence of organized crime and the government," says Eliot Spitzer, who prosecuted two bid-rigging cases in his career as a New York prosecutor, one involving garbage collection, the other a Garment District case involving the Gambino family. The Mafia moved into bid rigging, he says, because it observed over time that monopolizing public contracts offers a far more lucrative business model than leg­breaking. "Organized crime learned their lessons from John D. Rockefeller," Spitzer explains. "It's much more efficient to control a market and boost the price 10 percent than it is to run a loan-sharking business on the street, where you actually have to use a baseball bat and collect every week."

What Spitzer saw was gangsters moving in the direction of big business. When I ask him if he is surprised by the current bid-rigging case, which looks more like big business moving in the direction of gangsters, he laughs. "The urge to become a monopolist," he says, "is as old as capitalism."

2. THE TAPES
The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked together at GE, which was competing for bond business against banks like Chase, Wells Fargo and Bank of America. Carollo was the boss of Goldberg and Grimm, who handled the grunt work, submitting bids. Between August 1999 and November 2006, the three executives participated in countless rigged bids by telephone, conspiring with middleman brokers like Chambers, Dunhill and Rubin. We know this because prior to the start of the Carollo trial, 12 other individuals, including several brokers from CDR, had already pleaded guilty in a wide-ranging federal investigation.

How did the government manage to make a case against so many Wall Street scam artists? Hubris. As was the case in Jefferson County, Alabama, where Chase executives blabbed criminal conspiracies on the telephone even though they knew they were being recorded by their own company, the trio of defendants in Carollo wantonly fixed bond auctions despite the fact that their own firm was taping the conversations. Defense counsel even made an issue of this at trial, implying to the jury that nobody would be dumb enough to commit a crime by phone when "there was a big sticker on the phones that said all calls are being recorded," as Grimm's counsel, Mark Racanelli, put it. In fact, Racanelli argued, the conversations on the tapes hardly suggested a secret conspiracy, because "no one was whispering."

But the reason no one was whispering isn't that their actions weren't illegal – it's because the bid rigging was so incredibly common the defendants simply forgot to be ashamed of it. "The tapes illustrate the cavalier attitude which the financial community brought toward this behavior," says Michael Hausfeld, a renowned class-action attorney whose firm is leading a major civil suit against Bank of America, Wells Fargo, Chase and others for this same bid-rigging scam. "It became the predominant mode of transacting business."

How and when the government got hold of those tapes is still unclear; the prosecution is not commenting on the case, which remains an open investigation. But we do know that in November 2006, federal agents raided the offices of CDR, the broker firm that was working with Carollo, Goldberg and Grimm. Caught red­handed, many of the firm's top executives agreed to turn state's witness. One after another, these hangdog, pasty-faced men were led up to the stand by prosecutors and forced to recount how they'd been snatched up in the raid, separated and blitz-interviewed by FBI agents, and plunged into years of nut-crushing negotiations, which resulted in almost all of them pleading guilty. Prosecutors would eventually accumulate 570,000 recorded phone conversations, and to decipher them they worked these cooperating witnesses like sled dogs, driving them in for dozens of meetings and grilling them about the details of the scam.

The state's first witness, confusingly, was a CDR broker named Doug Goldberg (no relation to the defendant Steven Goldberg). Almost every executive involved in the trial was absurdly young; many were just out of college when the bid-rigging scam started in the late Nineties. Doug Goldberg graduated from USC in 1993, and his fellow CDR executive Evan Zarefsky still looks to be about 15 years old, suggesting a suit-and-tie version of Napoleon Dynamite. The extreme youth of some of the conspirators was an obvious subtext of the trial, underscoring the fact that far more senior executives from bigger banks like Chase and Bank of America had been permitted by the government to evade testifying.

Right off the bat, in fact, Doug Goldberg explained that while at CDR, he had routinely helped the cream of Wall Street rig bids on municipal bonds by letting them take a peek at other bids:

Q: Who were some of the providers you gave last looks to?
A: There was a whole host of them, but GE Capital, FSA, J.P. Morgan, Bank of America, Société Générale, Lehman Brothers, Bear. There were others.

Goldberg went on to testify that he repeatedly rigged auctions with the three defendants. Sometimes he gave them "last looks" so they could shave basis points off their winning bids; other times he asked them to intentionally submit losing offers – called cover bids – to allow other firms to win. He told the court he knew he was being recorded by GE. When asked how he knew that, he drew one of the trial's rare laughs by answering, "Either they told me or some of them, like Société Générale, you can hear the beeping."

Because of the recordings, he went on, he and the defendants used "guarded language."

"I might tell him, if I'm looking for an intentionally losing bid, 'I need a bid,' or something like that," he said.

Q: With whom specifically did you use this guarded type of language?
A: With Steve Goldberg and others.
Q: In your dealings with Steve Goldberg, what, if any, language or other signal did he use that you understood as a request for a last look?
A: He might ask me where I "saw the market," or he might ask me for, as I mentioned, an "indication of where the market is," an "idea of the market."

The broker went on to detail how he had worked with the GE executives to manipulate a number of auctions. In several cases, he was pushed to make deals with GE by his boss at CDR, Stewart Wolmark, who seemed smitten with GE's Steve Goldberg; jurors listening to the tapes couldn't miss the pair's nauseatingly tight, cash-fueled bromance. In December 2000, for instance, Wolmark helped Goldberg win a rigged bid for a bond in Onondaga County, New York. After the auction, he calls his buddy Steve:

WOLMARK: Hey, congratulations. You got another one.
GOLDBERG: Yeah. Yeah, thank you. Thank you.
WOLMARK: You're hot!
GOLDBERG: I'm hot? Hot with your help, sir.

Later on, Wolmark basically tells Goldberg he owes a service to his fellow gangster. "I deserve the big lunch now," Wolmark chirps.

"Yeah," says Goldberg. "I owe you something, huh?"

A few months later, in March 2001, Wolmark and Goldberg do another deal, this time for a $219 million construction bond for the Port Authority of Allegheny County, Pennsylvania. Wolmark rings up his payola paramour and scolds him for not calling him during a recent trip to Vegas, where Goldberg doubtless spent a nice chunk of the money Wolmark had helped him steal from places like Onondaga County.

"Good time in Vegas, you can't even call me back?" Wolmark laments.

"I don't have time to sleep in Vegas," Goldberg says suggestively.

"There's sleeping," Stewart Wolmark chides, "and there's Stewart."

From there, the clothes just start flying off as the pair jump into a steamy negotiation over the monster Allegheny deal. "I'm all set with $200 million," Goldberg says. "Everything's ready to go."

Then Wolmark asks if GE is ready to pay CDR its bribe. "You got some swaps coming up?"

Goldberg assures him they do. Wolmark then passes the deal off to his own Goldberg, Doug, who handles the actual auction.

