"Client 9": The Eliot Spitzer case: How we were bamboozled

http://www.salon.com/entertainment/movies/andrew_ohehir/2010/11/03/client_9/index.html

Wednesday, Nov 3, 2010
"Client 9": The Eliot Spitzer case: How we were bamboozled
An intriguing new movie dissects the thicket of money, lies and rumors around the governor's downfall
Andrew O'Hehir

"Perhaps you've noticed this lately: It's remarkably easy to distract people from substantive issues by telling them entertaining stories, whether or not they bear any relationship to the truth. (E.g.: "The Muslim socialist raised your taxes!" may be a lie from beginning to end, but it has a lot more narrative appeal than "We're the people who let the bankers steal your grandkids' money, and we'd like to do it some more.")

Unfortunately for former New York Gov. Eliot Spitzer, the stories his enemies got to tell about him were true, at least in part. But the fact that Spitzer must take the blame for his own misdeeds -- and for his hypocrisy -- should not obscure the more important fact that the media and the public got fatefully bamboozled by the Spitzer story. "Politician caught with pants down" and "White knight has feet of clay" are stories we're all drawn to, almost by primal instinct. They satisfyingly confirm all our worst suspicions about human nature. But that primal satisfaction was used, in this case, to distract our attention from the takedown of one of the few American politicians devoted to fighting corporate power and ruling-class privilege, an act that in retrospect looks an awful lot like a political assassination.

As Spitzer himself tells Oscar-winning documentarian Alex Gibney in the latter's cool and intriguing new exposé, "Client 9: The Rise and Fall of Eliot Spitzer," his rapid political ascent and sudden collapse carried echoes of Icarus, the hubristic aviator of Greek mythology. A crusading attorney general who took down some of Wall Street's biggest white-collar criminals, Spitzer was elected to the Empire State's governorship in a 2006 landslide, and was repeatedly and only half-jokingly described as "our first Jewish president" by political insiders.

Spitzer's abrasive and confrontational style had served him well as a prosecutor, but it was far less effective in dealing with the murky alternate universe of New York's state Legislature, probably America's most corrupt and dysfunctional deliberative body. (Yes, I realize what a high standard that is.) But whether Spitzer would have succeeded or failed in wrestling Albany's back-roomers will never be known, because he resigned 13 months into his term. The proximate cause, of course, was a federal investigation revealing that Spitzer was among the prestigious patrons of a high-end escort service called Emperor's Club VIP. A United States attorney's document, which was leaked to the New York Times and several TV stations, supplied a suspicious amount of detail about "Client 9," without naming him, and sleuthy reporters soon connected the dots.

I guess it's only natural that we got sucked into the usual celebrity-journalism vortex, focusing on the most inane and salacious of the alleged facts and totally neglecting to notice how Spitzer's fall fit into the larger cultural and political narrative of American life. A young woman named Ashley Dupré got far more than her allotted 15 minutes of fame out of a single liaison with Spitzer at Washington's Mayflower Hotel, and Gibney -- working here in collaboration with investigative journalist Peter Elkind, the author of "Rough Justice: The Rise and Fall of Eliot Spitzer" -- plays along to some extent. One of Dupré's former co-workers describes her as possessing "great pheromones" and "an amazing coochie." Further elaboration, sadly, is not forthcoming.

Spitzer's favorite Emperor's Club consort was a woman identified only as "Angelina," who agreed to be interviewed by Gibney and Elkind but wouldn't appear on camera. Instead of the usual obscured-face-plus-distorted-voice trick, Gibney hired an actress to read her lines. Maybe this pushes "Client 9" further into docudrama than nonfiction purists would prefer, but it does Angelina a service, by making this independent and outspoken woman come alive, and so reminding us that prostitution is always a complicated human transaction. She disliked Spitzer at first for his wham-bam-thank you ma'am approach (an Emperor's Club date was supposed to be more, well, datelike), but grew to admire his intelligence and intensity. And contrary to what you may have read elsewhere, she says he took his socks off during sex.

As irresistible as the Ashley and Angelina material may be, that stuff is really the icing on Gibney's cake, which is an elegantly told New York fable about a smart, arrogant guy who made a whole lot of the wrong kinds of enemies. "Client 9" builds a forceful, if circumstantial, case around the disclosures that led to Spitzer's downfall. Avowed Spitzer haters like investment banker Ken Langone, former AIG CEO Hank Greenberg and ex-New York Stock Exchange head Dick Grasso were clearly seeking any opportunity to take the governor down, and Langone has made murky comments to the effect that he knew about the prostitution scandal before the news broke. (See, a friend of his was in line behind Spitzer at the post office ... No, really.)

Notorious right-wing political trickster Roger Stone has claimed to be the initial source who told the FBI about Spitzer's dalliances with hookers (and he's definitely the source of the scurrilous knee-socks allegation). Although Stone was an aide and confidante to state Sen. Joe Bruno, one of Spitzer's biggest Albany foes, Stone says he heard about the whole thing on his own, at random, from a hooker in a Miami nightclub. (Given Stone's background and reputation, that part of the story is strangely believable.) Add up all these billionaires, rogues and past and future indictees -- along with a scandal-plagued Justice Department at the tail end of the George W. Bush era, eager to claim the scalp of a leading Democrat -- and the whole thing looks overdetermined, as the Marxists say.

Nothing about this case is clear-cut, and we'll probably never know for sure. (The official story, via the government and the mainstream media, is that the whole thing emerged from a routine money-trail investigation and Stone et al. had nothing to do with it. Not impossible, but not all that plausible either.) If "Client 9" plays a lot like a murky, gripping political thriller, it lacks a fully satisfying ending -- or a fully satisfying hero. Spitzer manfully owns up to his misbehavior and declines to point fingers at anyone outside the mirror, but he also comes across as an emotionally strangled dude, totally incapable of the Oprah-style introspection that will be required if he tries to make a political comeback. Whether it's a good thing that we demand Augustine-level soul-searching from a disgraced public figure is entirely another matter, but as the movie makes clear, Spitzer's lack of personal warmth and political instinct is part of what got him into this mess in the first place.

In fact, I too am seduced, like everybody else, by the personal details. Maybe the real story ought to be how a product of Manhattan wealth and privilege turned on his own caste, attacking the corrupt financial elite with a zeal not seen since the days of Teddy Roosevelt, and then was punished for his class treachery (just before his crusade was 100 percent vindicated by recent history). Instead, I am captured by an offhand moment in "Client 9," when one of Spitzer's Albany aides describes him as unable to understand basic human nature, and to accept that political change is always incremental. Politicians can survive all sorts of moral failings and ludicrous misbehavior, as long as people like them (see: Clinton, William Jefferson). Spitzer's entire career rested on being above reproach -- and nobody ever likes the guy who's above reproach.

"Client 9: The Rise and Fall of Eliot Spitzer" opens Nov. 5 at the Angelika Film Center and Lincoln Plaza Cinema in New York; Nov. 12 in Boston, Los Angeles, Philadelphia, San Diego, San Francisco and Washington; Nov. 19 in Albany, N.Y., Minneapolis, New Haven, Conn., Palm Springs, Calif., and Santa Cruz, Calif.; Nov. 24 in Dallas; and Nov. 26 in Boca Raton, Fla., with more cities to follow.

Great Quotes: Eliot Spitzer

"Goldman, they got billions of dollars and they said they didn’t even need it. So you know what they did? They gave themselves bonuses with tax payer money. And what did Main Street get? Pink slips, unemployment through the roof, 20% of our mortgages are under water. You know what Mr. President, the reason we have a Tea Party is your team took care of the same insiders as the last administration."

7 questions Eliot Spitzer would have asked Goldman

http://www.financialpost.com/news-sectors/financials/story.html?id=2962262
7 questions Eliot Spitzer would have asked Goldman
Eliot Spitzer, Slate.com
Wednesday, April 28, 2010
Eliot Spitzer, the former 'Sheriff of Wall Street' says it's time to start figuring out whether investment banks have any real social value.

In ordinary times, the SEC's fraud case against Goldman Sachs would have been settled before it was even filed. There would have been a consent decree in which Goldman neither admitted nor denied any wrongdoing, paid a fine, and agreed to make more fulsome disclosures in the future. But these are not ordinary times, and the SEC's very public announcement that it's charging Goldman with misrepresentation and fraud in its marketing of a subprime debt product has become one of the biggest stories in the entire Wall Street scandal.

The filing of the Goldman case has crystallized the public support for more vigorous regulation of Wall Street. The Republican effort to oppose financial regulatory reform is now fading into an effort to forge a compromise that will give them some sort of defensible exit strategy. Under any bill that is likely to pass, derivatives trading will become reasonably transparent; a consumer protection agency will be created with a significant degree of independence; some chairs will be rearranged on the organizational deck of the regulatory ship of state; capital requirements and leverage ratios will be adjusted in ways that will be designed to reduce overall risk; and a systemic risk overseer will be created. This is all good stuff, but none of it is really adequate to address the "too big to fail" structure of the financial industry in a fundamental way. And it won't repair the underlying asymmetry of our having "socialized risk" and "privatized gain" for those entities that have an explicit federal guarantee behind them.

The furor around the Goldman case offers an opportunity to consider Wall Street's most profound, and entirely ignored, crisis. Now that we are seeing the inner workings of the products that Goldman is marketing, we must ask whether what Goldman and others investment banks do deserves the huge public subsidies they have received. Do they do anything that has any real social value?

In the traditional model, investment banks are thought to serve two critical functions. First, they are financial intermediaries: They are the conduits for transferring savings to those sectors of the economy that need capital. They fulfill the essential function, the economists tell us, of efficient allocation of capital. That is where their initial public offering and other capital-raising functions come into play. They enable productive companies to access the capital markets so they can grow their businesses.

Second, they are supposed to be market makers that provide liquidity and stability in the markets to permit the free flow of capital on an ongoing basis.

The question that must now be asked is: Are investment banks doing that? Are they doing the things that merit public support at all? Or are they just running a casino with products that have no great social utility? The regulators, legislators and investigators have not focused on the fact that the fundamental business of banking has changed from capital allocation to, essentially, gambling.

