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Archive for November, 2009

Last week the U.S. Department of Justice announced the formation of the new Financial Fraud Enforcement Task Force. Among other things, this task force is charged with bringing to justice those individuals who caused the worldwide economic collapse. Ummm… OK.  So…does that mean that nobody was minding the store before this? Does this mean that until now there were no laws governing the financial industry or does it just mean that the Department of Justice just wasn’t paying any attention to those existing laws?  Well, let’s see…if they are planning to find and prosecute those people who created the meltdown by deliberately misrepresenting the value of mortgages on the resale market, or if they will be going after the people who deliberately gave out “liar loans”, knowing full well that the people who were being granted the loans could never pay them back, or if they will be going after the people who fraudulently misrepresented their ability to pay for the mortgages in order to play “buy and flip”, I guess that means that there were already laws against these practices. Otherwise they would have to create new laws outlawing past practices, which I believe is frowned upon.

So…if there were already laws on the books that made it illegal to do all the things that led to the meltdown, I have a small question. What were the agents of the Department of Justice doing while the world was collapsing?  What were they doing in the years leading up to the collapse?  Come to think of it, what were all those guys over at the Securities and Exchange Commission doing while the world was hurtling toward the cliff edge?  I think we all know.  They weren’t doing anything to prevent it. Which is why when several people reported Bernie Madoff’s Ponzi scheme to the SEC they were ignored.  Of course, when Bernie’s scheme collapsed and a bunch of rich people lost everything, well…the government had to step in.  Didn’t they?

OK. So how many of those people at the SEC who deliberately ignored Bernie Madoff’s practices over the years have lost their jobs? Better still, how many have been prosecuted for allowing a massive Ponzi scheme to exist when it was their sworn duty to prevent such things from happening?  Or are we saying that no one had the duty to protect us from this sort of fraud? Or are we just that we’ll overlook this dereliction of duty this time?

OK, since we are on the subject…how many people at the Department of Justice are being investigated for doing nothing to prevent the worldwide economic collapse when it was their job to detect and prevent all the sorts of fraud that led to the meltdown?

And, if we want to start looking within the government for people who are culpable (and why shouldn’t we?) should we just confine our investigation to the ranks of the Department of Justice? Does that make sense?  Let’s face it.  This was a truly massive exercise in deception. Our big banks (the ones we saved because we can’t live without them) were selling billions (trillions?) of dollars worth of worthless mortgages to any sucker in the entire world who would be foolish enough to invest in them. Now, I find it hard to believe that there weren’t a lot of people higher up in the former administration who knew exactly what was going on. I expect that most of the wealthy bankers knew too.  All the rich folk were playing a sort of real estate roulette via misrepresented values of U.S. real estate and the mortgages that encumbered these properties.

So, now we have a new Task Force.  Oh, good.  But somehow, I just sort of feel that this small effort is not going to clean out the Augean Stables of Washington or Wall Street.  More likely, it will be more of the usual Washington window dressing.  Oh sure, they’ll probably nail a few unfortunate suckers who were stupid enough to get caught, but the big racketeers who were behind this gargantuan fraud? I don’t think so.  The oligarchs are too deeply embedded, the invisible wealthy have too much power. The real perpetrators will not only get away with the destruction of the world’s economy, they will retain the profits they made at our expense.  It’s just how our system works.

So, to the newly rejuvenated DOJ, I say, “Give ’em Hell!”

But for me, frankly, I feel a bit like poor Vladimir and Estragon, waiting endlessly for Godot.

 

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About a year ago, when it looked like the world was about to end and the economies of countries around the world were beginning to melt away like a Salvador Dali painting, the leaders of the U.S. government, i.e. President Bush and Treasury Secretary Paulson told us that we had only days, maybe only minutes, left to rescue those great bastions of Capitalism – the banks of Wall Street.  Everybody panicked. We couldn’t shovel money into the banks fast enough. If they died, we died – or so we were told anyway.

