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!!!
Showing posts with label Wall Street Journal. Show all posts
Showing posts with label Wall Street Journal. Show all posts
Wednesday, March 11, 2009
Tuesday, February 24, 2009
‘Dow Theory’ Says Worst Isn’t Over for U.S. Stocks
http://www.bloomberg.com/apps/news?pid=20601087&sid=agapqPsrRIEY&refer=home
‘Dow Theory’ Says Worst Isn’t Over for U.S. Stocks as YRC Falls
By Eric Martin and Cristina Alesci
Feb. 21 (Bloomberg) -- A 125-year-old method for forecasting the market is telling investors the worst isn’t over for stocks.
Dow Theory, which holds that simultaneous moves in industrial and transportation shares foreshadow economic activity, indicates the Dow Jones Industrial Average’s drop to a six-year low yesterday may presage more losses.
The Dow industrials slumped to 7,365.67 on concern the deepening recession will force the U.S. government to bail out banks. Adherents of Dow Theory say the 30-stock gauge will fall farther because the Dow Jones Transportation Average has slipped to the worst level since September 2003.
“When you have that confirmation in both legs, that’s clearly negative,” said Ryan Detrick, senior technical analyst at Schaeffer’s Investment Research in Cincinnati. “There’s some validity to Dow Theory.”
This week’s retreat left the Standard & Poor’s 500 Index, the benchmark for U.S. stocks, within 2.3 percent of breaking through its Nov. 20 low to the worst level since 1997.
Citigroup Inc. and Bank of America Corp. declined the most in the Dow this week, losing more than 31 percent, on concern shareholders will be wiped out through nationaliGzation. General Motors Corp. had the third-biggest slump, losing 29 percent on concern about its solvency. General Electric Co. dropped 18 percent to $9.38, becoming the fifth stock in the average since last year to sink below $10.
“The direction of the market is clearly down,” said Richard Moroney, who manages $150 million at Hammond, Indiana- based Horizon Investment Services and edits the Dow Theory Forecasts newsletter. “We’re holding a lot more cash than we normally do.”
‘Clearly Down’
Dow Theory, created by Wall Street Journal co-founder Charles Dow in 1884, argues that transportation companies are harbingers of economic activity. The transportation gauge slipped below its November nadir in January and has kept retreating. YRC Worldwide Inc. and JetBlue Airways Corp. fell the most this week, losing more than 27 percent.
Dow Theory is showing that “the bear market is in force,” said Philip Roth, the New York-based chief technical analyst at Miller Tabak & Co. “It doesn’t tell you whether it’s going to last another year or another day. It isn’t a forecaster of magnitude, just direction.”
In November 2007, one month after the Dow industrials and S&P 500 surged to record highs, Dow Theory suggested the rally was over. The S&P 500 went on to tumble 38 percent in 2008, the most since 1937.
Bullish Strategists
The Dow Theory signal goes against all 10 Wall Street strategists tracked by Bloomberg, who on average project the S&P 500 will end the year at 1,059, a 38 percent gain from yesterday’s close of 770.05. Almost $800 billion in federal spending and the cheapest valuations in two decades will spur the rally, the strategists say.
The S&P 500 is a better indicator of the market’s direction because it has almost 17 times more companies than the Dow average and uses market value, not share prices, to determine company weightings, said Roger Volz, New York-based senior vice president at Hampton Securities Ltd. and a technical analyst since 1982.
The index would probably plunge to 681 should it fall below the 11-year-low of 752.44 reached in November, according to Volz. His chart-based techniques include Fibonacci analysis.
“I don’t think we get out of the woods for 14 months,” he said. “The destruction is severe.”
To contact the reporters on this story: Cristina Alesci in New York at calesci2@bloomberg.net; Eric Martin in New York at emartin21@bloomberg.net.
‘Dow Theory’ Says Worst Isn’t Over for U.S. Stocks as YRC Falls
By Eric Martin and Cristina Alesci
Feb. 21 (Bloomberg) -- A 125-year-old method for forecasting the market is telling investors the worst isn’t over for stocks.
Dow Theory, which holds that simultaneous moves in industrial and transportation shares foreshadow economic activity, indicates the Dow Jones Industrial Average’s drop to a six-year low yesterday may presage more losses.