It's time to start figuring out whether and how investments banks perform economically useful functions. To do that, we need to know how big banks deploy their capital and how they make their money.

So here are a few questions that I believe are structurally more important than the ones that reporters and senators have been asking about Goldman:

• What percentage of Goldman's capital is dedicated to proprietary trading as opposed to capital formation for client companies?

• What percentage of Goldman's profits derives from proprietary trading, asset management and prime brokerage activities; and what percentage comes from capital formation for client companies?

• What percentage of Goldman's profits derives from marketing and trading derivatives, specifically the synthetic CDOs that are at the heart of the SEC investigation?

• What percentage of Goldman's capital has been invested in U.S. government securities over the last year, essentially taking advantage of an interest arbitrage between Goldman's cost of capital and the rate being paid on Treasury bills?

• How much income did Goldman derive from bets against products it marketed?

• How much capital - debt and equity - have Goldman and the other major investment houses raised for their clients over each of the past five years?

• How much capital have they invested overseas in foreign-based companies-especially through private equity funds?

This is just a starting list. The point is that we need to get a real measure of the social value of investment banking activity and to determine whether they are fulfilling the essential capital formation and liquidity needs of the markets. We taxpayers have given them billions upon billions upon billions based on the theory that they perform economically useful activities. They need to prove that they do.

Federal Reserve is ‘a Ponzi scheme, an inside job’

http://rawstory.com/08/news/2009/07/25/spitzer-federal-reserve-is-a-ponzi-scheme-an-inside-job/

Spitzer: Federal Reserve is ‘a Ponzi scheme, an inside job’
Daniel Tencer
July 25, 2009

The Federal Reserve — the quasi-autonomous body that controls the US’s money supply — is a “Ponzi scheme” that created “bubble after bubble” in the US economy and needs to be held accountable for its actions, says Eliot Spitzer, the former governor and attorney-general of New York.

In a wide-ranging discussion of the bank bailouts on MSNBC’s Morning Meeting, host Dylan Ratigan described the process by which the Federal Reserve exchanged $13.9 trillion of bad bank debt for cash that it gave to the struggling banks.

Spitzer — who built a reputation as “the Sheriff of Wall Street” for his zealous prosecutions of corporate crime as New York’s attorney-general and then resigned as the state’s governor over revelations he had paid for prostitutes — seemed to agree with Ratigan that the bank bailout amounts to “America’s greatest theft and cover-up ever.”

Advocating in favor of a House bill to audit the Federal Reserve, Spitzer said: “The Federal Reserve has benefited for decades from the notion that it is quasi-autonomous, it’s supposed to be independent. Let me tell you a dirty secret: The Fed has done an absolutely disastrous job since [former Fed Chairman] Paul Volcker left.

“The reality is the Fed has blown it. Time and time again, they blew it. Bubble after bubble, they failed to understand what they were doing to the economy.

“The most poignant example for me is the AIG bailout, where they gave tens of billions of dollars that went right through — conduit payments — to the investment banks that are now solvent. We [taxpayers] didn’t get stock in those banks, they didn’t ask what was going on — this begs and cries out for hard, tough examination.

“You look at the governing structure of the New York [Federal Reserve], it was run by the very banks that got the money. This is a Ponzi scheme, an inside job. It is outrageous, it is time for Congress to say enough of this. And to give them more power now is crazy.

“The Fed needs to be examined carefully.”

Spitzer resigned as governor of New York in March, 2008, after news reports stated he had paid for a $1,000-an-hour New York City call girl.

At the time, Spitzer had been raising the alarm about sub-prime mortgages. In the wake of the economic meltdown triggered last fall by sub-prime loans, some observers have suggested that Spitzer may have been targeted by law enforcement because of his high-profile opposition to Wall Street financial policies.

Investigative reporter Greg Palast wrote that federal agents’ revealing of Spitzer’s identity as a call-girl customer was no coincidence.

Palast wrote that the principle of “prosecutorial discretion” is often used to keep the names of high-profile persons out of the media when they are tangentially linked to a criminal investigation. In the case of Spitzer, the Justice Department chose not to invoke prosecutorial discretion.

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.


Spitzer recently told Bloomberg News that President Obama’s regulatory reforms of the financial sector are “irrelevant” because regulatory agencies have not been enforcing corporate laws to begin with.

“Regulatory agencies already had the power to do everything they needed to do,” he said. “They just affirmatively chose not to do it.”

The Real AIG Scandal

http://www.slate.com/id/2213942/

The Real AIG Scandal
It's not the bonuses. It's that AIG's counterparties are getting paid back in full.
By Eliot Spitzer
Tuesday, March 17, 2009

Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG's counterparties are justified with an appeal to the sanctity of contract. If AIG's contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.

But wait a moment, aren't we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes—income taxes to sales taxes—to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won't be laid off. Why can't Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn't we already give Goldman a $25 billion capital infusion, and aren't they sitting on more than $100 billion in cash? Haven't we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn't they have accepted a discount, and couldn't they have agreed to certain conditions before the AIG dollars—that is, our dollars—flowed?

The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.

So here are several questions that should be answered, in public, under oath, to clear the air:

What was the precise conversation among Bernanke, Geithner, Paulson, and Blankfein that preceded the initial $80 billion grant?

Was it already known who the counterparties were and what the exposure was for each of the counterparties?

What did Goldman, and all the other counterparties, know about AIG's financial condition at the time they executed the swaps or other contracts? Had they done adequate due diligence to see whether they were buying real protection? And why shouldn't they bear a percentage of the risk of failure of their own counterparty?

What is the deeper relationship between Goldman and AIG? Didn't they almost merge a few years ago but did not because Goldman couldn't get its arms around the black box that is AIG? If that is true, why should Goldman get bailed out? After all, they should have known as well as anybody that a big part of AIG's business model was not to pay on insurance it had issued.

Why weren't the counterparties immediately and fully disclosed?

Failure to answer these questions will feed the populist rage that is metastasizing very quickly. And it will raise basic questions about the competence of those who are supposedly guiding this economic policy.

Beast of the Month - February 2009

Beast of the Month - February 2009
Bernie Madoff
Ponzi Scheme Con Artist

"I yam an anti-Christ..."
John Lydon (aka Johnny Rotten) of The Sex Pistols, "Anarchy in the UK"

Let's hand it to the good ol' USA, even now with the economic crisis, we're still number one in one major economic category: business fraud. (Sorry, Nigeria.) Yes, because America is the center of the economic universe, it still leads Planet Earth in swindles. And in America, the most famous form of fraud is the good old-fashion Ponzi scheme.

Like many great American traditions, the Ponzi scheme wasn't actually invented in the US: indeed, in the 1844 Charles Dickens novel Martin Chuzzlewitt, one is perfectly described. In fact, the man who the Ponzi scheme is named after, Charles Ponzi, was, like many great American trailblazers, an immigrant to this country. But in Chuck Ponzi, the swindle was perfected and popularized, so it is rightfully named in his deserved honor, and thus the Ponzi is as American as General Tso's chicken or nachos.

At the age of 21, Ponzi came to America in 1903 with only $2.50 in his pocket. Like another Italian-born American folk legend who immigrated to the East Coast two years later, Angelo Siciliano AKA Charles Atlas, he was a man short of money but strong of will and dreams to make it in the New Atlantis. But unlike Atlas - who made his fortune on marketing bodybuilding, thus paving the way for future American immigrant folk legend Governor Arnold - Ponzi earned his wealth in Boston on an investment scheme in 1920.

Ponzi's plan was a simple one as presented: exchanging international reply coupons bought in Italy for postage stamps in the US, he could make enormous profits. He formed a business, the Securities Exchange Company, to use foreign agents to make such mass transactions. Investors were offered a 50 percent return after 45 days, or double the investment in ninety. Incredibly, he was able to make the payouts, and quickly amassed $15 million dollars in investments. It appeared almost too good to be true.

It WAS too good to be true. The whole coupon exchange plan was a hoax, something the Boston Post had pretty much uncovered by late July. The real way Ponzi was able to meet his enormous payouts was by rapidly increasing his investor base by both reinvestment of "returns" and finding more suckers. He was arrested by the Feds in August, charged with mail fraud in using postcards to his "investors" in the scam (his only apparent actual business with the postal service.) He became the first business villain of the roaring twenties, and even with his quick rise and fall, the influence of Ponzi on the public's confidence in business investments is vast: no doubt in 1934, when FDR formed the Securities and Exchange Commission as part of the New Deal, the name and initials were used to replace the bad name to security trades given thanks to Chucky P.

Today, $15 million is chump's change when it comes to investments. Still, no Ponzi con since Ponzi has managed to match him in infamy. At least not until last year, when the curious case of Bernie Madoff, The Konformist Beast of the Month, came to light.

The aptly named Madoff ran a brazen Ponzi scheme which was unique in two ways. One was in how respectable the mastermind of the fraud was. The other was in its sheer amount: at $50 billion, it's the largest Ponzi scheme in history, even if you include MLM pyramid schemes like Amway.

Unlike the scrappy and streetwise Ponzi, Madoff was as inside the Wall Street establishment as you could get, having been a former chairman of the NASDAQ stock exchange. Indeed, it is arguable that the NASDAQ wouldn't exist without him, as the technology behind it was developed by his firm. This is what makes his story so strange: the reason respectable folks like Madoff don't form Ponzi schemes is because they don't have to.

Not having to didn't stop Madoff. And he managed to long avoid some of the key pratfalls of most Ponzis, which he is believed to have started in the 1970s. To begin with, he targeted charities, which are unlikely to make sudden withdrawals of their cash, actions that usually lead to Ponzi black holes being unmasked. He further promised modest but consistent returns of around 10 percent annually, enough to keep charities afloat, but not too high to arouse suspicion. The ten percent number also allowed him 10 years of time for every dollar taken before any investment became completely worthless, thus also making it unnecessary to desperately seek more and more capital. Meanwhile, by being an insider schmoozer who hung with the rich and famous in Long Island and Palm Beach, he managed to obtain large amounts of investment painlessly from well-to-do who had little reason to suspect he was a con artist. Indeed, though it became the world's largest hedge fund, he would turn down would-be-investors who sometimes literally begged to become his clients, which only added to his fund's appeal.