Today, the dust has settled, the banks are alive – having been given massive transfusions of life-giving money – and the people of America are left wondering: what just happened?  Here’s what happened: we were robbed by the banks.  After Lehman Brothers melted into a little puddle of red ink, there were reports that Goldman Sachs might be next.  Goldman Sachs!?!?  How could that be?  Isn’t Goldman the underlying sine qua non of American capitalism? If Goldman goes down won’t the entire country just dissolve? That’s what we were led to believe by Bush, Paulson, and their cronies.

So what happened? We (that means you and me, the American taxpayers) gave them a loan, called TARP, to keep them alive. We gave a lot of banks a lot of money because we were told we couldn’t survive without them.  They were “too big to fail”. Of course we didn’t give them our own cash, because we were also drowning in the melting economy – so we just printed the money and decided to let our descendants pay the government back through their tax bills over the coming centuries.

Here is where the big scam comes in: while Americans made a lot of stupid decisions buying houses they couldn’t afford at prices they couldn’t pay, the banks were equally – if not more – stupid because they gave us all those loans that we couldn’t pay back.  If the banks had the intelligence of a rock they would have realized that making such loans was pure folly.  They used to know that, but in their greed they put aside their knowledge as they chased the huge profits that can be made in a bubble economy.  So, what had happened was that we, the people, lost a bundle and so did the banks, but the banks got reimbursed for their losses – by us! But nobody reimbursed us! So now, not only do we owe the money we foolishly invested in overpriced houses, we are also on the hook for all the TARP money we printed because a lot of that will never be paid back.

Meanwhile, the bailed out banks – the ones we can’t live without, the ones that are too big to fail because our Capitalist economy depends on them – don’t want to play Capitalism anymore. They don’t want to lend money anymore. Instead they are hogging all their TARP money, refusing to lend money to people who need money for many purposes. In other words the big hog banks aren’t really functioning as banks anymore, which leads one to wonder why we thought they were too big to fail. In a sense they have already failed.  If they aren’t lending then they have failed in the principal purpose of a capitalist bank – making capital available. So if they have failed in their role, and yet, here we are, still alive and functioning, doesn’t that mean that they really weren’t “too big to fail” after all?  Aren’t the big hog banks proving every day that we really don’t need them after all? Isn’t this the big lie of Bush and Paulson?  Isn’t this the big lie of Wall Street?

One of the great drags on our economy now is the lack of available capital to restart businesses.  If we had simply nationalized the banks we would now have government-run banks that would be in the business of lending money to us because we would be the owners of the banks! They would sort of be like giant credit unions.  Instead, we have the Boss Hogs of Wall Street sitting on 200 billion dollars of TARP money, unwilling to do that for which we bailed them out.  The TARP bailout didn’t rescue the economy – the money we gave to the banks is still sitting in the banks, so how could it have any effect on the economy? The only thing TARP did was prove one thing: the whole Too Big To Fail story was nothing but a Big Bank Lie that only passed on the losses of the big banks to the American people.  We were duped. We were done a huge disservice by former President George Bush and former Treasury Secretary Hank Paulson, and we will be paying the price for this for generations to come.

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The book is in the bookstores, the crowds are eagerly waiting in line for autographs, the book tour is set to travel through a number of key battleground states. So is this it? Is this the beginning of Sarah Palin’s 2012 Presidential campaign?  Sarah’s supporters are already saying they would vote for her in the next election.  She is being compared to Ronald Reagan, the former movie star turned President of the United States.  Let’s face it, if Ronald Reagan, a man who got his inspiration for important government decisions and policies from watching old Hollywood movies, could be elected President – twice – there is certainly a reasonable chance that Americans might also vote to put Sarah in the White House. I know it is something that is hard to accept for a lot of people, but we have to consider it, just as scientists and policy makers contemplated the “unthinkable” many years ago when it seemed that there was a possibility of global thermonuclear war.

So what would happen if Sarah were elected President? Can we discern anything from her actions as a mayor of Wasilla and governor of Alaska?  Is there something in her speeches and interviews that provides us a foretaste of things to come, should the unthinkable come to pass? Most of her political experience comes from being the Mayor of Wasilla, a small town in Alaska. She was mayor for ten years and seems to have made several accomplishments, although in a heavy-handed way, that helped the town to prosper. She appears to have a record of trying to “clean up” Alaskan politics and is driven by an ethical concept that seems to be shared by a lot of Alaskans. She only served as Governor of Alaska for two years and her time as Governor was marked by significant friction with the political establishment. She seems to place little value on being a “team player”.