When prosecutors tried to explain these telephone auctions at trial, projecting the transcripts of the calls on a huge movie screen set up across the courtroom from the jury, you could see the sheer bewilderment on the jurors' faces. The men on the tapes seemed to be speaking a language from another planet – an insanely dry and boring planet, where there's no color and no adverbs, maybe, and babies are made by rubbing two calculators together. One of the jurors, an older white man, spent the first few days of the trial yawning repeatedly, fighting a heroic battle to stay awake in the face of all the mind-numbing jargon about Guaranteed Investment Contracts. "Who needs Lunesta," joked one lawyer who attended the proceedings, "when you can hear a lawyer talk about GICs right out of the gate?"

The language of the auctions was a kind of intellectual camouflage. If you didn't listen closely, you'd have thought the two Goldbergs were a couple of airmen exchanging weather balloon data, rather than two Wall Street executives plotting a crime to rip off the good citizens of Allegheny County. In that deal, Steve Goldberg of GE originally bid "503, 4" on the $219 mil­lion bond, only to be guided downward by Doug Goldberg of CDR. The broker explained in court:

Q: Can you explain what you understood Mr. Goldberg to say when he was saying 503, 4? What was he bidding?
A: That was the rate he was willing to bid on this investment agreement.
Q: How much was it?
A: 5.04 percent.
Q: What did you do as a response to his bid of 5.04 percent?
A: I brought his bid down to 5.00 percent.

In other words, even though GE was willing to pay an interest rate of 5.04 percent, Allegheny County ended up earning just 5.00 percent on its $219 million bond. How much money that amounted to is difficult to calculate, given the way the bond account diminished each year as the county used it to pay contractors; even Doug Goldberg couldn't put a number on the scam. But if the account was full at the start of the deal, GE may have cheated the county out of as much as $87,600 a year to start.

In any case, GE certainly chiseled the Pennsylvanians out of a sizable sum, because soon after, the company paid CDR a kickback of $57,400 in the form of "fees" on a swap deal. The whole deal pleased CDR's higher-ups. "I went to Stewart Wolmark and told him that not only did Steve Goldberg win but that I was able to reduce his rate down four basis points," said Doug Goldberg. "Stewart was very happy and excited."

Over and over again, jurors heard cooperating witnesses translate the damning audiotapes. In one lurid sequence, the bat-eared, bespectacled CDR broker Evan Zarefsky explained how he helped the GE defendant Peter Grimm win a bid for a bond put out by the Utah Housing Authority. The pair had apparently reamed Utah so many times that it had become a sort of inside joke between the two of them. From a call in August 2001:

GRIMM: Utah, let's see, how we look on that?
ZAREFSKY: Good old Utah!

Grimm complains about how much he'll have to pay to win the deal. "These levels are really shitty," he says.

Zarefsky comforts him. "Well, I can probably save you a couple of bucks here," he says.

From there, Grimm rattles off numbers, ultimately settling on a bid of 351 – 3.51 percent. Zarefsky, in almost motherly fashion, guides the manic Grimm downward, telling him, in code, that his bid is 10 basis points too high. "You actually got like a dime in there," Zarefsky says. "You want to come down a dime?"

So Grimm comes back with a bid of 3.41 percent, which turned out to be the winning bid. Utah lost out on 10 basis points, GE bilked the state out of untold sums, and CDR got another nice kickback.

This, basically, is how a lot of the calls went. The provider would tentatively offer a number, and the broker would guide him to a new bid. "You have a little bit of room there," he might say, or "That's gonna put you about a nickel short." Guiding the bidders to the lowest possible bid was called "figuring out the level" or being "in the market"; obtaining information about other bids was called "giving an indicative" or "seeing the market."

The brokers and providers used a dizzying array of methods for rigging deals. In some cases, the broker helped the "winner" by simply excluding other bidders, who may or may not have been in on the scam. In one hilarious sequence that sounds like something out of a wiretap of a Little Italy social club, CDR executive Dani Naeh tells GE's Steve Goldberg that he's not sure he can guarantee a win on a bid for a New Jersey hospital bond. There were too many triple-A-rated companies interested in the bond, Naeh explains, and he couldn't control their bids the way he could those of the lesser, double-A-rated companies he usually did business with. "It would be easier for us to contact other providers who were rated double-A and ask them to submit an intentionally losing bid," Naeh testified. He sounded exactly like a mobster, talking about "our guys" and "our friends."

In some of the calls, jurors could hear the entirety of the dirty deals negotiated, including the bribe paid back to the broker. In one deal involving a bond for the Port of Oakland, California, Steve Goldberg of GE starts to ask his pal Stewart Wolmark of CDR what kind of kickback the broker wants for rigging the deal. Such conversations about payoffs were so commonplace that Wolmark doesn't even have to wait for Goldberg to finish the question:

GOLDBERG: What are we building in here for the...
WOLMARK: Swap.

In his testimony, Wolmark explained that he was asking for a swap deal in return for rigging the bid. "He wanted to know what we were going to get paid on the back end," Wolmark explained.

In the call, Wolmark and Goldberg start haggling over the price of CDR's kickback. Wolmark tells Goldberg he only wants what's fair. "Listen, I'm not a chazzer," Wolmark says.

Fans of the movie Scarface will remember Tony Montana's inspired translation of this Yiddish term: "Thas a pig that don' fly straight."

Wolmark reassures Goldberg that as pigs go, he's a straight flier. "You see the kind of mensch I am," he says.

Negotiations ensue. Goldberg tells Wolmark that he can pay him more on the bribe – the swap deal – if Wolmark can help GE save money on the Port of Oakland deal. "I'd like to see if we can pull a nickel out of that swap," Wolmark says. Translation: He wants to boost CDR's take on the kickback by five basis points.

"If I could get to the right level," Goldberg answers, referring to the Port of Oakland deal. Translation: Goldberg will help Wolmark get his "nickel" on the swap deal if Wolmark can help GE "get to the right level" on the bid.

3. THE POLITICIANS
The Carollo case provides far more than a detailed look at the mechanics and pervasiveness of bid rigging; it offers a clear and unvarnished blueprint of the architecture of American financial and political corruption. In an attempt to discredit the CDR witnesses, defense counsel hounded them about other revelations that surfaced in the government's investigation, particularly those that involved bribery, illegal campaign contributions and pay-for-play schemes.

The defense's cross-examinations were surreal. It was ­certainly true that some of the government's cooperating witnesses had dubious résumés, so it may have made sense to highlight their generally duplicitous history of tax evasion or lying to investigators. But in their zeal, defense counsel went far beyond simply discrediting the witnesses, spending an inordinate amount of time eliciting even more details about the grotesque corruption scheme their own clients had taken part in. The result was a rare and somewhat confusing spectacle: high-octane lawyers from Wall Street working to rip the lid off Wall Street corruption in open court.

Defense counsel showed us, for instance, how CDR employees were routinely directed by their boss, David Rubin, to make political contributions to select candidates, only to be reimbursed by Rubin for those contributions later on. This kind of corporate skirting of campaign finance limits is something we've always suspected goes on, but we rarely get to see direct evidence of it.