But a con artist he was, with a rather famous list of victims: Jeffrey Katzenberg, John Malkovich, Sandy Koufax, Zsa Zsa Gabor, Yeshiva University, the Elie Wiesel Foundation, and charities set up by the publisher Mortimer Zuckerman and Hollywood film director Steven Spielberg. (For those playing Six Degrees of Kevin Bacon at home, the actor and his wife Kyra Sedgwick were indeed investors as well.) The list of Jewish investors bilked by fellow Jew Madoff left some anti-Semites on the Internet confused about the whole enterprise: didn't Madoff read the Protocols and realize he was supposed to screw the goy?

Though the SEC investigated Madoff at least eight times since 1992, they apparently did a sloth-filled job, as no evidence of a scam was ever uncovered. This despite being warned this was so by financial analyst Harry Markopolos, who in 2005 would send the SEC a report with the subtle title The World's Largest Hedge Fund is a Fraud. The Markopolos report itemized 29 red flags that the Madoff fund was a Ponzi con. Markopolos also sent the information to the Wall Street Journal the same year, who decided not to pursue the story. A 2001 article in MARHedge magazine shined suspicion of his track record of 72 straight months without a loss, a streak it deemed practically implausible. Charles Gradante, co-founder of the hedge-fund research firm Hennessee Group, agreed with this assessment, telling the L.A. Times in 2008: "You cannot go 10 or 15 years with only three or four down months. It's just impossible." After the hoax was uncovered, financial software company RiskData analyzed Madoff fund returns and discovered it was similar to those in previously uncovered fraudulent funds, something that should have raised warning signs in its own right.

Even with all these suspicious facts, there was apparently little interest among authorities to do detective work on such an esteemed Wall Street investor. Indeed, the only person in power who seemed to have any real interest in investigating Madoff was Eliot Spitzer, who did so in 2006 as New York's Attorney General. Spitzer, who also had investments in the Madoff fund, would become Governor the following year before being destroyed in a conveniently timed sex scandal expose early last year.

How he got away with it for so long may be the least of the remaining mysteries surrounding the Madoff scam. Two claims are repeatedly made in the mainstream press about the fraud: that Madoff did the whole thing by his lone gunman self, and that nearly all of the $50 billion is gone for good. Considering the main source for both these claims is Madoff himself, perhaps they shouldn't be taken on faith. Is it possible Madoff is just a fall guy for a larger money looting operation, and the money is now hidden in some offshore bank accounts?

Whether there is a larger conspiracy or not, in some ways, Madoff is a rather convenient scapegoat for the recent crime spree by Wall Street. After all, $50 billion is nothing compared to the money lost so far in the economic crisis. Meanwhile, the $700 billion bailout, widely opposed by the public from the start, has been pretty much been unmasked as the fraud and dollar black hole The Konformist warned it was last October. With unemployment at the end of January at 7.6 percent (with over 3.5 million jobs lost since December 2007) the masses need a face to attach their rage to, before they focus their rage against the system. Then again, considering Madoff was a swindler who targeted charities to the tune of billions, he is probably a more deserving scapegoat for the crimes of humanity than Britney Spears.

And perhaps the Madoff con is just the tip of the iceberg. Already, the SEC has busted two more Ponzi schemes in the post-Madoff era, worth $50 and $17 million each. Another hedge-fund scam, which may have bilked investors of up to $350 million in Florida, was discovered last month when the manager suddenly disappeared. None match the scope of the Madoff enterprise yet, but anything is possible at this point. In any case, if enough of these Ponzis posing as respectable funds start popping up, perhaps Madoff, like Ponzi before him, will enter the lexicon as an adjective in its own right.

In any case, we salute Bernie Madoff as Beast of the Month. Congratulations, and keep up the great work, Bernie!!!

Is There A Bigger Story Behind Spitzer's Downfall?

http://crooksandliars.com/susie-madrak/there-bigger-story-behind-spitzers-do

Is There A Bigger Story Behind Spitzer's Downfall?
By Susie Madrak
Tuesday Dec 16, 2008

Via Skimble, a most interesting theory:

I have yet to see this reported anywhere, but an anonymous commenter named trademonster on an investment forum said this (notice the dates):

01-09-06 06:49 AM
I've heard that SEC is going to shut down Madoff financial and all of their hedge funds for SEC violations. Can anyone confirm this?

And this:

01-14-06 02:52 PM
I actually got some update and found out that it's Spitzer's office doing the investigation not SEC. But I don't know what the scope of the investigation is.


Suddenly Spitzer's dalliances with a hooker don't seem quite as fundmentally important to the financial health of this country.

We need people who understand the system to police it. No matter how sanctimonious or egomaniacal you may find him, Spitzer understands the financial system. If these posts are true, somebody in power was more interested in the the details of Eliot Spitzer's transactions than Bernard L. Madoff's. They were obviously more interested in killing the watchdog than in catching the billionaire burglar.


And via Corrente, something even more interesting from Michael Isikoff's Newsweek story about the FISA whistleblower:

[Under the secret and illegal "Stellar Wind" program of domestic warrantless surveillance,] NSA was also able to access, for the first time, massive volumes of personal financial records—such as credit-card transactions, wire transfers and bank withdrawals—that were being reported to the Treasury Department by financial institutions. These included millions of "suspicious-activity reports," or SARS, according to two former Treasury officials who declined to be identified talking about sensitive programs. (It was one such report that tipped FBI agents to former New York governor Eliot Spitzer's use of prostitutes.) These records were fed into NSA supercomputers for the purpose of "data mining"—looking for links or patterns that might (or might not) suggest terrorist activity.

Lambert asks an important question: How did the suspicious activity report on Spitzer's financial transaction get from the NSA to the FBI?

He also notes the convenient timing, because Spitzer at the time was looking into the monoline insurance companies - another important piece of the Wall St. crash.

Was the Bush administration using illegally obtained information to take down political enemies? Oh, I think it's a safe bet. And do you suppose they were deliberately trying to keep Spitzer from exposing extensive Wall St. fraud?

What do you think?

Tags: FISA, illegal wiretapping, investments, Madoff, Spitzer, theft

The affair of Illinois Governor Blagojevich

http://wsws.org/articles/2008/dec2008/blag-d15.shtml

Questions in the affair of Illinois Governor Blagojevich
By Patrick Martin
15 December 2008

Two top aides to Illinois Governor Rod Blagojevich resigned this week in the wake of the launching of criminal proceedings against the governor, and there was mounting pressure from state and national Democratic Party leaders for the governor himself to step down.

Deputy Governor Bob Greenlee resigned Wednesday and Chief of Staff John Harris stepped down Friday, deepening the governor’s isolation. Harris was arraigned with Blagojevich on Tuesday on charges of influence-peddling, including an effort to sell the appointment to the US Senate seat vacated by President-elect Barack Obama.

Both Greenlee and Harris were rumored to be cooperating with the federal prosecutor, US Attorney Patrick Fitzgerald, who announced the charges against the governor at a Tuesday press conference.

Blagojevich met for four hours Saturday with a top criminal lawyer in Chicago, and there were widespread media reports—denied by a Blagojevich spokesman—that he planned to resign as governor on Monday.

While it has long been public knowledge that the US Attorney’s office in Chicago was investigating the Blagojevich administration for a series of “pay to play” arrangements in which construction firms and other companies gave campaign contributions to the governor in return for state contracts, the rapid-fire events since Tuesday raise many questions.

Fitzgerald’s decision to file a complaint and have the governor and his chief of staff arraigned, rather than seeking an indictment from a grand jury are highly unusual, as were his remarks at the Tuesday press conference.

In op-ed columns in both the New York Times and the Wall Street Journal, former federal prosecutors sharply criticized Fitzgerald’s conduct, noting that his much publicized comments at the press conference—declaring that the governor was engaged in “a political corruption crime spree” that “would make Lincoln roll over in his grave”—were highly prejudicial and improper.

Both columns noted that Fitzgerald was violating ethics guidelines. The Justice Department requires that prior to a trial a “prosecutor shall refrain from making extrajudicial comments that pose a serious and imminent threat of heightening public condemnation of the accused.” The US district court for northern Illinois mandates that a “lawyer shall not make an extrajudicial statement the lawyer knows or reasonably should know is likely to be disseminated by public media and, if so disseminated, would pose a serious and imminent threat to the fairness of an adjudicative proceeding.”

These guidelines are routinely ignored when the accused are poor, working-class or minority individuals, particularly those purportedly involved in terrorism. But it is relatively rare for a member of the political establishment, in this case a two-term sitting governor, to be treated in this fashion.

The frenzy to remove Blagojevich from office as soon as possible is also remarkable. Illinois Attorney General Lisa Madigan filed a motion with the state Supreme Court Friday seeking to have Blagojevich declared “incapable” of performing his office and have Lt. Gov. Pat Quinn installed as acting governor.

In her motion, Madigan argued that, “The pervasive nature and severity of these pending charges disable Mr. Blagojevich from making effective decisions on critical time-sensitive issues.” She sought to invoke a provision in the state constitution allowing for the replacement of a governor on the grounds of “disability,” although the constitutional history suggests that this term was meant to apply to a physical or mental breakdown, not a prosecution.

The traditional constitutional separation of powers would seem to bar the courts from intervening in such a fashion against the executive branch. Madigan conceded that her motion has no legal precedent, remarking at a news conference, “I recognize that this is an extraordinary request, but these are extraordinary circumstances.”

Madigan’s father, Michael Madigan, the Democratic leader in the state House of Representatives, said he would move for impeachment of the governor at a special session of the legislature called for Monday in Springfield if Blagojevich did not resign or was not removed by the court. Impeachment, the traditional constitutional procedure for removal of a chief executive, would take considerably longer, since it would require a trial before the state Senate and conviction.