The Dow industrials slumped to 7,365.67 on concern the deepening recession will force the U.S. government to bail out banks. Adherents of Dow Theory say the 30-stock gauge will fall farther because the Dow Jones Transportation Average has slipped to the worst level since September 2003.
“When you have that confirmation in both legs, that’s clearly negative,” said Ryan Detrick, senior technical analyst at Schaeffer’s Investment Research in Cincinnati. “There’s some validity to Dow Theory.”
This week’s retreat left the Standard & Poor’s 500 Index, the benchmark for U.S. stocks, within 2.3 percent of breaking through its Nov. 20 low to the worst level since 1997.
Citigroup Inc. and Bank of America Corp. declined the most in the Dow this week, losing more than 31 percent, on concern shareholders will be wiped out through nationaliGzation. General Motors Corp. had the third-biggest slump, losing 29 percent on concern about its solvency. General Electric Co. dropped 18 percent to $9.38, becoming the fifth stock in the average since last year to sink below $10.
“The direction of the market is clearly down,” said Richard Moroney, who manages $150 million at Hammond, Indiana- based Horizon Investment Services and edits the Dow Theory Forecasts newsletter. “We’re holding a lot more cash than we normally do.”
‘Clearly Down’
Dow Theory, created by Wall Street Journal co-founder Charles Dow in 1884, argues that transportation companies are harbingers of economic activity. The transportation gauge slipped below its November nadir in January and has kept retreating. YRC Worldwide Inc. and JetBlue Airways Corp. fell the most this week, losing more than 27 percent.
Dow Theory is showing that “the bear market is in force,” said Philip Roth, the New York-based chief technical analyst at Miller Tabak & Co. “It doesn’t tell you whether it’s going to last another year or another day. It isn’t a forecaster of magnitude, just direction.”
In November 2007, one month after the Dow industrials and S&P 500 surged to record highs, Dow Theory suggested the rally was over. The S&P 500 went on to tumble 38 percent in 2008, the most since 1937.
Bullish Strategists
The Dow Theory signal goes against all 10 Wall Street strategists tracked by Bloomberg, who on average project the S&P 500 will end the year at 1,059, a 38 percent gain from yesterday’s close of 770.05. Almost $800 billion in federal spending and the cheapest valuations in two decades will spur the rally, the strategists say.
The S&P 500 is a better indicator of the market’s direction because it has almost 17 times more companies than the Dow average and uses market value, not share prices, to determine company weightings, said Roger Volz, New York-based senior vice president at Hampton Securities Ltd. and a technical analyst since 1982.
The index would probably plunge to 681 should it fall below the 11-year-low of 752.44 reached in November, according to Volz. His chart-based techniques include Fibonacci analysis.
“I don’t think we get out of the woods for 14 months,” he said. “The destruction is severe.”
To contact the reporters on this story: Cristina Alesci in New York at calesci2@bloomberg.net; Eric Martin in New York at emartin21@bloomberg.net.
Sunday, December 21, 2008
Time to settle net neutrality debate
http://www.mercurynews.com/business/ci_11240110
Time to settle net neutrality debate
By Chris O'Brien
Mercury News
12/16/2008
I had lulled myself into believing we were all but done with this whole debate about net neutrality, the notion that service providers must treat all traffic equally.
I mistakenly thought a ruling by the Federal Communications Commission back in September in a case involving Comcast had settled the issue, once and for all.
Silly me.
A story that appeared on The Wall Street Journal's Web site over the weekend and in Monday's paper claimed that Google was asking for preferential treatment from network providers that appeared at odds with its previous support for net neutrality. The article also said that President-elect Barack Obama was backtracking on the issue. And the story reported that Stanford Professor Lawrence Lessig, a leading advocate for a free and open Internet, had "softened" his stance.
The article prompted heated denials from all three.
But while the story may have been off target, it's clear from the subsequent dust-up that the issue of net neutrality is far from settled. The article and the subsequent back-and-forth of blog postings and press releases revealed that some fault lines remain, even among supporters.
So job one for the new FCC under President Obama should be to define and make permanent net neutrality. The FCC should establish clear guidelines for what constitutes acceptable network management. It's in the best interest of service providers, Internet companies and consumers to get this done and move on to other issues.