More interesting, though, were the stories about political payoffs. In 2001, CDR hired a consultant named Ron White, a Philadelphia bond attorney who happened to be the chief ­fundraiser for then-mayor John Street. CDR gave White two tickets to the 2003 Super Bowl in San Diego plus a limo – a gift worth $10,000. As his "guest," White took Corey Kemp, the city treasurer for Philadelphia, who, 16 days later, awarded CDR a $150,000 contract to advise the city on swap deals. But that wasn't the end of the gravy train: CDR doled out those swap deals to selected banks, who in return kicked back $515,000 to CDR for steering city business their way.

So a mere $10,000 bribe to a politician – a couple of Super Bowl tickets and a limo – scored CDR a total of $665,000 of the public's money. If you want to know why Wall Street has been enjoying record profits, here's your answer: Corruption is a business model that brings in $66 for every dollar you invest.

Even more startling was the way that a notorious incident involving former New Mexico governor and presidential candidate Bill Richardson resurfaced during the trial. Barack Obama, you may recall, had nominated Richardson to be commerce secretary – only to have the move blow up in his face when tales of Richardson accepting bribes began to make the rounds. Federal prosecutors never brought a case against Richardson: In 2009, an inside source told the AP that the investigation had been "killed in Washington." Obama himself, after Richardson bowed out, praised the former governor as an "outstanding public servant."

Now, in the Carollo trial, defense counsel got Doug Goldberg, the CDR broker, to admit that his boss, Stewart Wolmark, had handed him an envelope containing a check for $25,000. The check was payable to none other than Moving America Forward – Bill Richardson's political action committee. Goldberg then went to a Richardson fundraiser and handed the politician the envelope. Richardson, pleased, told Goldberg, "Tell the big guy I'm going to hire you guys."

Goldberg admitted on the stand that he understood "the big guy" to mean Wolmark. After that came this amazing testimony:

Q: Soon after that, New Mexico hired CDR as its swap and GIC adviser on a $400 million deal, right?
A: Yes.
Q: You learned later that that check in that envelope was a check for $25,000, right?
A: Yes. I learned it later.
Q: You also learned later that CDR gave another $75,000 to Gov. Richardson, right?
A: Yes.
Q: CDR ended up making about a million dollars on this deal for those two checks?
A: Yes.
Q: In fact, New Mexico not only hired CDR, they hired another firm to do the actual work that they needed done?
A: For the fixed-income stuff, yes.

What we get from this is that CDR paid Bill Richardson $100,000 in contributions and got $1.5 million in public money in return. And not just $1.5 million, but $1.5 million for work they didn't even do – the state still had to hire another firm to do the actual job. Nice non-work, if you can get it.

To grasp the full insanity of these revelations, one must step back and consider all this information together: the bribes, yes, but also the industrywide, anti-competitive bid-rigging scheme. It turns into a kind of unbroken Möbius strip of corruption – the banks pay middlemen to rig auctions, the middlemen bribe politicians to win business, then the politicians choose the middlemen to run the auctions, leading right back to the banks bribing the middlemen to rig the bids.

When we allow Wall Street to continually raid the public cookie jar, we're not just enriching a bunch of petty executives (Wolmark's income in 2008, two years after he was busted in the FBI raid, was $2,464,210.18) – we're effectively creating an alternate government, one in which money lifted from the taxpayer's pocket through mob-style schemes turns into a kind of permanent shadow tax, used to maintain the corruption and keep the thieves in place. And that cuts right to the heart of what this case is all about. Wall Street is tired of making money by competing for business and weathering the vagaries of the market. What it wants instead is something more like the deal the government has – regularly collecting guaranteed taxes. What's crazy is that in order to justify that dream of regular, monopolistic tribute, they've begun to see themselves as a type of shadow government, watching out for the rest of us. Amazingly enough, this even became a defense at trial.

4. THE DEFENSE
There were times, sitting in the courtroom, when I wondered, How did this case even go to trial? What defense attorney would look at the thousands of recorded phone calls, the parade of cooperating witnesses, the stacks of falsified documents, and conclude that airing all of this in court was a smart play? Listening to tape after damning tape played in open court while the defendants cringed in a corner seemed increasingly like a gratuitous ass-kicking, one that any smart defense lawyer would have made a deal to avoid.

But as the weeks passed, I started to get a feel for the defense strategy, which made a kind of demented sense. The lawyers for Carollo, Goldberg and Grimm didn't even bother trying to argue the facts of the case. Instead, in one cross-examination after another, they kept hitting the same theme. Despite the fact that the rigged bids resulted in lower returns, wasn't it true that the cities and towns still received, technically speaking, the highest bid? If a town received a 5.00 percent return on a $219 million bond instead of 5.04 percent, who's to say that wasn't a good price?

John Siffert, the gray-faced and unlikable attorney for Steve Goldberg, put it this way in his cross-examination of CDR executive Stewart Wolmark. Asking about the Allegheny deal, he boomed: "Isn't it fair to say that you believed that by lowering... Steve's bid to 5 percent, Steve's bid was still a fair price to pay?"

Wolmark's answer was both quick and sensible: "I don't determine the fair price," he replied. "The market does." GE was supposed to pay the highest price the market would pay. It wasn't a competitive auction, as required by law.

But Siffert had made his point, and his rhetoric got right to the heart of the defense, which was going to center around the definition of the word "fair." The men and women who run these corrupt banks and brokerages genuinely believe that their relentless lying and cheating, and even their anti-competitive cartel­style scheming, are all legitimate market processes that lead to legitimate price discovery. In this lunatic worldview, the bid­rigging scheme was a system that created fair returns for everyone. If a bunch of Pennsylvanians got a 5.00 percent return on their money instead of 5.04 percent, and GE and CDR just happened to split the extra .04 percent, that was a fair outcome, because that's what the parties negotiated. True, the Pennsylvanians had no idea about the extra .04 percent, and true, they had hired CDR precisely to make sure they got that extra 0.4 percent. But hey, it's not like they were complaining: Until someone told them they were being brazenly cheated, they were happy with their bond service. And besides, it's not like ordinary people understand this stuff anyway. So how is it the place of some busybody federal prosecutor to waltz in here and say what's a fair price?

Siffert tried to lay this outrageous load of balls on the jury using a faux-folksy analogy. "When your refrigerator breaks down, if you're not mechanically inclined, you're at the mercy of that repair person," he told the jury. "And if he repairs the refrigerator, makes it work well, charges you a fair price, you're likely to call on him again when the stove breaks." What he was essentially telling jurors was: This shit is complicated, so best just to leave it to the experts. Whether they're fixing a fridge or fixing a bond rate, they get to set the price, because we're all morons who are dependent on them to make our world work. Siffert, in his scuzzy way, was actually telling us an essential economic truth: You're at the mercy of that repair person.