Neither of the Madigans, nor Lt. Gov. Quinn, nor Republican state legislative leaders who have given their enthusiastic support, explained why it was necessary to remove Blagojevich from office so precipitously, before any trial or even evidentiary hearing on the criminal charges brought against him by the US Attorney.

It is a peculiar fact that Blagojevich, were he to be forced out of office now, would be the fourth Democratic governor of a major state forced to leave office in the past five years, following the recall of Gray Davis in California in 2003, the resignation of New Jersey’s James McGreevey in 2004 and the resignation of Elliott Spitzer of New York earlier this year.

If there is a political motivation in the charges against Blagojevich, however, this could well involve a desire to protect a more important Democrat—President-elect Barack Obama. At least one top Obama aide, Congressman Rahm Emanuel of Chicago, Obama’s choice for White House chief of staff, was in contact with Blagojevich about the selection of Obama’s successor in the Senate.

While the Obama transition office refused to release any information on such contacts for several days after the Blagojevich scandal become public, on Friday it confirmed that Emanuel had delivered a list to Blagojevich of a half-dozen prominent Democrats whom Obama could support as his replacement. Any telephone conversations on this topic between Emanuel and Blagojevich or Harris would likely have been tape-recorded by the FBI, which wiretapped the governor’s calls for nearly two months, beginning in mid-October.

The timing of Fitzgerald’s decision to bring charges against Blagojevich suggests that he may have wanted to act before anyone in the Obama camp could respond favorably to the governor’s shakedown effort. This fact is underscored by a report in the Washington Post Saturday noting that “debate raged within the legal community about whether US Attorney Patrick J. Fitzgerald moved prematurely to bring bribery and conspiracy charges before the consummation of an illegal act.”

In plain language, Blagojevich was arrested before he could make any deal for the delivery of the Senate appointment in return for political and/or financial favors. While he may well be guilty of a series of other corrupt practices, among them selling state contracts for campaign contributions, extortion against the owner of the Chicago Tribune and a Chicago-area children’s hospital, on the most sensational charge, the sale of Obama’s seat in the US Senate, he seems to have engaged only in thinking and talking, with no apparent overt action.

Fitzgerald not only preempted any possible deal between Blagojevich and Obama, he included exculpatory information about Obama in the 76-page document charging Blagojevich, including several quotes of telephone conversations in which the governor cursed the president-elect for failing to offer a quid-pro-quo for the Senate selection. The US attorney—whose job depends on re-nomination by the incoming president—also went out of his way to declare that he was making no suggestion that Obama or anyone in his transition team had acted improperly.

Beast of the Month - April 2008

Beast of the Month - April 2008
Henry Paulson, Treasury Secretary

"I yam an anti-Christ... "
John Lydon (aka Johnny Rotten) of The Sex Pistols, "Anarchy in the UK"

"I have a message for every homeowner worried about rising mortgage payments: The best you can do for your family is to call 1-800-995-HOPE."
George W. Bush, giving the wrong number (it's an 888 prefix) for his "solution" to the subprime crisis last December

Since moving Konformist headquarters from across the Ambassador Hotel in Los Angeles to across the UNLV college campus in Las Vegas last April, The Konformist editorial staff have rediscovered the joys of drinking games. Here's one new favorite we particularly recommend: The "Since the Great Depression" Drinking Game. Here's how you play: talk about current economic and financial conditions, and every time somebody uses the phrase "since the Great Depression" in the discussion, everyone needs to take a swig. Trust us, you'll get drunk off your ass real quick.

The big financial story in recent months has been the subprime crisis, which is the Godzilla of the 2008 economic crisis. Eight million homeowners are overwhelmed by subprime loans - ones with low introductory interest rates for prospective homeowners that often pay only interest initially, but later have higher interest rates and huge increases in monthly payment after the introductory period - with two million in or headed to foreclosure. Meanwhile, 10 percent of homes are worth less than their mortgage. All in all, the last two housing market crisis this big in the USA were the S&L scandal of the late eighties and, of course, The Great Depression. (Gulp gulp gulp...)

The Great Depression comparisons are no mere hype: as Robert Shiller, Professor of Economics at Yale University, told the London Times last December: “American real estate values have already lost around $1 trillion. That could easily increase threefold over the next few years." The New York Times has put the figure at up to $4 trillion. In retrospect, it shouldn't be a surprise: while the Bush Team's debacle in Iraq and its attack on civil liberties have been the main focus of Shrubian criticism in recent years, it is the destructive economic policies to benefit the rich at the expense of everyone else that is the hallmark of the Dubya years.

As news of the subprime crisis first began to be reported, a right-wing spin (echoed more than partially in the "establishment" media) circulated as the explanation: it was the fault of the millions of families who, in stupidity, bought homes they couldn't afford with loans that were doomed to swallow them. And, to be fair to these talking points, there were many (including those in The Konformist editorial staff) who realized that subprime loans were definitely a bad idea.

But then in February, New York Governor (and former hard-nosed Attorney General) Eliot Spitzer gave another explanation for the subprime crisis in The Washington Post: the loans should've been illegal as predatory lending. As Spitzer noted: "Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive 'teaser' rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks." Tellingly, 73% of high-income Black and Hispanic borrowers (repeat, that is high-income, not low-income) were given sub-prime loans versus only 17% of similar-income Whites.

So why were these loans not stopped? They were legitimized by the Bush Administration. More specifically, the Treasury Department (currently led by Henry Paulson, The Konformist Beast of the Month) not only stopped federal enforcement to regulate and stop these loans, they selectively used obscure laws and created new rules to block states from enforcing their own predatory lending and consumer protection laws against national banks. This was so unprecedented and outrageous, all 50 state attorneys general and banking superintendents fought the Treasury, but were stonewalled by the Bush minions like it was a 9/11 investigation. The end result: millions of working-class and middle-class Americans (a high percentage, coincidentally, of racial minority status) were forced by criminal market collusion sanctioned by Bush to either accept highly risky subprimes or give up the apparently foolish fantasy of owning their own home.

(Also coincidentally, less than a month after his WaPo expose, Spitzer was forced to resign in disgrace after being exposed as a customer for an expensive Big Apple prostitution ring. So far, none of the other johns have been exposed by Feds, and it appears the target of the DOJ investigation begins and ends with Mr. Spitzer.)

Okay, big surprise. A destructive economic agenda to help the rich at the expense of everyone else was hatched by the Bush Team. Tell us something we don't know. The question then becomes what to do about the mess. Unsurprisingly, the Bush Administration has thus far only offered "voluntary" deals they have encouraged between bankers and mortgage debtors who are delinquent on payments. Even this minimal plan has helped less than eight percent of all subprime borrowers. But anything beyond a voluntary deal worked out between debtors and the banks is decried by right-wing mouthpieces as a "moral hazard" which will encourage future individuals to recklessly enter dangerous loans with the supposed expectation of a bailout.

Oddly, this concern over a "moral hazard" doesn't seem to apply to big boys involved in the mess. Already the subprime crisis has wreaked havoc on the financial establishment, causing the near collapse of venerable investment bank giant Bear Stearns and the liquidation of Carlyle Capital, the mortgage investment fund off-shoot of the notorious Carlyle Group. (Which leads to some Konformist konspiracy theorizing: Bear Stearns was widely despised in the Wall Street establishment as a banking maverick, and the sweetheart deal leading to a JPMorgan Chase & Co. takeover of the firm appears to be a vengeful payback against a lone wolf. Meanwhile, though Carlyle Capital has indeed gone belly up, its parent Carlyle Group - the private equity group whose partners have included George H. W. Bush and the bin Laden family, and whose founder, perhaps not-so-symbolically, bought the original copy of the Magna Carta for $20 million - has only been marginally damaged by the liquidation, as Carlyle Capital was an spin-off of mortgage securities. Did Carlyle suspect the mortgage market was doomed to sink over toxic subprime loans and thus create the spin-off, the first in its history, to dump a loser on sucker investors?) Moral hazards and laissez-faire philosophy be damned: the Federal Reserve decided to give $400 billion in loan packages to Wall Street banks and financial institutions to help them weather the storm. (And that was in just one decisive action: all told, the Fed has offered nearly a trillion bucks in discounted loans to the fat cats who pushed for this mess.) Before the Senate Banking Committee, Fed Chairman Ben Bernanke conceded: “If you want to say we bailed out markets in general, I guess that’s true.”

Which led The Konformist to do a little mathematics. Just taking the $400 billion figure alone, divide it by 2 million, the number of families at the brink of foreclosure due to predatory subprime loans. That comes to $200K per family. Do you think giving 2 million working-class and middle-class families $200 grand each in financial aid backed by their property couldn't solve the current crisis?

Of course, the Fed is merely the scapegoat here of the Bush Administration's failings, just as George Tenet and the CIA became the scapegoat of the Bush lies leading to the Iraq War. (It's a sad indictment of the Bush Team that they could make The Konformist feel sympathy for the CIA and Federal Reserve.) The fact is the Fed was acting in the capacity it had available to aid ailing markets, while helping the average American is the job of Bush, Paulson and co. So far there's been a grand total of zero.

That's fine with John McCain, the almost certain Republican nominee for the 2008 presidential race. In one speech, McCain declared: “It is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.” But talking out the other side of his mouth, he would add: "Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy." So helping out subprime debtors is rewarding the irresponsible, but helping out bankers is okay to defend the financial system.

Here's another quote: "There's no sense in which you're rewarding someone for taking too big a risk. If you lied about your income in order to get a bigger mortgage, then you're not qualified. Do you really want to give a subsidy to the guy who wasn't prudent?" Nice right-wing talking points, that the subprime crisis is the fault of lying debtors. But the quote doesn't come from Bush, Paulson or McCain, but rather a Barack Obama economic advisor. As it turns out, Obama has echoed these same right-wing talking points on the campaign trail. This should be little surprise: for all his charming talk of "hope" and "unity" this campaign, Obama - who has a bizarre media cheerleading behind his campaign similar to what Bush had in 2000 - has been pushing right-wing economics in his content-free mantras. To be fair, Obama has offered a $20 billion fund plan to help struggling borrowers, but that still is a pittance of what has already been given to Wall Street. It's hardly how we imagine MLK (or even JFK, the pair Obama salesmen are pitching him as a combination of) would respond to the crisis.