If net neutrality seems like so much Washington policy wonkishness, well, it's not. As Internet traffic explodes, telecommunications companies like Comcast and AT&T have argued that they're spending vast sums of money on new infrastructure that companies like Google are eating up with their search and video traffic. The service providers would like to charge some companies more to carry certain types of content, or to restrict the amount or type of content to end users to help manage that flow of traffic.
For instance, Comcast was accused of blocking file sharing and peer-to-peer network services for extended periods, uses that generate a heavy amount of traffic. Until the practice was brought to light, confused customers couldn't understand what was happening.
The problem is that this punishes consumers, who face either lower quality service, or higher costs. Telecom companies could essentially set up a toll service, and those costs will get passed on to consumers either directly, in the form of higher broadband costs, or indirectly by companies that are forced to pay more to have their content carried across the Internet.
This is bad for innovation and bad for our wallets.
A few months ago, the FCC ruled that Comcast had engaged in such a practice, a decision that net neutrality supporters hailed for finally creating a precedent. But clearly, confusion remains.
In the Journal story, for instance, Google is apparently asking ISPs for permission to co-locate its servers into their facilities so its content can be physically closer to end users, and thus be delivered more quickly. Companies such as Akamai of Cambridge, Mass., have made big businesses out of providing such services.
Richard Whitt, Google's Washington telecom and media counsel, wrote on the company's public policy blog: "Despite the hyperbolic tone and confused claims in Monday's Journal story, I want to be perfectly clear about one thing: Google remains strongly committed to the principle of net neutrality."
Clearly, some folks thought this ran afoul of net neutrality principles. I'd disagree, since such a service in effect keeps some types of traffic off the Internet and helps reduce congestion.
But that wasn't the only area of dispute. In a blog post, Lessig noted that he had always supported the concept that service providers should be allowed to provide different tiers of service, allowing some companies such as Google to pay more for access to faster networks. Lessig acknowledged that some members of the net neutrality community disagree. Lessig writes: "But the suggestion that the position is 'recent' is baseless. If I'm wrong, I've always been wrong."
With all due respect, he's wrong.
Among those who agree with me is Ben Scott, a policy director for the Free Press, a consumer advocacy group based in Washington. I chatted with Scott on Monday about the Journal story. Scott noted that while Lessig sat on the Free Press board, they had a healthy disagreement on this piece of the puzzle.
"If you create a super tier, and it's a million dollars a month, what happens is that the big guys go in and bid up the price, and it becomes a barrier to entry," Scott said.
Agreed. Clearing up the confusion over such unsettled issues will be good for everyone. Scott also noted that with Obama coming in, codifying net neutrality has become a question of "not if, but when."
The answer should be sooner, not later.
Contact Chris O'Brien at cobrien@mercurynews.com or (415) 298-0207. Follow on Twitter at sjcobrien and read his blog at blogs.mercurynews.com/obrien.
Time to settle net neutrality debate
By Chris O'Brien
Mercury News
12/16/2008
I had lulled myself into believing we were all but done with this whole debate about net neutrality, the notion that service providers must treat all traffic equally.
I mistakenly thought a ruling by the Federal Communications Commission back in September in a case involving Comcast had settled the issue, once and for all.
Silly me.
A story that appeared on The Wall Street Journal's Web site over the weekend and in Monday's paper claimed that Google was asking for preferential treatment from network providers that appeared at odds with its previous support for net neutrality. The article also said that President-elect Barack Obama was backtracking on the issue. And the story reported that Stanford Professor Lawrence Lessig, a leading advocate for a free and open Internet, had "softened" his stance.
The article prompted heated denials from all three.
But while the story may have been off target, it's clear from the subsequent dust-up that the issue of net neutrality is far from settled. The article and the subsequent back-and-forth of blog postings and press releases revealed that some fault lines remain, even among supporters.
So job one for the new FCC under President Obama should be to define and make permanent net neutrality. The FCC should establish clear guidelines for what constitutes acceptable network management. It's in the best interest of service providers, Internet companies and consumers to get this done and move on to other issues.
If net neutrality seems like so much Washington policy wonkishness, well, it's not. As Internet traffic explodes, telecommunications companies like Comcast and AT&T have argued that they're spending vast sums of money on new infrastructure that companies like Google are eating up with their search and video traffic. The service providers would like to charge some companies more to carry certain types of content, or to restrict the amount or type of content to end users to help manage that flow of traffic.