Interestingly, although she is officially a Republican, she has supported some initiatives that required major government intervention.  It would be hard to characterize her as a Libertarian in her deeds, regardless of her words.  She wholeheartedly supported and signed a bill that would provide government funding to build a trans-Alaska gas pipeline. She also signed an energy bill that gives $1,200 to every qualified resident of Alaska. The money comes from Alaska’s revenue from the oil and gas.  It sure seems a bit Socialist to me, hardly a Republican ideal, and certainly something that no pure Libertarian would ever dream of.  In her statement about the gift of government money to Alaskan families she said that these people needed the money to buy groceries and heat their homes.  An admirable thought, but hardly Republican ideology.

In an attempt to save money for the state, Sarah sold the governor’s jet plane and fired the governor’s private chef.  It seems, from her actions, that she has no problem with spending hundreds of millions of dollars for gas pipeline construction, some of the proceeds of which will then be given as a gift to the people of Alaska so they can buy necessities , but she is against spending taxpayer money for non-essential things, like jet planes and chefs.  Overall, it appears that her political philosophy is more aligned with the Democrats than the Republicans.  However, her religious views can only be viewed as deeply “conservative”.  And it is the clever alliance the Republicans have made with the conservative Christian movement that seems to be the principle reason she calls herself a Republican.

Now we come to the last election.  Sarah was quickly catapulted into the national limelight as John McCain’s Vice Presidential running mate. The infamous interview with Katie Couric clearly showed that she was in way over her head. And that is the problem.  The simple fact is this: if there is one thing the campaign showed us about Sarah Palin it is that she is woefully unprepared to be President of the United States. Her knowledge of foreign policy and geography, the fact that she seems to read almost no magazines or newspapers, her inability to respond intelligently on major issues of interest to Americans simply showed that she has not concerned herself with the world outside of Alaska.

So now she’s written a book – a best seller, even before it was in the bookstores. It shows what name recognition can do for you – the one thing that the American publishing industry cares about (but that is a subject for another time).  Now she is on the campaign trail, sort of pretending it’s a book signing tour. There is no doubt that she will find many supporters who love her down-home, simple, goldurnit, aw shucks logic.  The question we all have to ask ourselves though is this: does she really have the knowledge and skills to run the country? Could she be a good President? The thing to recognize is that while many people might have what it takes to be a good mayor of Wasilla, after all there are thousands of Wasillas and thousands of good mayors all over the U.S., it is quite another thing to be President of the United States. Well, what about being Governor of Alaska? Remember, she was only governor foe two years, and then she walked off the job there.  Remember also that she was continually at odds with the other politicians in Alaska.  She has a sort of “take no prisoners” way of doing business when she is in charge. It’s her way or the highway, it seems. Not exactly the way a competent and seasoned politician operates, and certainly not the way to be successful in Washington.  It is my guess that if she were elected, she would be the most ineffective president in our history, because she doesn’t understand how the U.S. system of government actually works. In a word, she is naive.  And that spells great danger for our country, because the same people who voted for the movie star, Ronald Reagan, might vote for her too.

Our forefathers anticipated this potential moment in our nation’s history. The knew that a time might come when the common people might be deceived; they knew that it is possible for a slick talker to convince people, based upon emotional arguments, that they are the best candidate, when in fact they are simply incompetent.  That is why we have the electoral college. It is our last hope – a group of people of learning and experience, who in the end have the ability, the right, and the obligation to overrule the people and protect them from a grievous error in judgment.

When I contemplate the unthinkable I am left with this: This small group of people, the electoral college, may well be the only thing that can save this nation from itself in 2012 –  I wonder if they will have the courage to do so.