Ironically, it is the widely maligned and despised Hillary Clinton who has pushed the most to protect the real victims of the subprime crisis. Behind her shameless pandering and sometimes demagogic manipulations this campaign, there is a surprising level of economic populism to her pitch. She has pushed for a 90-day moratorium on foreclosures, a five-year rate freeze on subprime ARMs and backed legislation allowing bankruptcy judges to amend mortgage terms. She's also backed a total of $40 billion in aid to subprime debtors, twice what Obama has offered. Of course, even that is only a tenth of what the Fed gave Wall Street in its bailout.

Of course, The Konformist isn't saying that the US government lending $200K to every American family facing subprime foreclosure is the best way to solve the problem. And The Konformist isn't saying that propping up the financial market, even with $400 billion in Federal Reserve help, isn't a completely bad idea either. What we are saying is the frame of argument is clearly out of whack, even from the supposed "liberal" viewpoint of Obama and Hillary. And it isn't helped by pundits of the both "left" and "right" who silence and demonize criticism of this status quo as "engaging in class warfare."

Henry Paulson knows a thing about benefiting from class warfare. Like his predecessor John Snow, Paulson has been deservedly derided for his clueless figurehead status as Bush's economic point man. But he didn't get there by accident: after a stint as Nixon's Assistant Secretary of Defense, he parlayed his Pentagon connections into becoming Chairman and CEO of investment bank titan Goldman Sachs. (As The Konformist has previously noted, he's hardly the only CEO in the BushMob mix.) For his work at the behest of the defense industry and the financial community, he's been rewarded with a net worth of over $700 million.

This leads to the final class warfare punch line. If the 2 million families now in threat of losing their homes fall into foreclosure, the homes will go to the banks and investment houses that lended them the subprime loans. While that should mean some short term pain, they should be able to weather it thanks to the Federal Reserves aid. Eventually they will have at their disposal hundreds of billions in dollars of property to find new prospective buyers for. This could make the subprime crisis the greatest transfers of wealth to the rich in the history of the USA since, well, since the Bush Team's tax cuts of 2001 and 2003. Class warfare that.

In any case, we salute Henry Paulson as Beast of the Month. Congratulations, and keep up the great work, Hank!!!

Sources:

Bajaj, Vikas and Andrews, Edmund L. "Reports Suggest Broader Losses From Mortgages." New York Times 25 October 2007 <http://www.nytimes.com/2007/10/25/business/25mortgage.html>.

"Fed Staves Off Disaster, but That's Not Enough." San Jose Mercury News 20 March 2008 <http://www.mercurynews.com/opinion/ci_8635232>.

Fraser, Max. "Subprime Obama." The Nation 11 February 2008.

Grey, Barry. "Clinton, Obama, McCain Defer to Wall Street." World Socialist Web Site 29 March 2008 <http://www.wsws.org/articles/2008/mar2008/cand-m29.shtml>.

Jackson, Jesse. "Banks Bailed Out, Homeowners Sinking." Chicago Sun-Times 18 March 2008 <http://www.suntimes.com/news/jackson/847802,CST-EDT-jesse18.article>.

Jagger, Suzy. "Top Economist Says America Could Plunge Into Recession." Times Online 31 December 2007 <http://business.timesonline.co.uk/tol/business/economics/article3111659.ece>.

Krugman, Paul. "Loans and Leadership." New York Times 28 March 2008.

Palast, Greg. "The $200 Billion Bail-out for Predator Banks and Spitzer Charges Are Intimately Linked." GregPalast.com 14 March 2008 <http://www.gregpalast.com/elliot-spitzer-gets-nailed> .

Prins, Nomi. "Obama vs. Clinton on the Top 10 Economic Policy Issues." Mother Jones 28 February 2008 <http://www.motherjones.com/news/update/2008/02/obama-vs-clinton-economic-policy.html>.

Spitzer, Eliot. "Predatory Lenders' Partner in Crime." Washington Post 14 February 2008.

Sterling, Robert. "Subprime Bailout & Shrubonomics: A Mathematical Analysis." Konformist Blog 20 March 2008 <http://robalini.blogspot.com/2008/03/subprime-bailout-shrubonomics.html>.

"Wall St. Unlikely to Bemoan Passing of Bear Stearns, Which Made Few Friends Over the Years." International Herald Tribune 18 March 2008 <http://www.iht.com/articles/ap/2008/03/18/business/NA-FIN-US-Bear-Stearns-Employees.php>.

Republican sex freak moralistic about Spitzer

http://blogs.citypages.com/gop/2008/03/orgiastic_repub.php

Orgiastic Republican sex freak waxes moralistic about Spitzer
Filed under: National Republicans

Eliot Spitzer used a prostitution ring to cheat on his wife. Bad, bad Spitzer! You, the prince of accountability! It's high time the party of morals rebuked you, using an unimpeachably objective media outlet!

But because that party and that media outlet don't exist, we'll have to settle for Republican group sex aficionado Roger Stone and Fox News.

We've written about the GOP operative Roger Stone before, and how the charmingly amoral hedonist rolls from S&M sex party to swinger gathering in between calling Hillary Clinton vulgar names. To his credit (?), Stone doesn't seem to actually believe any of his own horseshit, but does parlay it into presumably well-paying media gigs like this one on Fox:

Yes, that's the resigned-in-disgrace Dole aide whose forays into leather sex parties forced his ouster talking about how a self-righteous Spitzer got what he deserved. I know you'll be just as shocked as I am to learn that a Google News search for Stone's name plus the name of "family values" Republican David Vitter (who also was nailed in a prostitution scandal) turns up exactly zero hits.

Let's get the obvious out of the way. Self-righteous politicians are loathsome, hypocritical self-righteous politicians are vile, and Spitzer should be ashamed of himself. But if you're expecting Republican operatives like Stone to condemn Vitter, or Larry Craig, or whoever the perv du jour is, you're setting yourself up for disappointment.

The point is this: an attack news outlet finding someone with a swift, polished tongue to do what he does best with it. Or possibly second-best, depending upon who you ask.

Posted by Jeff Shaw at March 10, 2008

Beach man told FBI of alleged Spitzer sexscapades

http://www.miamiherald.com/459/story/465701.html

Fri, Mar. 21, 2008
Beach man told FBI of alleged Spitzer sexscapades
BY AMY DRISCOLL

Almost four months before Gov. Eliot Spitzer resigned in a sex scandal, a lawyer for Republican political operative Roger Stone sent a letter to the FBI alleging that Spitzer ''used the services of high-priced call girls'' while in Florida.

The letter, dated Nov. 19, said Miami Beach resident Stone learned the information from ''a social contact in an adult-themed club.'' It offered one potentially identifying detail: the man in question hadn't taken off his calf-length black socks ``during the sex act.''

Stone, known for shutting down the 2000 presidential election recount effort in Miami-Dade County, is a longtime Spitzer nemesis whose political experience ranges from the Nixon White House to Al Sharpton's presidential campaign. His lawyer wrote the letter containing the call-girl allegations after FBI agents had asked to speak to Stone, though he says the FBI did not specify why he was contacted.

''Mr. Stone respectfully declines to meet with you at this time,'' the letter states, before going on to offer ''certain information'' about Spitzer.

''The governor has paid literally tens of thousands of dollars for these services. It is Mr. Stone's understanding that the governor paid not with credit cards or cash but through some pre-arranged transfer,'' the letter said.

''It is also my client's understanding from the same source that Governor Spitzer did not remove his mid-calf length black socks during the sex act. Perhaps you can use this detail to corroborate Mr. Stone's information,'' the letter said, signed by attorney Paul Rolf Jensen of Costa Mesa, Calif.

The letter also notes that while Stone believes the information is true, he ''cannot swear to its accuracy'' because it is second-hand.

James Margolin, a spokesman for the FBI's New York office, would not say whether the bureau had received the letter. A spokeswoman for Spitzer also had no comment.

The letter was written several months after allegations were leveled at Stone that he had left a threatening phone message at the office of Bernard Spitzer, the ex-governor's father, regarding ''phony'' campaign loans involving his son's unsuccessful 1994 bid for attorney general. Stone denied making the call but resigned as a consultant for state Senate Republicans in Albany.

Spitzer, the crusading attorney general who became governor, resigned March 12 amid allegations he was a client of a high-paid prostitution ring, the Emperors' Club. Four people have been charged with operating the ring. Spitzer has not been charged. A federal affidavit described a rendezvous between Spitzer and a prostitute known as Kristen, since identified as Ashley Alexandra Dupre, at the Mayflower Hotel in Washington on Feb. 13.

One of Stone's lawyers, Fort Lauderdale attorney Robert Buschel, said the letter's release is an attempt to set the record straight about Stone's possible part in the Spitzer drama. Stone confirmed the letter and referred The Miami Herald to his lawyer for comments.

''The conspiracy enthusiasts on the Internet are going wild over Roger Stone's role in the fall of Eliot Spitzer. We felt it was important to lay out for the public exactly what Mr. Stone did tell the government,'' said Buschel, a partner in Rothstein, Rosenfeldt, Adler of Fort Lauderdale.

Stone works as a partner in a separate public affairs and consulting company with the same name -- Rothstein, Rosenfeldt, Adler -- in the same office as the law firm.

''We trust this information was helpful to federal authorities in making their case against Mr. Spitzer,'' Buschel said.

U.S. Defends Tough Tactics on Spitzer

http://www.nytimes.com/2008/03/21/nyregion/21justice.html

March 21, 2008
U.S. Defends Tough Tactics on Spitzer
By DAVID JOHNSTON and PHILIP SHENON

WASHINGTON — The Justice Department used some of its most intrusive tactics against Eliot Spitzer, examining his financial records, eavesdropping on his phone calls and tailing him during its criminal investigation of the Emperor’s Club prostitution ring.