For instance, Comcast was accused of blocking file sharing and peer-to-peer network services for extended periods, uses that generate a heavy amount of traffic. Until the practice was brought to light, confused customers couldn't understand what was happening.
The problem is that this punishes consumers, who face either lower quality service, or higher costs. Telecom companies could essentially set up a toll service, and those costs will get passed on to consumers either directly, in the form of higher broadband costs, or indirectly by companies that are forced to pay more to have their content carried across the Internet.
This is bad for innovation and bad for our wallets.
A few months ago, the FCC ruled that Comcast had engaged in such a practice, a decision that net neutrality supporters hailed for finally creating a precedent. But clearly, confusion remains.
In the Journal story, for instance, Google is apparently asking ISPs for permission to co-locate its servers into their facilities so its content can be physically closer to end users, and thus be delivered more quickly. Companies such as Akamai of Cambridge, Mass., have made big businesses out of providing such services.
Richard Whitt, Google's Washington telecom and media counsel, wrote on the company's public policy blog: "Despite the hyperbolic tone and confused claims in Monday's Journal story, I want to be perfectly clear about one thing: Google remains strongly committed to the principle of net neutrality."
Clearly, some folks thought this ran afoul of net neutrality principles. I'd disagree, since such a service in effect keeps some types of traffic off the Internet and helps reduce congestion.
But that wasn't the only area of dispute. In a blog post, Lessig noted that he had always supported the concept that service providers should be allowed to provide different tiers of service, allowing some companies such as Google to pay more for access to faster networks. Lessig acknowledged that some members of the net neutrality community disagree. Lessig writes: "But the suggestion that the position is 'recent' is baseless. If I'm wrong, I've always been wrong."
With all due respect, he's wrong.
Among those who agree with me is Ben Scott, a policy director for the Free Press, a consumer advocacy group based in Washington. I chatted with Scott on Monday about the Journal story. Scott noted that while Lessig sat on the Free Press board, they had a healthy disagreement on this piece of the puzzle.
"If you create a super tier, and it's a million dollars a month, what happens is that the big guys go in and bid up the price, and it becomes a barrier to entry," Scott said.
Agreed. Clearing up the confusion over such unsettled issues will be good for everyone. Scott also noted that with Obama coming in, codifying net neutrality has become a question of "not if, but when."
The answer should be sooner, not later.
Contact Chris O'Brien at cobrien@mercurynews.com or (415) 298-0207. Follow on Twitter at sjcobrien and read his blog at blogs.mercurynews.com/obrien.
Thursday, November 6, 2008
Wall Street’s Great Heist of 2008
http://wsws.org/articles/2008/nov2008/pers-n01.shtml
Wall Street’s Great Heist of 2008
1st November 2008
The Wall Street Journal published a front-page article Friday reporting that the nine biggest US banks, which have received a combined $125 billion in taxpayer funds as part of the $700 billion bailout authored by Treasury Secretary Henry Paulson and passed by the Democratic Congress, owed their executives more than $40 billion for recent years’ compensation and pensions as of the end of 2007.
This means that nearly a third of the public funds given to these banks will ultimately be used to increase the private fortunes of a handful of multimillionaire Wall Street executives.
This revelation, the result of an analysis of the banks’ corporate reports by the American financial elite’s own chief organ, provides a stark exposure of the social interests that are being served by the government bailout. More generally, it provides an instructive insight into class relations in America.
It has already been widely reported that the banks are refusing to use their government windfalls to resume lending to other banks, businesses and consumers—the ostensible purpose of the cash injections—and are, instead, hoarding the money for the purpose of acquiring smaller and weaker banks. The so-called economic rescue plan is, in fact, a plan to effect a rapid consolidation of the US banking system, resulting in the domination of the economy by a few mega-banks, which will be free to set interest rates and lending standards as they see fit.
Far from opposing this development, Treasury Secretary Paulson and the Federal Reserve Board are encouraging it. They deliberately designed the bailout to place no restrictions on how the banks use their taxpayer money and then enacted changes in the tax code to give banks acquiring other banks a huge tax break. (See: “The ‘dirty little secret’ of the US bank bailout”)
As the Journal explains, the minimal restrictions on future executive compensation stipulated in the bailout bill do not affect deferred payments to executives accumulated over previous years. Since such deferred payment accounts are commonplace in the banking industry and are the preferred means by which top executives build up nest eggs in the hundreds of millions of dollars, those who are primarily responsible for the financial disaster and, in many cases, the ruin of their own companies, will emerge from the crisis richer than ever.