This incredible defense, which the attorneys for all three defendants led with, perfectly expresses the awesome arrogance of the modern-day aristocrats who run our financial services sector. Corrupt or not, they built this financial infrastructure, and it's producing the prices they genuinely think are fair for us – and for them. And fair to them is the customer getting the absolute bare minimum, while they get instant millions for work they didn't do. Moreover – and this is the most important part – they believe they should get permanent protection from the ravages of the market, i.e., from one another's competition. Imagine Jack Nicholson on the witness stand, dressed in a repairman's uniform and tool belt. Who's gonna fix those refrigerators? You? You, Lieutenant Weinberg? You can't handle the truth!

That, ultimately, is what this case was about. Capitalism is a system for determining objective value. What these Wall Street criminals have created is an opposite system of value by fiat. Prices are not objectively determined by collisions of price information from all over the market, but instead are collectively negotiated in secret, then dictated from above.

"One of the biggest lies in capitalism," says Eliot Spitzer, "is that companies like competition. They don't. Nobody likes competition."

To the great credit of the jurors in the Carollo case, they didn't buy Wall Street's ludicrous defense. On May 11th, nearly a month after the trial began, they handed down convictions to all three defendants. Carollo, Goldberg and Grimm, who will be sentenced in October, face as many as five years in jail.

There are some who think that the government is limited in how many corruption cases it can bring against Wall Street, because juries can't understand the complexity of the financial schemes involved. But in USA v. Carollo, that turned out not to be true. "This verdict is proof of that," says Hausfeld, the antitrust attorney. "Juries can and do understand this material."


In the end, though, the conviction of a few bit players seems like far too puny a punishment, given that the bid rigging exposed in Carollo involved an entrenched system that affected major bond issues in every state in the nation. You find yourself thinking, America's biggest banks ripped off the entire country, virtually every day, for more than a decade! A truly commensurate penalty would be something like televised stonings of the top 10 executives of every guilty bank, or maybe the forcible resettlement of every banker and broker in Lower Manhattan to some uninhabited Andean wasteland... anything to address the systemic nature of the crime.

No such luck. Instead of anything resembling real censure, a few young executives got spanked, while the offending banks got off with slap-on-the-wrist fines and were allowed to retain their pre-eminent positions in the municipal bond market. Last year, the two leading recipients of public bond business, clocking in with more than $35 billion in bond issues apiece, were Chase and Bank of America – who combined had just paid more than $365 million in fines for their role in the mass bid rigging. Get busted for welfare fraud even once in America, and good luck getting so much as a food stamp ever again. Get caught rigging interest rates in 50 states, and the government goes right on handing you billions of dollars in public contracts.

Over the years, many in the public have become numb to news of financial corruption, partly because too many of these stories involve banker-on-banker crime. The notorious Abacus deal involving Goldman Sachs, for instance, involved a hedge-fund billionaire ripping off a couple of European banks – who cares? But the bid-rigging scandal laid bare in USA v. Carollo is a totally different animal. This is the world's biggest banks stealing money that would otherwise have gone toward textbooks and medicine and housing for ordinary Americans, and turning the cash into sports cars and bonuses for the already rich. It's the equivalent of robbing a charity or a church fund to pay for lap dances.

Who ultimately loses in these deals? Well, to take just one example, the New Jersey Health Care Facilities Finance Authority, the agency that issues bonds for the state's hospitals, had their interest rates rigged by the Carollo defendants on $17 million in bonds. Since then, more than a dozen New Jersey hospitals have closed, mostly in poor neighborhoods.

As Carollo showed us, in open court, this is what Wall Street learned from the Mafia: how to reach into the penny jars of dying hospitals and schools and transform their desperation and civic panic into fat year-end bonuses and the occasional "big lunch." Unlike the Mafia, though, they were smart enough to do their dirt without anyone noticing for a very long time, which is what defense counsel in this case were talking about when they argued that towns and cities "were not harmed" by the rigged bids. No harm, to them, means no visible harm, i.e., that what taxpayers didn't know couldn't hurt them. This is logical thinking, to the sociopath – like saying it's not infidelity if your wife never finds out. But we did find out, and the scale of betrayal unveiled in Carollo was epic. It was like finding out your husband didn't just cheat, but had a frequent-flier account with every brothel in North America for the past 10 years. At least now we know how bad it was. The trick is to find a way to make the cheaters pay.

This story is from the July 5th, 2012 issue of Rolling Stone.

via BoingBoing

Leak Offers Glimpse of Campaign Against Climate Science

from The New York Times

Leaked documents suggest that an organization known for attacking climate science is planning a new push to undermine the teaching of global warming in public schools, the latest indication that climate change is becoming a part of the nation’s culture wars.

The documents, from a nonprofit organization in Chicago called the Heartland Institute, outline plans to promote a curriculum that would cast doubt on the scientific finding that fossil fuel emissions endanger the long-term welfare of the planet. “Principals and teachers are heavily biased toward the alarmist perspective,” one document said.

While the documents offer a rare glimpse of the internal thinking motivating the campaign against climate science, defenders of science education were preparing for battle even before the leak. Efforts to undermine climate-science instruction are beginning to spread across the country, they said, and they fear a long fight similar to that over the teaching of evolution in public schools.

In a statement, the Heartland Institute acknowledged that some of its internal documents had been stolen. But it said its president had not had time to read the versions being circulated on the Internet on Tuesday and Wednesday and was therefore not in a position to say whether they had been altered.

Heartland did declare one two-page document to be a forgery, although its tone and content closely matched that of other documents that the group did not dispute. In an apparent confirmation that much of the material, more than 100 pages, was authentic, the group apologized to donors whose names became public as a result of the leak.

The documents included many details of the group’s operations, including salaries, recent personnel actions and fund-raising plans and setbacks. They were sent by e-mail to leading climate activists this week by someone using the name “Heartland insider” and were quickly reposted to many climate-related Web sites.

Heartland said the documents were not from an insider but were obtained by a caller pretending to be a board member of the group who was switching to a new e-mail address. “We intend to find this person and see him or her put in prison for these crimes,” the organization said.

Although best-known nationally for its attacks on climate science, Heartland styles itself as a libertarian organization with interests in a wide range of public-policy issues. The documents say that it expects to raise $7.7 million this year.

The documents raise questions about whether the group has undertaken partisan political activities, a potential violation of federal tax law governing nonprofit groups. For instance, the documents outline “Operation Angry Badger,” a plan to spend $612,000 to influence the outcome of recall elections and related fights this year in Wisconsin over the role of public-sector unions.

Tax lawyers said Wednesday that tax-exempt groups were allowed to undertake some types of lobbying and political education, but that because they are subsidized by taxpayers, they are prohibited from direct involvement in political campaigns.

The documents also show that the group has received money from some of the nation’s largest corporations, including several that have long favored action to combat climate change.