The scale and intensity of the investigation of Mr. Spitzer, then the governor of New York, seemed on its face to be a departure for the Justice Department, which aggressively investigates allegations of wrongdoing by public officials, but almost never investigates people who pay prostitutes for sex.

A review of recent federal cases shows that federal prosecutors go sparingly after owners and operators of prostitution enterprises, and usually only when millions of dollars are involved or there are aggravating circumstances, like human trafficking or child exploitation.

Government lawyers and investigators defend the expenditure of resources on Mr. Spitzer in the Emperor’s Club V.I.P. case as justifiable and necessary since it involved the possibility of criminal wrongdoing by New York’s highest elected official, who had been the state’s top prosecutor.

Bradley D. Simon, a veteran Justice Department trial lawyer who was federal prosecutor in Brooklyn throughout the 1990s, said that although it was rare for the department to use so many resources on the workings of a prostitution ring, the involvement of such a high-level politician must change the equation.

“If they’ve got some evidence of a high-ranking public official involved in violations of federal criminal code, it may not be unreasonable for them to pursue it,” he said. Still, he said, “I don’t think prostitution has been a high priority at the Justice Department.”

The focus on Mr. Spitzer was so intense that the F.B.I. used surveillance teams to follow both him and the prostitute in Washington in February. The surveillance teams had followed him at least once before — when he visited the city in January but did not engage a prostitute, officials said, confirming a report in The Washington Post. Stakeouts and surveillance are labor-intensive and often involve teams of a dozen or more agents and non-agent specialists.

An affidavit filed in the prostitution case did not identify Mr. Spitzer by name, only as Client 9, but it provided far more detail, some of it unusually explicit, about Client 9’s encounter with the prostitute than about any of the nine other clients identified by number in the document.

Government officials, including several who have been briefed on details of the case but declined to speak on the record because they were not authorized to discuss a continuing inquiry, said there was no alternative but to look into Mr. Spitzer’s activities once investigators began examining reports of suspicious transactions that banks filed with the Treasury Department. Those reports suggested to investigators that Mr. Spitzer might have been trying to keep anyone from noticing transfers of his own funds. That is the kind of activity that can bring an investigation of the possibility of corruption.

The reports led prosecutors and investigators to what some describe as a kind of crossroads. While they do not routinely investigate allegations concerning public officials who pay for sex, the Justice Department and Federal Bureau of Investigation regard public corruption as a high priority and routinely investigate allegations of even low-level wrongdoing.

“If the government gets a Suspicious Activity Report about a high-ranking public official, they would be negligent not to pursue it, if only to determine whether there was bribery or extortion involved,” said Robert D. Luskin, a defense lawyer and former federal prosecutor. Mr. Luskin said that as the case proceeds, the more difficult questions could well involve how the information about Mr. Spitzer became public and whether the government “will prosecute Spitzer if it doesn’t prosecute others in the same situation.”

The Treasury reports led federal investigators to the Emperor’s Club and Mr. Spitzer’s involvement with prostitutes, and later to the 47-page affidavit filed with the complaint that referred to him as Client 9.

The officials said that once they learned that such a prominent figure was involved in soliciting prostitutes, and had seemed to be arranging sex in violation of the statute that prohibits travel across state lines to engage in sex, they wanted to follow the evidence.

Moreover, several asserted that had they dropped the matter or given Mr. Spitzer’s conduct only cursory examination, they almost certainly would have been accused of a cover-up for failing to aggressively investigate possible misconduct by a public official.

In defending their handling of the case, officials said that in the end, investigators chose to monitor his conduct but made no effort to set up a sting, or an arranged situation in which Mr. Spitzer might implicate himself. They did not surreptitiously record his activities inside the hotel or seek to obtain DNA evidence. It was not necessary, as Mr. Spitzer proved to be easy prey, according to the affidavit, which was signed by an F.B.I. agent.

It indicated that on Feb. 13 federal agents staked out his hotel in Washington, and it contained recorded conversations that amply demonstrated that he willingly had a sexual encounter with a prostitute. Afterward she was recorded on a wiretap telling an Emperor’s Club employee: “I don’t think he’s difficult. I mean it’s kind of like, whatever.”

On March 10, when Mr. Spitzer was first identified by name by The New York Times on its Web site, the affidavit was widely used by news organizations to describe graphic details about his conduct.

Several current and former federal prosecutors and prominent defense lawyers who reviewed the document said the inclusion of such salacious details about Mr. Spitzer’s encounter with the prostitute went far beyond what was necessary to provide probable cause for the arrests and for searches, the purpose of the affidavit.

The government has not accused Mr. Spitzer, a Democrat, of any wrongdoing, although last week the top federal prosecutor in Manhattan, Michael J. Garcia, issued a statement saying there had been no deal with Mr. Spitzer’s lawyers, suggesting that a prosecution of some kind might still be a possibility. Some officials have cautioned against drawing conclusions about the case, since it is still under way while investigators try to determine whether Mr. Spitzer misused public or campaign funds.

At the Justice Department in Washington, senior political appointees have said they had little involvement in the case, saying that it was supervised by Mr. Garcia and directly managed by Boyd M. Johnson III, head of the public corruption unit in the Manhattan United States attorney’s office.

Attorney General Michael B. Mukasey, a former federal judge in New York, was not told about the case until shortly before March 5, when the complaint was filed against four of the prostitution ring’s employees.

Mr. Simon said it was unusual for the department to bring criminal charges in a prostitution case in which there was no allegation of the exploitation of children, human trafficking or some far more serious crime.

He said that in his eight years in the Brooklyn office in the 1990s, he could not recall a single major criminal case that centered on prostitution charges. “There were a lot of serious crimes — organized crime, narcotics cases, major financial crime investigations,” he said in an interview. “Prostitution was not a high priority.”

Law enforcement officials said the F.B.I. has about 450 active prostitution cases under investigation, almost all involving enterprises and some using techniques like wiretapping. In addition, since 2005, the F.B.I. has led an initiative known as Innocence Lost, which investigates prostitution involving underage women.

Justice Department officials insist that it has a strong record of breaking up large prostitution rings around the country, but many of the cases they cite involve case brought several years ago, especially before the Sept. 11, 2001, terror attacks; after that, the department vowed to focus its attention on national security threats.

And for years, they acknowledge, the department has rarely, if ever, prosecuted or even identified the clients of a prostitution ring.

Bear Stearns saddled with toxic sub-prime debt

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/15/ccom115.xml

Bear Stearns exposed as a bank saddled with toxic sub-prime debt
By Ambrose Evans-Pritchard
16/03/2008

Big American finance houses have collapsed before. Continental Illinois required a $4.5bn (£2.25bn) bail-out in 1984 after coming to grief in Texas as the oil boom deflated.

The giant hedge fund Long Term Capital Management was saved by a club of banks in 1998 under the guidance New York Federal Reserve. The fund blew up after Russia's default, which ravaged its portfolio of Danish, Italian and Spanish bonds.

On both occasions the US economy was in rude good health. The damage was quickly contained.

The implosion of Bear Stearns is more dangerous.

A host of other banks, broker dealers, and hedge funds have played the same game, deploying massive leverage at the top of the credit bubble to eke out extra yield. Dozens of them are saddled with the same toxic debt - sub-prime property, credit cards, auto loans, and mountains of unsold paper from the merger boom.

This time the market for default insurance is flashing bright red warning signals across the entire spectrum of US finance.

The swap spreads on Lehman Brothers rocketed to 465 yesterday, mirroring the moves in Bear Stearns debt days before. Fannie Mae and Freddie Mac - the venerable agencies created by Roosevelt that underpin 60pc of the $11 trillion mortgage market - had a heart attack on Monday. Their bonds were in free-fall, threatening to set off another cascade of bank writedowns.

These are not sub-prime outfits. They sit at the apex of the US mortgage credit industry. Hence the dramatic move by the Fed this week to offer a $200bn lifeline, agreeing to accept Fannie Mae and Freddie Mac issues as collateral.

Had the Fed delayed, many traders believe Wall Street would have plunged through resistance levels risking a full-fledged crash.

The 'monoline' bond insurers - MBIA, Ambac, and others - that guarantee most of the $2,600bn market for US municipal bonds have seen their shares collapse by 90pc since the Autumn.

They are still battling to raise enough to capital to save their 'AAA' ratings. Should they fail, the insured bonds will be downgraded in lockstep. Pension funds would be forced to liquidate huge holdings. As New York Governor Eliot Spitzer said before his own liquidation, such an outcome is too dreadful to contemplate.

You have to go back to the banking crisis of the Great Depression to find a moment when the financial system as a whole seemed so close to the precipice.

Although 4,000 US banks failed in the early 1930s (mostly small ones), it was a long-drawn out affair. The bank runs began in the Prairies as falling food prices caused farmers to default in 1930. It seemed to be a local problem.

The crisis reached New York in December 1930 when the Bank of the United States succumbed to panic withdrawals. Legend has it that the 'WASP' clearing banks refused to back a rescue because of the bank's Jewish links.

In those days the contagion spread slowly to the rest of the world. It is much swifter now. The Swiss bank UBS has suffered US sub-prime losses on a scale to match Merrill Lynch and Citigroup, thanks to the curse of mortgage securities.

"We are now experiencing the first truly major crisis of financial globalisation," said the Swiss central bank governor Philipp Hildebrand this week.

"Never before have banks seen such destruction of their balance sheets in such a short time. Moreover, there are signs that the problems are spreading. The risk premiums on commercial property, consumer credit and corporate loans have risen sharply," he said.

Debt levels have been much higher than in the Roaring Twenties; the new-fangled tools of structured credit are more opaque: the $415 trillion nexus of derivative contracts is untested. Nobody knows for sure if the counter-parties are able to deliver on vast IOUs, or whether the construct is built on sand.

What keeps Federal Reserve officials turning at night is fear that the "financial accelerator" will now set off a vicious downward spiral. There is a risk of "very adverse economic outcomes," said Fed vice-chair Don Kohn.