As the Journal puts it: “The deferred-compensation programs for executives are like 401(k) plans on steroids.” At some of the banks that have received government handouts, the newspaper notes, the total amounts previously incurred and owed to their executives exceed what they owe in pensions to their entire work forces.
The newspaper notes that at Goldman Sachs, formerly headed by Paulson, “the $11.8 billion obligation primarily for deferred executive compensation dwarfed the liability for its broad-based pension plan for all employees. That was just $399 million.”
Goldman received $10 billion of the $125 billion doled out to the biggest banks. JPMorgan Chase, which was granted $25 billion, owes its top officers $8.5 billion. Citigroup, another $25 billion recipient, owes $5 billion, and Morgan Stanley, which got $10 billion in taxpayer money, is in debt to its top executives to the tune of $10 to $12 billion.
A separate article in the same issue of the Journal amplifies this picture of parasitism and criminality. Headlined “Securities Firms Tackle Pay Issue,” it deals with discussions among the top executives of Wall Street firms such as Goldman Sachs, Morgan Stanley and Merrill Lynch over the advisability of paring down their traditional multimillion-dollar year-end bonuses in the face of growing public outrage.
The article notes that since the start of 2002, Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns have paid a total of $312 billion in compensation and benefits. It estimates that these firms have also paid out $187 billion in bonuses, for a grand total of $499 billion. Much of this staggering sum—more than five-and-a-half times the total income of the firms—has gone to the top echelon of executives.
The latter three firms have either disappeared or are in the process of being taken over. Bear Stearns was bought out by JPMorgan Chase last March in a deal subsidized by the government in the amount of $29 billion; Lehman Brothers filed for bankruptcy in September, and Merrill Lynch has agreed to sell itself to Bank of America in a government-brokered agreement.
While the bank executives were awarding themselves tens of millions in salaries and bonuses, their companies were being run into the ground. Since the start of 2007, for example, Merrill Lynch has had net losses of nearly $20 billion, or virtually all of the profits it made from 2003 to 2006. CEO John Thain took in $83 million in 2007. Now, thousands of Merrill employees are being laid off to cut $7 billion in costs as part of the takeover by Bank of America.
The events of the past two months have brought into sharper focus the naked power exercised by the American financial aristocracy over society and the state. All of the various schemes devised in response to the near-collapse of the financial system have had one thing in common: they proceed from the need to uphold the interests of the most powerful banks and the richest of the rich.
The combination of impotence, servility and duplicity of Congress and its Democratic leadership is being mercilessly exposed. Charles Schumer, the Democratic chairman of the Joint Economic Committee, said this week in regard to the banks’ refusal to use the government money to extend new loans, “There’s not much we can do other than jawbone.”
Christopher Dodd, the Democratic chairman of the Senate Banking Committee, blustered, “The intent here certainly wasn’t for healthy banks to buy healthy banks—it’s infuriating.”
Dodd, it would seem, is shocked to learn that the bailout plan he adamantly supported is being used to serve the narrow self-interest of the bankers. Even if one makes the implausible assumption that this veteran of Washington politics and favorite of Wall Street is not being disingenuous, that does not alter the fact of his utter prostration before the real power brokers in America.
Nothing is permissible that impinges on the basic prerogatives of the financial oligarchy, no matter the cost to the American people. On critical matters regarding the class interests of the ruling elite, the people have no say.
There is a ruling class in America. The administration, Congress, the courts—all of the agencies of the state—are, behind the trappings of democracy, instruments of its domination.
Barry Grey
Wall Street’s Great Heist of 2008
1st November 2008
The Wall Street Journal published a front-page article Friday reporting that the nine biggest US banks, which have received a combined $125 billion in taxpayer funds as part of the $700 billion bailout authored by Treasury Secretary Henry Paulson and passed by the Democratic Congress, owed their executives more than $40 billion for recent years’ compensation and pensions as of the end of 2007.
This means that nearly a third of the public funds given to these banks will ultimately be used to increase the private fortunes of a handful of multimillionaire Wall Street executives.