The documents typically say that those donations were earmarked for projects unrelated to climate change, like publishing right-leaning newsletters on drug and technology policy. Nonetheless, several of the companies hastened on Wednesday to disassociate themselves from the organization’s climate stance.

“We absolutely do not endorse or support their views on the environment or climate change,” said Sarah Alspach, a spokeswoman for GlaxoSmithKline, a multinational drug company shown in the documents as contributing $50,000 in the past two years to support a medical newsletter.

A spokesman for Microsoft, another listed donor, said that the company believes that “climate change is a serious issue that demands immediate worldwide action.” The company is shown in the documents as having contributed $59,908 last year to a Heartland technology newsletter. But the Microsoft spokesman, Mark Murray, said the gift was not a cash contribution but rather the value of free software, which Microsoft gives to thousands of nonprofit groups.

Perhaps the most intriguing aspect of the Heartland documents was what they did not contain: evidence of contributions from the major publicly traded oil companies, long suspected by environmentalists of secretly financing efforts to undermine climate science.

But oil interests were nonetheless represented. The documents say that the Charles G. Koch Charitable Foundation contributed $25,000 last year and was expected to contribute $200,000 this year. Mr. Koch is one of two brothers who have been prominent supporters of libertarian causes as well as other charitable endeavors. They control Koch Industries, one of the country’s largest private companies and a major oil refiner.

The documents suggest that Heartland has spent several million dollars in the past five years in its efforts to undermine climate science, much of that coming from a person referred to repeatedly in the documents as “the Anonymous Donor.” A guessing game erupted Wednesday about who that might be.

The documents say that over four years ending in 2013, the group expects to have spent some $1.6 million on financing the Nongovernmental International Panel on Climate Change, an entity that publishes periodic reports attacking climate science and holds lavish annual conferences. (Environmental groups refer to the conferences as “Denialpalooza.”)

Heartland’s latest idea, the documents say, is a plan to create a curriculum for public schools intended to cast doubt on mainstream climate science and budgeted at $200,000 this year. The curriculum would claim, for instance, that “whether humans are changing the climate is a major scientific controversy.”

It is in fact not a scientific controversy. The vast majority of climate scientists say that emissions generated by humans are changing the climate and putting the planet at long-term risk, although they are uncertain about the exact magnitude of that risk. Whether and how to rein in emissions of greenhouse gases has become a major political controversy in the United States, however.

The National Center for Science Education, a group that has had notable success in fighting for accurate teaching of evolution in the public schools, has recently added climate change to its agenda in response to pleas from teachers who say they feel pressure to water down the science.

Mark S. McCaffrey, programs and policy director for the group, which is in Oakland, Calif., said the Heartland documents revealed that “they continue to promote confusion, doubt and debate where there really is none.”

Mike D for Net Neutrality In A Big Way

The Beastie Boys' Michael "Mike D" Diamond is part of an AT&T investor group seeking to put a net neutrality question on the shareholder ballot: "The shareholder resolution would recommend each company 'publicly commit to operate its wireless broadband network consistent with network neutrality principles,' the letter said. The companies should not discriminate based on the “source, ownership or destination” of data sent over their wireless infrastructure." (from BoingBoing via Consumerist)

The Health of Children and Consumers is Threatened by Conservative Push for Corporate Speech Rights

from AlterNet:

By Steven RosenfeldSome pro-business federal judges have shockingly approved a constitutional right for big companies to avoid revealing product dangers on labels.

In recent years, corporate lawyers representing industries whose products touch millions of American lives have stopped numerous government efforts to better inform the public about possible health risks with an eyebrow-raising legal strategy. They have asserted a constitutional right not to speak, or say more than they want on labels and advertising, and pro-business federal judges have agreed, rejecting the public’s right to know.

In cases involving manmade hormones fed to dairy cows, heart and lung disease caused by tobacco, the nutritional value of foods contributing to childhood and teenage obesity, and even radiation emitted by cell phones, the industries keep returning to court until a business-friendly judge or majority on an appeals court rules that the First Amendment includes the corporate right not to ‘speak’ if it could harm profits.

“They invoke the Amendment’s protection to accomplish exactly what the Amendment opposes,” wrote U.S. Court of Appeals Judge Pierre Leval, in a lengthy dissent in an early case in which his peers sided with industry and cited the First Amendment to overturn a state law labeling hormone-containing milk products. “The majority’s invocation of the First Amendment to invalidate a state law requiring disclosure of information consumers reasonably desire stands the Amendment on its ear.”

The labeling cases are not the only way corporations have been seeking to enlarge First Amendment speech rights outside the political arena.

This past June the Supreme Court ruled that drug makers’ constitutional speech rights included ‘selling' patient records, overturning a Vermont law that sought to keep the files private. Justice Stephen Breyer’s dissent said the Court was setting a dangerous precedent by allowing the First Amendment to be used to avoid reasonable government regulation.

“At best the Court opens a Pandora’s Box of First Amendment challenges to many ordinary regulatory practices that may only incidentally affect a commercial message,” he warned. “At worst, it reawakens Lochner’s pre-New Deal threat of substituting judicial for democratic decision making where ordinary economic regulation is at issue.”

Breyer’s reference to the Lochner Era was shorthand for what many right-wingers would like to see the judiciary do today—roll back government regulation. Lochner refers to the early 20th century when the Supreme Court reversed many workplace rights. It ended when the Court relented to allow the new deal to allow the New Deal's progressive reforms to take place.

Indeed, today’s corporate champions, such as Washington Post columnist George Will, are pining for an activist judiciary that prioritizes corporate rights above those of citizens. They see nothing wrong with extending the Constitution’s political freedoms given to individuals to modern profit-making corporations. As Will wrote this September in a piece attacking liberals, “So much for the idea that one of the Constitution’s primary purposes is the protection of individual rights against majority tyranny.”

Don’t Call It A Food Fight

The mainstream media calls it a Washington food fight. But that belittles the stakes.

One-third of American children and teens age 17 and younger are overweight or obese. The Federal Trade Commission, created a century ago is to protect consumers, has been studying the issue for years. It has found little consistency in the marketing and labeling of foods that are a mainstay of children and young adult diets. So the FTC, working with other federal agencies that studied the science behind what has been called an epidemic – The Department of Agriculture, Food and Drug Administration, and Centers for Disease Control and Prevention – last April announced voluntary product marketing guidelines for foods targeting youths, including limits on ingredients such as sugar, fat and salt. The FTC will soon issue a final report to Congress, including the voluntary guidelines.

This federal effort has prompted a lobbying stampede that continues to this day.

In July, some of the America’s largest food corporations, including Burger King and McDonald’s, announced their own marketing standards to defang, if not to derail, the FTC guidelines. Preemption is an old tactic in Washington. Their perspective reached prominent newspapers, such as at USAToday, which editorialized that the “industry standards aren’t bad.” In response, Josh Golin of Campaign for a Commercial-Free Childhood, wrote, “The brouhaha over the government proposal is the latest proof that asking corporations to work against their economic interests is futile.”