Albert Edwards, global strategist at Societe Generale, said the toppling banks are merely a symptom of a deeper rot. "The banks are not the problem. Nor even the grotesquely leveraged funds. The problem is that an economic bubble financed by ridiculously loose monetary policy is unravelling," he said.

"US house prices have a lot further to fall, which will simply crush the global economy. The lesson from Japan in the early 1990s is that the death dance goes on and on and on," he said.

The Fed blundered badly in the Slump, delaying rate cuts for too long. It allowed the money supply to implode.

It is acting with breath-taking speed this time. Rates have already been cut from 5.25pc to 3pc, and will be slashed again this week. New means of showering liquidity on the banking system are being devised each week.

As luck would have it, the world's greatest expert on the financial causes of depressions - Ben Bernanke - happens to be chairman of the Federal Reserve.

New York Governor ‘Destroyed’ Over 9/11

http://www.whatdoesitmean.com/index1077.htm

March 11, 2008

New York Governor ‘Destroyed’ Over Threat To Probe 9/11 Attacks On US
By: Sorcha Faal, and as reported to her Western Subscribers

Reports consuming the US propaganda media organs and political elite today are centering upon the charges leveled against the Governor of New York, Eliot Spitzer, and who is said to have paid for the services of a high priced prostitute.

FSB reports circulating in the Kremlin today, however, point to a much more sinister effort behind the toppling of Governor Spitzer as he had just begun a new probe into Larry Silverstein, the owner of the World Trade Center brought down in the September 11, 2001 attacks upon the US, and the Bush Families Carlyle Group.

The focus of Governor Spitzer’s investigation, these reports state, revolve around the growing crisis embroiling the Carlyle Group as it nears total collapse and is facing insolvency due to Larry Silverstone’s withdrawal of over $14 billion from the embattled groups coffers, and which could see the loss to New York States already troubled massive pension fund of over $10 billion.

Governor Spitzer has long battled with the former comptroller for New York States Pension Fund, Alan G. Hevesi, who holds duel Israeli-American citizenship, and prompted a US Federal Probe that charged Comptroller Hevesi of using the over $100 billion of funds entrusted to him for the personal benefit of his friends and family, and to which Mr. Hevesi pled guilty for and paid a $5,000 fine.

Prior to his taking office as New York States Governor, these reports continue, Mr. Spitzer, as a prosecutor, had long targeted the United States Banking System for their vast theft of money from the American people, and had won billions in judgments against Bear Stearns, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley, Salomon Smith Barney and UBS Warburg.

It is more than interesting to note, too, that these are the exact same International Banking Giants who are now reeling under the Global assault against them, with Bear Stearns becoming the latest victim, and as we can read as reported by Britain’s Independent News Service:

"Panic swept the credit markets on reports of an insolvency crunch at both the US investment bank Bear Stearns and the mortgage giant Fannie Mae, triggering a dramatic surge in default insurance and rumours of yet another emergency rate cut by the US Federal Reserve."

As Governor Spitzer becomes yet another victim to vast power of the West’s war, political and media elite assault against him, and by their introduction of sex charges against him, as they have done to so many of their adversaries in order to destroy their credibility, the truest warnings of these events to the American people will no doubt be lost, again.

And, with the most dangerous of these warnings coming from the World’s richest man, Warren Buffet, and as we can read as reported by the Market Watch News Service in their article titled "Buffett and Gross warn: $516 trillion bubble is a disaster waiting to happen", and which says:

"In short, despite Buffett's clear warnings, a massive new derivatives bubble is driving the domestic and global economies, a bubble that continues growing today parallel with the subprime-credit meltdown triggering a bear-recession.

Data on the five-fold growth of derivatives to $516 trillion in five years comes from the most recent survey by the Bank of International Settlements, the world's clearinghouse for central banks in Basel, Switzerland. The BIS is like the cashier's window at a racetrack or casino, where you'd place a bet or cash in chips, except on a massive scale: BIS is where the U.S. settles trade imbalances with Saudi Arabia for all that oil we guzzle and gives China IOUs for the tainted drugs and lead-based toys we buy."

There used to be a time when warnings were prudent to be given to the American people so that they could, in some small measure, protect themselves, but, and sadly, those times are now gone as these people have nearly completed their descent into the abyss of total slavery to their masters with virtually no knowledge of the horrific future that lies before them.

The Spitzer Sex Sting: A Few More Questions

http://harpers.org/archive/2008/03/hbc-90002589

The Spitzer Sex Sting: A Few More Questions
BY Scott Horton
PUBLISHED March 10, 2008

It looks like the Bush Justice Department just bagged themselves another Democratic Governor. Here’s the New York Times on the story:

Gov. Eliot Spitzer, who gained national prominence relentlessly pursuing Wall Street wrongdoing, has been caught on a federal wiretap arranging to meet with a high-priced prostitute at a Washington hotel last month, according to a law enforcement official and a person briefed on the investigation.

The wiretap captured a man identified as Client 9 on a telephone call confirming plans to have a woman travel from New York to Washington, where he had reserved a hotel room, according to an affidavit filed in federal court in Manhattan. The person briefed on the case and the law enforcement official identified Mr. Spitzer as Client 9.

Mr. Spitzer, a first term Democrat, today made a brief public appearance during which he apologized for his behavior, and described it as a “private matter.” He did not address his political future. “I have acted in a way that violates my obligation to my family and violates my or any sense of right or wrong,” said Mr. Spitzer, who appeared with his wife Silda at his Manhattan office. “I apologize first and most importantly to my family. I apologize to the public to whom I promised better.”

On the other hand, ABC News this evening offers a starkly different account of how the investigation got launched. According to ABC, the whole investigation of the prostitution ring itself was triggered by an investigation of Spitzer.

The federal investigation of a New York prostitution ring was triggered by Gov. Eliot Spitzer’s suspicious money transfers, initially leading agents to believe Spitzer was hiding bribes, according to federal officials. It was only months later that the IRS and the FBI determined that Spitzer wasn’t hiding bribes but payments to a company called QAT, what prosecutors say is a prostitution operation operating under the name of the Emperors Club. …

The suspicious financial activity was initially reported by a bank to the IRS which, under direction from the Justice Department, brought in the FBI’s Public Corruption Squad. “We had no interest at all in the prostitution ring until the thing with Spitzer led us to learn about it,” said one Justice Department official.

Fox News reported earlier in the day that Spitzer would resign at his press conference. He did not. In any event, however, Spitzer—who was previously viewed as a rising star in the Democratic Party—is now damaged goods. Many had expected him to consolidate power in Albany, inching the Democrats towards control of the State Senate, and to rule as a powerful governor. He may or may not survive the initial shock waves of the scandal, but certainly no one now expects him to be a powerful force in the statehouse.

The Times notes in its story that Spitzer once prosecuted a prostitution ring:

In one such case in 2004, Mr. Spitzer spoke with revulsion and anger after announcing the arrest of 16 people for operating a high-end prostitution ring out of Staten Island. “This was a sophisticated and lucrative operation with a multitiered management structure,” Mr. Spitzer said at the time. “It was, however, nothing more than a prostitution ring.”

These facts are likely to dominate the punditry’s discussion of the issue. Spitzer will be labeled a hypocrite (a charge he can hardly refute).

However, there is a second tier of questions that needs to be examined with respect to the Spitzer case. They go to prosecutorial motivation and direction. Note that this prosecution was managed with staffers from the Public Integrity Section at the Department of Justice. This section is now at the center of a major scandal concerning politically directed prosecutions. During the Bush Administration, his Justice Department has opened 5.6 cases against Democrats for every one involving a Republican. Beyond this, a number of the cases seem to have been tied closely to election cycles. Indeed, a study of the cases out of Alabama shows clearly that even cases opened against Republicans are in fact only part of a broader pattern of going after Democrats. So here are the rather amazing facts that surface in the Spitzer case:

(1) The prosecutors handling the case came from the Public Integrity Section.

(2) The prosecution is opened under the White-Slave Traffic Act of 1910. You read that correctly. The statute itself is highly disreputable, and most of the high-profile cases brought under it were politically motivated and grossly abusive. Here are a few:

Heavyweight boxing champion Jack Johnson was the first man prosecuted under the act — for having an affair with Lucille Cameron, whom he later married. The prosecution was manifestly an effort “to get” Johnson, who at the time was the most famous African-American. (All of this is developed well in Ken Burns’s film “Unforgiveable Blackness”).

University of Chicago sociologist William I. Thomas was prosecuted for having an affair with an officer’s wife in France. Thomas was targeted because of his Bohemian social and his radical political views.

In 1944 Charles Chaplin was prosecuted for having an affair with actress Joan Barry. The prosecution again provided cover for a politically motivated effort to drive Chaplin out of the country.

Canadian author Elizabeth Smart was arrested and charged in 1940 while crossing the border with the British poet George Barker.

(3) The resources dedicated to the case in terms of prosecutors and investigators are extraordinary.

(4) How the investigation got started. The Justice Department has yet to give a full account of why they were looking into Spitzer’s payments, and indeed the suggestion in the ABC account is that it didn’t have anything to do with a prostitution ring. The suggestion that this was driven by an IRS inquiry and involved a bank might heighten, rather than allay, concerns of a politically motivated prosecution.

All of these facts are consistent with a process which is not the investigation of a crime, but rather an attempt to target and build a case against an individual.

The answer of the Justice Department to all this is likely to be: Trust us. But in the current environment, the reservoir of trust is tapped. The Justice Department needs to submit to some questions about how this probe got launched, who launched it, and to what extent political appointees were involved in its direction. This has nothing to do with Spitzer’s guilt or innocence. But it has everything to do with the fading integrity of the Public Integrity Section.

Eliot Spitzer: A Lesson for all Men

http://www.henrymakow.com/eliot_spitzer_a_lesson_for_all.html

Eliot Spitzer: A Lesson for all Men
By Henry Makow Ph.D.
March 12, 2008

Governor Eliot Spitzer's downfall contains an almost Biblical lesson for all men: Don't be controlled by your dick. It will ruin your life.

Sex is a powerful force. Either we control it or it (and woman) controls us. Like Samson, Spitzer forfeited his power for sex. The bankers used it to control Spitzer; they also use it to control us.