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The search by physicists to understand the way the world works has been going on since the first man wondered why things fall down but they don’t fall up.  In the long history of physics, there have been a few preeminent physicists whose reputations have spanned the centuries.  Isaac Newton made a huge leap in knowledge when he was able to describe the force of gravity mathematically.  Newtons equations very reliably predict the trajectory of a cannonball or the motion of the planets.  However, it is interesting to note that Newton was frustrated by this thing called gravity and admitted that he did not understand how it really worked. In Newton’s own words in his Principia he writes: “I feign no hypothesis… That one body may act upon another at a distance through a vacuum without the mediation of anything else, by and through which their action and force may be conveyed from one another, is to me so great an absurdity that, I believe, no man who has in philosophic matters a competent faculty of thinking could ever fall into it.”  In other words, although Newton had an equation that seemed provide the capability to determine the gravitational force of one body upon another, he had absolutely no idea of the mechanism of how the gravitational force was exerted by one body upon another.

Centuries later another of the giants of physics took on the problem of gravity.  Albert Einstein, winner of the Nobel Prize in physics for his explanation of the photoelectric effect and one of the founders of quantum theory (he actually coined the word “quantum”) would eventually develop his crowning achievement, the General Theory of Relativity, which provided a mathematical description of the gravitational field far more exactly than Newton’s equations.  Today, NASA wouldn’t consider putting a satellite into orbit using Newton’s equations, it is always Einstein’s equations that must be used to account for the relativistic effects of the high speeds of the satellites as they orbit the Earth.

It is therefore curious to the average person that Einstein and his philosophy are often shunned and even ridiculed by modern physicists.  Ever since Einstein published his General Theory other physicists have tried to find an error in its predictions, but to no avail.  Most recently NASA launched a satellite to test a very small, second order effect, that is predicted by the equations of General Relativity. The effect is called frame dragging. Essentially, Einstein’s equations predict that space and time will be affected by the rotation of the Earth in a way similar to how a spoon dipped in molasses will create swirls in the molasses if the spoon is twirled.  The NASA experiment corroborated this very tiny, second order effect of Einstein’s theory. This effect was not something that Einstein was keen on predicting, instead it was the result of the equations he had created in order to predict the major interactions of gravity, space, and time, effects such as the precession of the perihelion of Mercury or the bending of starlight as it passes near the sun.

So what does this have to do with CERN, the European Organization for Nuclear Research? It is all about what causes gravity.  Newton just didn’t have an explanation for how gravity actually worked.  Einstein was able to show that gravity can be interpreted as the geometrical distortion of spacetime.  However, his equations do not specify an agent of the gravitational force between too adjacent objects. This is where the particle physicists come in. They have a theory that a particle called a Higgs boson must exist and it is this particle that confers mass to a body – and it is mass that interacts with or creates gravity.

Einstein spent the latter years of his life in the search for a Grand Unified Theory that would combine gravity, electricity, and magnetism in to a single set of equations. However, he died before he was able to determine what this set of equations must be.  The particle physicists, the quantum theorists, have taken a different approach altogether from Einstein.  While Einstein envisioned fields and warps in space and time as the explanation for gravity and electricity and magnetism, modern quantum theorists prefer particles and the mathematics of randomness and probability, because, for them, the universe at its heart can never be known precisely, as stated in Heisenberg’s uncertainty principle. This was the source of great debate between quantum physicists and Einstein, and in the end Einstein was marginalized.

CERN is now on the verge of a major test to determine whether the hypothesized Higgs boson, the agent of gravitational mass, exists. The Large Hadron Collider is about to be fired up, generating collisions between high energy particles that, it is hoped, will momentarily create a Higgs boson.  Interestingly, it is also predicted that it might temporarily create a microscopic black hole – and this has some people very concerned. What if it did create a black hole in Switzerland? Would it swallow up the Earth in a split second?  The people at CERN have bent over backwards trying to show that such a black hole would not last long enough to do any damage.  They even point out that Einstein’s theory says that they could not even be produced at the Large Hadron Collider.  It’s sort of interesting that the quantum theorists are quoting Einstein at this time in order to assure the public that the experiment is safe.

At any rate we’ll soon know. The LHC could be fired up as early as this weekend for preliminary testing. It’ll be a while before they get to the real super particle collisions.  I suppose then we might actually have the answers to some questions that have been around for a long time. Will it disprove General Relativity? No.  Will it show that Einstein’s determinism is wrong and the world is really based upon random probability? No. If it shows the existence of a Higgs boson, it is more than likely that it will open up a whole new set of questions, because that has been the history of quantum physics. It is like peeling the layers of an onion. A good example is the search for the Omega Minus particle back in the 1960’s.