But then corporate lawyers added another twist.

The Washington Legal Foundation, a non-profit law firm that seeks to affirm and expand corporate rights, filed comments with the FTC claiming that the guidelines, even though voluntary, would be “a clear violation of First Amendment Rights.” Their accompanying press release said:

“Under Supreme Court case law, First Amendment protections kick in whenever government regulation “burdens” speech, not simply when the government adopts an outright prohibition on speech. WLF argued that the “burden” imposed by the Guidance’s “voluntary” advertising restrictions would be considerable, because many companies will be frightened by the unknown consequences of not complying.”

In other words, even a nudge to reveal more nutritional information was unacceptable.

“Are you really surprised?” replied Betsy Lordan, FTC spokeswoman, when asked to comment on the Foundation’s claim. “There is nothing new with companies trying to come up with reasons for not being regulated.”

But, strictly speaking, the federal agencies are not trying to regulate the food industry.

The FTC is issuing a year-end report to Congress, including voluntary ingredients and marketing guidelines. Congress will then decide what action, if any, to take. The FTC regularly issues guidelines for all kinds of industries, such as what is permissible with celebrity endorsements. Its goal is to deter commercial misrepresentation and fraud.

Nonetheless, the Washington Legal Foundation said this FTC-led food marketing effort exceeded its instructions from Congress because “instead of making recommendations to Congress, the Guidance makes recommendations directly to the food industry.” That criticism is to be expected from an anti-regulation think tank. But its lawyers also said that how a corporation labels its food products is constitutionally protected speech—as long as what is printed on the labels is true.

This is legally correct but a sly argument because companies do not have a legal duty to say everything they know about their products on their packaging and advertising. They can—and do—omit key details that could erode profits. And, as Judge Leval said in his dissent in the milk labeling case, government has the power to require companies to tell the public more about products if a public interest is served, such as protecting health.

“Freedom of speech is not an absolute right, particularly in the commercial context,” Leval wrote. It is “subject to regulation if the government has a substantial interest in regulating the speech, the regulation directly advances that interest, and is no more intrusive than necessary to accomplish its goal.”

The Washington Legal Foundation told the FTC that food corporations would be harmed if they could not freely label or advertise, or if they felt government pressure to include more nutritional information, such as how fatty, sugary or salty their products covered with cartoon wrappers truly were. Their FTC brief omits any mention of the millions of overweight American kids and teenagers, or the government’s legitimate interest in improving public health trends.

“Government action can constitute a ‘burden’ on speech even when it takes the form of ‘voluntary’ government speech standards,” WLF said. “The government seeks to change the dietary habits of children. There is no reason to believe that the only means of doing so is to suppress truthful speech.”

Tobacco and The Right Not To Speak

WLF’s arguments about corporate speech rights are not unique or limited to food labels.

Under its project entitled, “Criminalization of Free Enterprise – Business Civil Liberties Program,” it has filed briefs with the FDA opposing future nutritional labeling of food served in restaurants, required under the new federal health care reform law. It also filed briefs in federal appeals court arguing that shopkeepers in New York City should not be forced “to display signs conveying the city’s anti-smoking message, with which they disagree.” Their brief said signs, such as “Smoking Causes Lung Cancer,” accompanied by “one of three graphic, color images depicting the potential effects of tobacco use: a brain damaged by a stroke, decaying teeth and gums, or a diseased lung,” and a New York City seal, are “controversial, non-factual disclosures.”

This characterization—controversial and non-factual—is how the large tobacco firms described the accusations made by its critics in 1967, nearly four decades before the U.S. Department of Justice convicted them of racketeering by concealing science and other evidence that cigarettes severely harmed human health.

“The First Amendment protects not only the right to speak but also the right not to speak,” WLF’s website said, summarizing the New York City case. “Forcing someone to convey and associate with speech with which he disagrees violates the free speech protections of the U.S. Constitution… Many tobacco retailers object to the signs.”

Substitute ‘tobacco merchants’ for ‘milk producers’ in the following comment by Judge Leval in the 1996 Vermont milk labeling case, and consider how corporate lawyers have been pushing to not just protect profits, but also to expand constitutional protections.

“Notwithstanding their self-righteous references to free expression, the true objective of the milk producers is concealment. They do not wish consumers to know that their milk products were produced by use of rBST because there are consumers who, for various reasons, prefer to avoid rBST… The question is simply whether the First Amendment prohibits government from requiring disclosure of truthful relevant information to consumers.”

The Appeals Court majority, ruling against Vermont, disagreed, saying the labeling law was based on “consumer curiosity alone,” not science, because no federal agency had found rBST was unsafe. It said, “Strong consumer interest and the public’s ‘right to know’ … are insufficient to justify compromising protected constitutional speech.”

In other words, the public’s right-to-know is subordinate to private industry’s right to conceal information from consumers.

The federal court system is byzantine. Each federal circuit is a legal kingdom unto itself. Judges in one circuit can ignore what judges in other circuits do, until conflicting rulings work their way up to the Supreme Court – where they are settled until Congress passes new laws. (Or until those laws are challenged in lawsuits, restarting this cycle).

In 2009, Congress passed the Family Smoking Prevention and Tobacco Control Act, which, among other things, authorized the FDA to regulate warning labels on cigarette boxes. It was the biggest change in cigarette labels in 25 years. The agency published its rules describing the new warnings in June 2011. New text messages and photographic images would “bring Americans face to face with tobacco-related disease on every cigarette package and advertisement,” the FDA website said. Four of the five largest American tobacco companies sued the FDA in August in U.S. District Court in Washington, D.C.

In early November, U.S. District Judge Richard Leon ruled that the FDA’s regulations forcing the industry to put the same kind of graphic images as in the New York case on the outside of cigarette boxes would likely violate their constitutional speech rights. He ordered the mandatory labeling process stopped until the court fight was over, which could take years. But suspending the introduction of the FDA’s new labels was not Leon’s only gift to cigarette makers.

Leon also agreed with tobacco lawyers, finding the photographic images—not the printed warnings—would “confiscate the front and back portions of cigarette packaging” and went beyond “purely factual and uncontroversial information,” the legal standard that he cited for government-compelled speech such as warning labels. “The Court concludes that plaintiffs have demonstrated a substantial likelihood that they will prevail… and that they will suffer irreparable harm.”

Who is Harmed?

Courts often look for middle ground balancing interests—often frustrating advocates on either side of a fight. The question of who is being harmed—and harmed more, the public or private commercial interests—shows how citizens have lost ground to corporations as fervent federal judges have expanded and elevated corporate speech.

Judge Leon’s order suspended a political process that included state attorneys general from both political parties, Congress, the Justice Department under a Democratic and Republican president, and other federal court rulings from judges appointed by three presidents. None of that mattered to Leon. “I would remind the Government that even decisions from other district courts in our Circuit have no binding effect on this Court,” the activist judge wrote.