Men are fighting a powerful meme created by the banker-owned media. Although sexual attraction is totally based on our instinct to propagate, the media divorces sex from love, marriage and procreation

It perverts a natural instinct that requires strict cultural definition into an entertainment and commodity. It proclaims anonymous sex is an end in itself, meaningful and liberating, and in Spitzer's case, worth $2000 an hour. This elevates the nubile female-prostitute to the level of goddess. Who else gets paid that much?

Sex is an appetite like food. If you don't get food, you will think of nothing else. It's the same with sex. The answer? Men have got to marry women who like sex and "forgeta 'bout it."

It's time we deconstructed anonymous sex. Somehow the females have got the upper hand. Much like the diamond cartel ,they have hoodwinked males into thinking that a commodity as commonplace and plentiful as p---y is rare and precious. It's not. In Andy Warhol's words, “Sex is the biggest nothing in the world.”

I'll never understand why a man would ever pay a woman for sexual “gratification.” Why shouldn't she pay him? Sex is just as necessary for her. What fools we men are.

I wouldn't pay ten cents for anonymous sex with anyone. Not this New Jersey nose job. Not anyone. And you couldn't pay me $4000 to service some stranger. (Not that they'd ask.)

The “prostitution ring” charged Spitzer between one and three thousand an hour! It charged
$10,000 to $30,000 a night and would consider selling off their chattel for a large lump sum.

Eliot, didn't anyone tell you that all cats are grey in the dark?

The excitement for a man is a woman's response to him. How responsive can a woman be to a stranger? In casual sex, both parties are miming what they think should be happening, rather than admitting that the experience is empty and degrading.

IN PRAISE OF MASTURBATION

Masturbating is a far better solution for single men than anonymous sex. Do I have to list the advantages? You have your flawless woman and fantasy situation. After, she's gone instantly. And there's no chance of pregnancy or STD. Oh yeah. It's FREE. And, often it's better.

Let's deconstruct the fertile female while we're at it. Having lost her ability to love a man, most young women today are themselves scrawny men, with narrow shoulders, a couple of feed bags on their chests, and an unsightly jungle below.

They are pretty much physically identical. As one wag said, "Put a clock in it." Yet despite the tedious nature of the product, they have been selling it to us yokels from time immemorial.

The only thing that differentiates women is talent, character and personality. Yet most young women today seem content to compete on the basis of sex appeal alone.

I love feminine women, the kind that marry and sacrifice for husband and family. The kind that understand that femininity is the opposite of masculinity.

We live in a culture that promotes arrested development by inflating the status of women and teaching men to pander to them ifor sex, like dogs getting a treat. Of course women tire of this, and men end up neutered and alone.

Eliot Spitzer spent too much time overachieving and didn't develop emotionally. Part of that requires we get sex out of our system. Realize how mundane it is. That there is no “there” there. With all the sex available, are men finally learning that casual sex is a bore?

Men must also realize that no woman can give them what they really seek--- themselves. You get that by serving God (i.e. a spiritual ideal.)

Romantic love is a crock. Women are just companions on the journey. Real love is based on meeting mutual needs over a long period of time. It is based on sticking with someone when they're down, like Mrs. Spitzer is doing.

In closing, let's learn from Eliot Spitzer's folly. Sex is used to control men. When we control our sex drive, we are free to serve a higher master.
------------------
This seems a good time to plug my friend Julian Lee's website www.celibacy.info dedicated to teaching men the benefits of abstinence.

Penthouse wants Ashley Alexandra Dupre

http://www.nydailynews.com/news/2008/03/13/2008-03-13_penthouse_wants_ashley_alexandra_dupre_f.html

Penthouse wants Ashley Alexandra Dupre for cover shot
THE ASSOCIATED PRESS
Updated Thursday, March 13th 2008

The woman at the center of the Eliot Spitzer call girl scandal will have no problem cashing in on her notoriety: Penthouse and Hustler are already knocking on her door.

"We’ve been looking at that very closely. She’s young. She’s pretty. She’s a model," said Hustler magazine publisher Larry Flynt. "We would love to do business with her, and we will approach her."

Penthouse has been trying to reach out to 22-year-old Ashley Alexandra Dupre, too, but had yet to make contact Thursday afternoon.

Penthouse Magazine Group president and publisher Diane Silberstein said she would "love to have her in the magazine" and would consider offering her a cover shot.

"She sounds like a very interesting and talented young woman, and I’m sure she has a great story to tell," Silberstein said. "We promise to make it worth her while."

The New Jersey-born Dupre was thrust into the limelight this week when The New York Times identified her as the high-priced call girl whose arrangements for a rendezvous with New York’s governor at a Washington, D.C., hotel were secretly monitored by the FBI.

So far, authorities haven’t filed charges against Spitzer or Dupre, who was identified in court papers only by her escort agency pseudonym, Kristen, but she has a lawyer and hasn’t been speaking about her encounter with the governor while the case is under investigation.

Flynt, who last June took out a full-page advertisement in The Washington Post offering $1 million for anyone who could prove he or she had illicit sexual relations with a prominent politician, suggested that by the time Dupre starts talking she may be too big a media phenomenon for a simple magazine spread.

"She is no doubt going to do a book. There will probably be a movie," he said. "I think she is going to have so many offers coming in that it will probably be wishful thinking just to get in the door."

The $200 billion bail-out for predator banks

The $200 billion bail-out for predator banks and Spitzer charges are intimately linked

By Greg Palast
Reporting for Air America Radio’s Clout
Listen to Palast on Clout:

http://www.gregpalast.com/

While New York Governor Eliot Spitzer was paying an ‘escort’ $4,300 in a hotel room in Washington, just down the road, George Bush’s new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.

Both acts were wanton, wicked and lewd. But there’s a BIG difference. The Governor was using his own checkbook. Bush’s man Bernanke was using ours.

This week, Bernanke’s Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks’ mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.

Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers’ bordello: Eliot Spitzer.

Who are they kidding? Spitzer’s lynching and the bankers’ enriching are intimately tied.

How? Follow the money.

The press has swallowed Wall Street’s line that millions of US families are about to lose their homes because they bought homes they couldn’t afford or took loans too big for their wallets. Ba-LON-ey. That’s blaming the victim.

Here’s what happened. Since the Bush regime came to power, a new species of loan became the norm, the ‘sub-prime’ mortgage and it’s variants including loans with teeny “introductory” interest rates. From out of nowhere, a company called ‘Countrywide’ became America’s top mortgage lender, accounting for one in five home loans, a large chuck of these ‘sub-prime.’

Here’s how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 a month payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain’t worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the “discount” they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. Grinnings move into their Toyota.

Now, what kind of American is ‘sub-prime.’ Guess. No peeking. Here’s a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren’t stupid – they had no choice. They were ‘steered’ as it’s called in the mortgage sharking business.

‘Steering,’ sub-prime loans with usurious kickers, fake inducements to over-borrow, called ‘fraudulent conveyance’ or ‘predatory lending’ under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.

But when the Bush regime took over, Countrywide and its banking brethren were told to party hardy – it was OK now to steer’m, fake’m, charge’m and take’m.

But there was this annoying party-pooper. The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.

Instead of regulating the banks that had run amok, Bush’s regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of “federal pre-emption,” Bush-bots ordered the states to NOT enforce their consumer protection laws.

Indeed, the feds actually filed a lawsuit to block Spitzer’s investigation of ugly racial mortgage steering. Bush’s banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.

Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup’s Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called “securitization.”

What that means is that they took a bunch of junk mortgages, like the Grinnings, loans about to go down the toilet and re-packaged them into “tranches” of bonds which were stamped “AAA” - top grade - by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really).

When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywide’s top man, Angelo Mozilo, will ‘earn’ a $77 million buy-out bonus this year on top of the $656 million - over half a billion dollars – he pulled in from 1998 through 2007.

But there were rumblings that the party would soon be over. Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywide’s stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks.

Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? That’s Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.

The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the public treasure – and got to keep the Grinning’s house. There was no ‘quid’ of a foreclosure moratorium for the ‘pro quo’ of public bail-out. Not one family was saved – but not one banker was left behind.

Every mortgage sharking operation shot up in value. Mozilo’s Countrywide stock rose 17% in one day. The Citi sheiks saw their company’s stock rise $10 billion in an afternoon.

And that very same day the bail-out was decided – what a coinkydink! – the man called, ‘The Sheriff of Wall Street’ was cuffed. Spitzer was silenced.

Do I believe the banks called Justice and said, “Take him down today!” Naw, that’s not how the system works. But the big players knew that unless Spitzer was taken out, he would create enough ruckus to spoil the party. Headlines in the financial press – one was “Wall Street Declares War on Spitzer” - made clear to Bush’s enforcers at Justice who their number one target should be. And it wasn’t Bin Laden.

It was the night of February 13 when Spitzer made the bone-headed choice to order take-out in his Washington Hotel room. He had just finished signing these words for the Washington Post about predatory loans:

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

Bush, said Spitzer right in the headline, was the “Predator Lenders’ Partner in Crime.” The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.

Spitzer wrote, “When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably.”

But now, the Administration can rest assured that this love story – of Bush and his bankers - will not be told by history at all – now that the Sheriff of Wall Street has fallen on his own gun.

A note on “Prosecutorial Indiscretion.”

Back in the day when I was an investigator of racketeers for government, the federal prosecutor I was assisting was deciding whether to launch a case based on his negotiations for airtime with 60 Minutes. I’m not allowed to tell you the prosecutor’s name, but I want to mention he was recently seen shouting, “Florida is Rudi country! Florida is Rudi country!”

Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.
Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Or maybe we should say, 'indiscretion.'
************
Greg Palast, former investigator of financial fraud, is the author of the New York Times bestsellers Armed Madhouse and The Best Democracy Money Can Buy.

Hear The Palast Report weekly on Air America Radio’s Clout.

And next Wednesday March 19, join Palast and Clout host Richard Greene on a dinner cruise on the Potomac River.