This revelation, the result of an analysis of the banks’ corporate reports by the American financial elite’s own chief organ, provides a stark exposure of the social interests that are being served by the government bailout. More generally, it provides an instructive insight into class relations in America.
It has already been widely reported that the banks are refusing to use their government windfalls to resume lending to other banks, businesses and consumers—the ostensible purpose of the cash injections—and are, instead, hoarding the money for the purpose of acquiring smaller and weaker banks. The so-called economic rescue plan is, in fact, a plan to effect a rapid consolidation of the US banking system, resulting in the domination of the economy by a few mega-banks, which will be free to set interest rates and lending standards as they see fit.
Far from opposing this development, Treasury Secretary Paulson and the Federal Reserve Board are encouraging it. They deliberately designed the bailout to place no restrictions on how the banks use their taxpayer money and then enacted changes in the tax code to give banks acquiring other banks a huge tax break. (See: “The ‘dirty little secret’ of the US bank bailout”)
As the Journal explains, the minimal restrictions on future executive compensation stipulated in the bailout bill do not affect deferred payments to executives accumulated over previous years. Since such deferred payment accounts are commonplace in the banking industry and are the preferred means by which top executives build up nest eggs in the hundreds of millions of dollars, those who are primarily responsible for the financial disaster and, in many cases, the ruin of their own companies, will emerge from the crisis richer than ever.
As the Journal puts it: “The deferred-compensation programs for executives are like 401(k) plans on steroids.” At some of the banks that have received government handouts, the newspaper notes, the total amounts previously incurred and owed to their executives exceed what they owe in pensions to their entire work forces.
The newspaper notes that at Goldman Sachs, formerly headed by Paulson, “the $11.8 billion obligation primarily for deferred executive compensation dwarfed the liability for its broad-based pension plan for all employees. That was just $399 million.”
Goldman received $10 billion of the $125 billion doled out to the biggest banks. JPMorgan Chase, which was granted $25 billion, owes its top officers $8.5 billion. Citigroup, another $25 billion recipient, owes $5 billion, and Morgan Stanley, which got $10 billion in taxpayer money, is in debt to its top executives to the tune of $10 to $12 billion.
A separate article in the same issue of the Journal amplifies this picture of parasitism and criminality. Headlined “Securities Firms Tackle Pay Issue,” it deals with discussions among the top executives of Wall Street firms such as Goldman Sachs, Morgan Stanley and Merrill Lynch over the advisability of paring down their traditional multimillion-dollar year-end bonuses in the face of growing public outrage.
The article notes that since the start of 2002, Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns have paid a total of $312 billion in compensation and benefits. It estimates that these firms have also paid out $187 billion in bonuses, for a grand total of $499 billion. Much of this staggering sum—more than five-and-a-half times the total income of the firms—has gone to the top echelon of executives.
The latter three firms have either disappeared or are in the process of being taken over. Bear Stearns was bought out by JPMorgan Chase last March in a deal subsidized by the government in the amount of $29 billion; Lehman Brothers filed for bankruptcy in September, and Merrill Lynch has agreed to sell itself to Bank of America in a government-brokered agreement.
While the bank executives were awarding themselves tens of millions in salaries and bonuses, their companies were being run into the ground. Since the start of 2007, for example, Merrill Lynch has had net losses of nearly $20 billion, or virtually all of the profits it made from 2003 to 2006. CEO John Thain took in $83 million in 2007. Now, thousands of Merrill employees are being laid off to cut $7 billion in costs as part of the takeover by Bank of America.
The events of the past two months have brought into sharper focus the naked power exercised by the American financial aristocracy over society and the state. All of the various schemes devised in response to the near-collapse of the financial system have had one thing in common: they proceed from the need to uphold the interests of the most powerful banks and the richest of the rich.
The combination of impotence, servility and duplicity of Congress and its Democratic leadership is being mercilessly exposed. Charles Schumer, the Democratic chairman of the Joint Economic Committee, said this week in regard to the banks’ refusal to use the government money to extend new loans, “There’s not much we can do other than jawbone.”
Christopher Dodd, the Democratic chairman of the Senate Banking Committee, blustered, “The intent here certainly wasn’t for healthy banks to buy healthy banks—it’s infuriating.”