In Judge Leon’s discussion of the “harm that is more than simply irretrievable,” he said that the tobacco companies will have to spend “tens of millions of dollars” redesigning cigarette packaging to comply with the FDA rules. He said the FDA-required images would use too much space on cigarette boxes, which also was unconstitutional.

“The loss of First Amendment freedoms, for even minimal periods of time, unquestionably constitutes irreparable injury,” he wrote, quoting the 1971 Supreme Court ruling that protected the New York Times and Washington Post from retaliation from the federal government after they published the Pentagon Papers, which detailed the military’s failures in the Vietnam War.

Think about that comparison: the tobacco companies’ rights to avoid putting photographs on cigarette box warning labels—after losing a major racketeering case and being ordered to change their labels by Congress—are comparable in Leon’s courtroom to the media’s right to print information about an unpopular war that killed 45,000 Americans by 1971.

An Uphill Fight

Another recent federal ruling where public-interest concerns have been thwarted concerns the first-in-the nation’s cell phone radiation labeling law.

In late October, U.S. District Judge William Alsup suspended a San Francisco ordinance requiring cell phone makers to include health warnings about radiation from the devices. These were to include an in-store poster and sticker, and fact-sheet given to buyers. The national trade association for the wireless industry sued to block the law, arguing that it violated their First Amendment rights to not speak about their products.

Like Judge Leval’s dissent in the Vermont milk labeling case, Judge Alsup found “that a government may impose, out of caution, at least some disclosure requirements based on nothing more than the possibility that an agent may (or may not) turn out to be harmful.” That statement appeared to be a public interest victory; but was not the end of the Court’s remarks. Judge Alsup found the fact-sheet was “misleading and must be corrected.”

He said the city’s fact-sheet could easily prompt buyers to “misunderstand this as more dangerous than it really is.” Like Judge Leon in the FDA tobacco case, he also rejected images that the city wanted to use in its poster. Further, Alsup ruled the poster was “not reasonably necessary and would unduly intrude on the retailers’ wall space.” The judge also said that the “sticker requirement is also unconstitutional” because “stickers will unduly intrude upon the retailers’ own message.”

Judge Alsup ordered the city to rewrite its fact sheet, which is to be submitted to his court for approval. Those revisions will undoubtedly be weaker than health officials wanted. But buried in the Court’s interim ruling was wording that was less militant than other activist judges who have recently ruled in corporate First Amendment rights.

“There really will be little irreparable injury in complying with the fact-sheet so long as the corrections are included to mitigate the nonfactual, misleading and alarmist tenor of the fact-sheet,” Alsup wrote. “The San Francisco program is not aimed at slowing sales. It is aimed at precautions for consumer use and presupposes that all sales will flow unabated. Industry profits will not sag.”

Taken alone, that wording was dangling a carrot before the city in a ruling where Alsup gave the wireless industry almost everything it wanted. But the CTIA-The Wireless Association, the national trade group that sued the city, responded by saying it still was not enough. “CTIA respectfully disagrees with the Court's determination,” its press release said, and “is considering its options regarding further proceedings.”

In other words, in yet another corporate speech versus the public interest fight, corporate lawyers—with virtually bottomless corporate checkbooks behind them—are betting they will find an even more business-friendly courtroom, completely censoring the public’s right to know any health information about radiation when buying a cell phone.

Steven Rosenfeld covers democracy issues for AlterNet for is author of "Count My Vote: A Citizen's Guide to Voting" (AlterNet Books, 2008).

The GM genocide: Thousands of Indian farmers are committing suicide after using genetically modified crops

from The Daily Mail (UK)
By ANDREW MALONE

When Prince Charles claimed thousands of Indian farmers were killing themselves after using GM crops, he was branded a scaremonger. In fact, as this chilling dispatch reveals, it's even WORSE than he feared.

The children were inconsolable. Mute with shock and fighting back tears, they huddled beside their mother as friends and neighbours prepared their father's body for cremation on a blazing bonfire built on the cracked, barren fields near their home.

As flames consumed the corpse, Ganjanan, 12, and Kalpana, 14, faced a grim future. While Shankara Mandaukar had hoped his son and daughter would have a better life under India's economic boom, they now face working as slave labour for a few pence a day. Landless and homeless, they will be the lowest of the low.

Shankara, respected farmer, loving husband and father, had taken his own life. Less than 24 hours earlier, facing the loss of his land due to debt, he drank a cupful of chemical insecticide.

Unable to pay back the equivalent of two years' earnings, he was in despair. He could see no way out.

There were still marks in the dust where he had writhed in agony. Other villagers looked on - they knew from experience that any intervention was pointless - as he lay doubled up on the ground, crying out in pain and vomiting.

Moaning, he crawled on to a bench outside his simple home 100 miles from Nagpur in central India. An hour later, he stopped making any noise. Then he stopped breathing. At 5pm on Sunday, the life of Shankara Mandaukar came to an end.

As neighbours gathered to pray outside the family home, Nirmala Mandaukar, 50, told how she rushed back from the fields to find her husband dead. 'He was a loving and caring man,' she said, weeping quietly.

'But he couldn't take any more. The mental anguish was too much. We have lost everything.'

Shankara's crop had failed - twice. Of course, famine and pestilence are part of India's ancient story.

But the death of this respected farmer has been blamed on something far more modern and sinister: genetically modified crops.

Shankara, like millions of other Indian farmers, had been promised previously unheard of harvests and income if he switched from farming with traditional seeds to planting GM seeds instead.

Beguiled by the promise of future riches, he borrowed money in order to buy the GM seeds. But when the harvests failed, he was left with spiralling debts - and no income.

So Shankara became one of an estimated 125,000 farmers to take their own life as a result of the ruthless drive to use India as a testing ground for genetically modified crops.

The crisis, branded the 'GM Genocide' by campaigners, was highlighted recently when Prince Charles claimed that the issue of GM had become a 'global moral question' - and the time had come to end its unstoppable march.

Speaking by video link to a conference in the Indian capital, Delhi, he infuriated bio-tech leaders and some politicians by condemning 'the truly appalling and tragic rate of small farmer suicides in India, stemming... from the failure of many GM crop varieties'.

Ranged against the Prince are powerful GM lobbyists and prominent politicians, who claim that genetically modified crops have transformed Indian agriculture, providing greater yields than ever before.

The rest of the world, they insist, should embrace 'the future' and follow suit.

So who is telling the truth? To find out, I travelled to the 'suicide belt' in Maharashtra state.

What I found was deeply disturbing - and has profound implications for countries, including Britain, debating whether to allow the planting of seeds manipulated by scientists to circumvent the laws of nature.

For official figures from the Indian Ministry of Agriculture do indeed confirm that in a huge humanitarian crisis, more than 1,000 farmers kill themselves here each month.

Simple, rural people, they are dying slow, agonising deaths. Most swallow insecticide - a pricey substance they were promised they would not need when they were coerced into growing expensive GM crops.