Of course, if the calculations of the theoretical physicists at CERN are completely wrong, and if they accidently create a massive black hole that swallows us up in a nanosecond…well, we’ll never know, will we?

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Imagine it is September 11, 2001 all over again, except this time you are one of the passengers on United Airlines flight 93, bound for San Francisco out of Newark, New Jersey.  Except for luck, fate, timing, call it what you wish, it could have been any of us on that plane on that day.  The plane had already been hijacked and the World Trade Center towers and the Pentagon had already been hit by other hijacked aircraft.  What if it had been you on United 93 and you knew about the other hijackings and the destruction of the World Trade Center and the attack on the Pentagon? What would you do? Would you have decided to make an all out attack on the hijackers, storm the cockpit, and try to take over control of the plane, knowing that it must certainly be destined to smash into another major American landmark?

Not everyone would take that action.  Many would have remained in their seats, hoping, praying for something to save them. Some would have just entered a trance-like state, denying the reality of the entire situation, assuring themselves that it must be a dream from which they would awaken.  Others might even hold out hope that they could bargain with their captors, maybe make a deal – who knows?  But the passengers on United 93 didn’t try to avoid a confrontation.   They knew that the people who had taken control of the plane were ruthless murderers. They knew that their plane was going to be used as a weapon against other Americans. They decided that they were not going to let that happen.

We all know the result of their decision.  They rammed in the door of the cockpit and fought hand to hand with the terrorists for the control of the plane.  The violent struggle continued until the terrorists lost control of the aircraft and it plunged to the ground in Shanksville, Pennsylvania. Everyone on board perished. It is now known that the most likely target for United 93 was the U.S. Capitol building.  If the passengers had not intervened our Capitol – the symbol of our democracy – would have been reduced to rubble and many more Americans on the ground would have died.

Here is the question: do the brave passengers on United 93 deserve any posthumous recognition for their bravery from the U.S. government? Should they be awarded posthumous medals, similar to the Medal of Honor that is reserved for military people?  Surely their bravery and their deed of saving the U.S. Capitol is comparable to the bravery and deeds of many who have been awarded the Medal of Honor, isn’t it?

So far, the only recognition these brave heroes of United 93 have been awarded is a Hollywood movie called United 93.  There are government awards available to heroes such as these. There is the highest honor that can be awarded by the U.S. President: the Presidential Medal of Freedom award, perhaps it would be an appropriate medal that could be awarded to recognize their gallant deed. But it hasn’t been. The most recent recipients of this award for “service to country” was CIA Director George Tenat in 2004.  Before that it was Jean MacArthur in 1988, she was the second wife of General Douglas MacArthur. Before that the Medal had been awarded in 1984 to Whittaker Chambers, a former communist spy who eventually testified against Alger Hiss. So far neither President Bush nor President Obama has deemed the heroic passengers of United 93 worthy of the Presidential Medal of Freedom.

Well, what about the Congressional Gold Medal, the highest award that Congress can award? The most recent recipient of this award was Arnold Palmer on Sept 30, 2009.  Other recent winners of this award have been Neil Armstrong, Edward Brooke III, Aung San Suu Kyi, and Dr. Michael Debakey.  Congress did take  up the question of awarding their medal to the passengers of United 93, but, in their collective wisdom, they ultimately decided that the passengers on United 93 did not deserve such an august honor from them.

Recently, the National Park Service broke ground for a memorial to the people who died on United 93. It’s a simple memorial, a bit reminiscent of the Vietnam War Memorial in Washington DC, sort of half-underground with a low wall. So that’s it? That’s what happens in this country when ordinary civilians show extraordinary courage and save the nation’s Capitol from certain destruction? They get a low wall in the ground in Shanksville, PA? Meanwhile, George Tenat gets the Presidential Medal of Freedom and Arnold Palmer gets the Congressional Gold Medal?

I have only one question for President Obama (because the Congress is beyond hope): Mr. President, when will you correct this egregious oversight?

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