Dodd, it would seem, is shocked to learn that the bailout plan he adamantly supported is being used to serve the narrow self-interest of the bankers. Even if one makes the implausible assumption that this veteran of Washington politics and favorite of Wall Street is not being disingenuous, that does not alter the fact of his utter prostration before the real power brokers in America.
Nothing is permissible that impinges on the basic prerogatives of the financial oligarchy, no matter the cost to the American people. On critical matters regarding the class interests of the ruling elite, the people have no say.
There is a ruling class in America. The administration, Congress, the courts—all of the agencies of the state—are, behind the trappings of democracy, instruments of its domination.
Barry Grey
Thursday, October 30, 2008
TOP 25 Daily Papers in New FAS-FAX
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003878040
TOP 25 Daily Papers in New FAS-FAX
By E&P Staff
Published: October 27, 2008
NEW YORK Here are the top 25 daily papers ranked for the six-month period ending September 2008 based on a Monday-through-Friday average, according to the new FAS-FAX from the Audit Bureau of Circulations released today. The percent change compares this period to the same period a year ago.
USA TODAY -- 2,293,310 -- 0.01%
THE WALL STREET JOURNAL -- 2,011,999 -- 0.01%
NEW YORK TIMES -- 1,000,665 -- (-3.58%)
LOS ANGELES TIMES -- 739,147 -- (-5.20%)
DAILY NEWS, NEW YORK -- 632,595 -- (-7.16%)
NEW YORK POST -- 625,421 -- (-6.25%)
THE WASHINGTON POST -- 622,714 -- (-1.94%)
CHICAGO TRIBUNE -- 516,032 -- (-7.75%)
HOUSTON CHRONICLE -- 448,271 -- (-11.66%)
NEWSDAY -- 377,517 -- (-2.58%)
THE ARIZONA REPUBLIC -- 361,333 -- (-5.51%)
SAN FRANCISCO CHRONICLE -- 339,430 -- (-7.07%)
THE DALLAS MORNING NEWS -- 338,933 -- (-9.28%)
BOSTON GLOBE -- 323,983 -- (-10.18%)
STAR TRIBUNE, MINNEAPOLIS -- 322,360 -- (-4.26%)
STAR-LEDGER, NEWARK, N.J. -- 316,280 -- (-10.40%)
CHICAGO SUN-TIMES -- 313,176 -- (-3.94%)
PLAIN DEALER, CLEVELAND -- 305,529 -- (-8.58%)
THE PHILADELPHIA INQUIRER -- 300,674 -- (-11.06%)
DETROIT FREE PRESS -- 298,243 -- (-6.84%)
THE OREGONIAN -- 283,321 -- (-8.45%)
THE ATLANTA JOURNAL-CONSTITUTION -- 274,999 -- (-13.62%)
SAN DIEGO UNION-TRIBUNE -- 269,819 -- (-3.00%)
ST. PETERSBURG (FLA.) TIMES -- 268,935 -- (-6.88%)
THE SACRAMENTO BEE -- 253,249 -- (-4.22%)
Wednesday, June 4, 2008
Barack Obama’s Unlikely Supporter
http://finance.yahoo.com/tech-ticker/article/20951/Barack-Obama%E2%80%99s-Unlikely-Supporter-Rupert-'Fox-News'-Murdoch
Barack Obama’s Unlikely Supporter: Rupert 'Fox News' Murdoch
Posted May 29, 2008
Sarah Lacy
Kara Swisher and Walt Mossberg had a long day of grilling executives at their All Things Digital Conference. But they saved Rupert Murdoch -- their Wall Street Journal overlord -- for last. The highlight? Murdoch’s not-quite-but-almost endorsement of Barack Obama for president.
The founder -- and defender -- of Fox News said he expected Obama to win in a landslide, citing widespread unhappiness with the current administration and his disenchantment with Republican contender John McCain. Murdoch added that after a long career in the Senate, McCain had been forced to compromise too much and doesn’t stand for much. Murdoch even nonchalantly owned up to influencing the New York Post to back Obama in the New York primary.
During the Q&A, I pressed Murdoch -- a new U.S. citizen -- on whether he would actually vote for Obama in November. He said he was leaning toward it, but would know in the next six months. When I asked if I could call him, he said yes, then joked I could probably just figure it out from reading the Post.