It seems that many are massively in debt to local money-lenders, having over-borrowed to purchase GM seed.

Pro-GM experts claim that it is rural poverty, alcoholism, drought and 'agrarian distress' that is the real reason for the horrific toll.

But, as I discovered during a four-day journey through the epicentre of the disaster, that is not the full story.

In one small village I visited, 18 farmers had committed suicide after being sucked into GM debts. In some cases, women have taken over farms from their dead husbands - only to kill themselves as well.

Latta Ramesh, 38, drank insecticide after her crops failed - two years after her husband disappeared when the GM debts became too much.

She left her ten-year-old son, Rashan, in the care of relatives. 'He cries when he thinks of his mother,' said the dead woman's aunt, sitting listlessly in shade near the fields.

Village after village, families told how they had fallen into debt after being persuaded to buy GM seeds instead of traditional cotton seeds.

The price difference is staggering: £10 for 100 grams of GM seed, compared with less than £10 for 1,000 times more traditional seeds.

But GM salesmen and government officials had promised farmers that these were 'magic seeds' - with better crops that would be free from parasites and insects.

Indeed, in a bid to promote the uptake of GM seeds, traditional varieties were banned from many government seed banks.
The authorities had a vested interest in promoting this new biotechnology. Desperate to escape the grinding poverty of the post-independence years, the Indian government had agreed to allow new bio-tech giants, such as the U.S. market-leader Monsanto, to sell their new seed creations.

In return for allowing western companies access to the second most populated country in the world, with more than one billion people, India was granted International Monetary Fund loans in the Eighties and Nineties, helping to launch an economic revolution.

But while cities such as Mumbai and Delhi have boomed, the farmers' lives have slid back into the dark ages.
Though areas of India planted with GM seeds have doubled in two years - up to 17 million acres - many famers have found there is a terrible price to be paid.

Far from being 'magic seeds', GM pest-proof 'breeds' of cotton have been devastated by bollworms, a voracious parasite.
Nor were the farmers told that these seeds require double the amount of water. This has proved a matter of life and death.
With rains failing for the past two years, many GM crops have simply withered and died, leaving the farmers with crippling debts and no means of paying them off.

Having taken loans from traditional money lenders at extortionate rates, hundreds of thousands of small farmers have faced losing their land as the expensive seeds fail, while those who could struggle on faced a fresh crisis.

When crops failed in the past, farmers could still save seeds and replant them the following year.

But with GM seeds they cannot do this. That's because GM seeds contain so- called 'terminator technology', meaning that they have been genetically modified so that the resulting crops do not produce viable seeds of their own.

As a result, farmers have to buy new seeds each year at the same punitive prices. For some, that means the difference between life and death.

Take the case of Suresh Bhalasa, another farmer who was cremated this week, leaving a wife and two children.
As night fell after the ceremony, and neighbours squatted outside while sacred cows were brought in from the fields, his family had no doubt that their troubles stemmed from the moment they were encouraged to buy BT Cotton, a geneticallymodified plant created by Monsanto.

'We are ruined now,' said the dead man's 38-year-old wife. 'We bought 100 grams of BT Cotton. Our crop failed twice. My husband had become depressed. He went out to his field, lay down in the cotton and swallowed insecticide.'

Villagers bundled him into a rickshaw and headed to hospital along rutted farm roads. 'He cried out that he had taken the insecticide and he was sorry,' she said, as her family and neighbours crowded into her home to pay their respects. 'He was dead by the time they got to hospital.'

Asked if the dead man was a 'drunkard' or suffered from other 'social problems', as alleged by pro-GM officials, the quiet, dignified gathering erupted in anger. 'No! No!' one of the dead man's brothers exclaimed. 'Suresh was a good man. He sent his children to school and paid his taxes.

'He was strangled by these magic seeds. They sell us the seeds, saying they will not need expensive pesticides but they do. We have to buy the same seeds from the same company every year. It is killing us. Please tell the world what is happening here.'
Monsanto has admitted that soaring debt was a 'factor in this tragedy'. But pointing out that cotton production had doubled in the past seven years, a spokesman added that there are other reasons for the recent crisis, such as 'untimely rain' or drought, and pointed out that suicides have always been part of rural Indian life.

Officials also point to surveys saying the majority of Indian farmers want GM seeds - no doubt encouraged to do so by aggressive marketing tactics.

During the course of my inquiries in Maharastra, I encountered three 'independent' surveyors scouring villages for information about suicides. They insisted that GM seeds were only 50 per cent more expensive - and then later admitted the difference was 1,000 per cent.

(A Monsanto spokesman later insisted their seed is 'only double' the price of 'official' non-GM seed - but admitted that the difference can be vast if cheaper traditional seeds are sold by 'unscrupulous' merchants, who often also sell 'fake' GM seeds which are prone to disease.)

With rumours of imminent government compensation to stem the wave of deaths, many farmers said they were desperate for any form of assistance. 'We just want to escape from our problems,' one said. 'We just want help to stop any more of us dying.'
Prince Charles is so distressed by the plight of the suicide farmers that he is setting up a charity, the Bhumi Vardaan Foundation, to help those affected and promote organic Indian crops instead of GM.

India's farmers are also starting to fight back. As well as taking GM seed distributors hostage and staging mass protests, one state government is taking legal action against Monsanto for the exorbitant costs of GM seeds.

This came too late for Shankara Mandauker, who was 80,000 rupees (about £1,000) in debt when he took his own life. 'I told him that we can survive,' his widow said, her children still by her side as darkness fell. 'I told him we could find a way out. He just said it was better to die.'

But the debt does not die with her husband: unless she can find a way of paying it off, she will not be able to afford the children's schooling. They will lose their land, joining the hordes seen begging in their thousands by the roadside throughout this vast, chaotic country.

Cruelly, it's the young who are suffering most from the 'GM Genocide' - the very generation supposed to be lifted out of a life of hardship and misery by these 'magic seeds'.

Here in the suicide belt of India, the cost of the genetically modified future is murderously high.

Read the original article here at The Daily Mail

another related story HERE.

Thanks, Simi

WikiLeaks - needs help

"WikiLeaks is a website that publishes anonymous submissions and leaks of sensitive governmental, corporate, or religious documents, while attempting to preserve the anonymity and untraceability of its contributors. Within one year of its December 2006 launch, its database had grown to more than 1.2 million documents." [1]

Wikileaks is currently overloaded by readers. This is a regular difficulty that can only be resolved by deploying additional resources. If you support our mission, then show it in the way that is most needed. On average, each donation catalyzes the publication of around 150 mainstream press articles, exposing human rights abuses and corrupt government around the world. These exposures result in substantial reforms and have changed national election outcomes.

Here's a rare interview with some of those involved (click).

WikiLeak.org discussion blog about the ethical and technical issues of the WikiLeakS.org project

original heads-up via Boing Boing.