I also asked Murdoch about reports that he said he would buy the New York Times if he had the opportunity, just to shut it down. He said he was kidding, but likely Times staffers in the audience shuddered.
I caught up with Kara of the WSJ and All Things D once they got offstage to discuss her newfound admiration for the outspoken mogul -- not to mention Alaskan elk.
Barack Obama’s Unlikely Supporter: Rupert 'Fox News' Murdoch
Posted May 29, 2008
Sarah Lacy
Kara Swisher and Walt Mossberg had a long day of grilling executives at their All Things Digital Conference. But they saved Rupert Murdoch -- their Wall Street Journal overlord -- for last. The highlight? Murdoch’s not-quite-but-almost endorsement of Barack Obama for president.
The founder -- and defender -- of Fox News said he expected Obama to win in a landslide, citing widespread unhappiness with the current administration and his disenchantment with Republican contender John McCain. Murdoch added that after a long career in the Senate, McCain had been forced to compromise too much and doesn’t stand for much. Murdoch even nonchalantly owned up to influencing the New York Post to back Obama in the New York primary.
During the Q&A, I pressed Murdoch -- a new U.S. citizen -- on whether he would actually vote for Obama in November. He said he was leaning toward it, but would know in the next six months. When I asked if I could call him, he said yes, then joked I could probably just figure it out from reading the Post.
I also asked Murdoch about reports that he said he would buy the New York Times if he had the opportunity, just to shut it down. He said he was kidding, but likely Times staffers in the audience shuddered.
I caught up with Kara of the WSJ and All Things D once they got offstage to discuss her newfound admiration for the outspoken mogul -- not to mention Alaskan elk.
Friday, May 9, 2008
Average weekday circulation at US newspapers
http://news.yahoo.com/s/ap/20080428/ap_on_hi_te/newspapers_circulation_list
Average weekday circulation at the top 20 US newspapers
By The Associated Press
Mon Apr 28, 2008
Average paid weekday circulation of the nation's 20 largest newspapers for the six-month period ending in March, as reported Monday by the Audit Bureau of Circulations. The percentage changes are from the comparable year-ago period.
1. USA Today, 2,284,219, up 0.3 percent
2. The Wall Street Journal, 2,069,463, up 0.4 percent
3. The New York Times, 1,077,256, down 3.9 percent
4. Los Angeles Times, 773,884, down 5.1 percent
5. New York Daily News, 703,137, down 2.1 percent
6. New York Post, 702,488, down 3.1 percent
7. The Washington Post, 673,180, down 3.6 percent
8. Chicago Tribune, 541,663, down 4.4 percent
9. Houston Chronicle, 494,131, down 1.8 percent
10. The Arizona Republic, 413,332, down 4.7 percent
11. Newsday, Long Island, 379,613, down 4.7 percent
12. San Francisco Chronicle, 370,345, down 4.2 percent
13. Dallas Morning News, 368,313, down 10.6 percent
14. The Boston Globe, 350,605, down 8.3 percent
15. The Star-Ledger of Newark, N.J., 345,130, down 7.4 percent
16. The Philadelphia Inquirer, 334,150, down 5.1 percent
17. The Plain Dealer, Cleveland, 330,280, down 4.2 percent
18. The Atlanta Journal-Constitution, 326,907, down 8.5 percent
19. Star Tribune of Minneapolis-St. Paul, 321,984, down 6.7 percent
20. St. Petersburg Times, Florida, 316,007, down 2.1 percent
___
Source: Audit Bureau of Circulations
Average weekday circulation at the top 20 US newspapers
By The Associated Press
Mon Apr 28, 2008
Average paid weekday circulation of the nation's 20 largest newspapers for the six-month period ending in March, as reported Monday by the Audit Bureau of Circulations. The percentage changes are from the comparable year-ago period.
1. USA Today, 2,284,219, up 0.3 percent
2. The Wall Street Journal, 2,069,463, up 0.4 percent
3. The New York Times, 1,077,256, down 3.9 percent
4. Los Angeles Times, 773,884, down 5.1 percent
5. New York Daily News, 703,137, down 2.1 percent
6. New York Post, 702,488, down 3.1 percent
7. The Washington Post, 673,180, down 3.6 percent
8. Chicago Tribune, 541,663, down 4.4 percent
9. Houston Chronicle, 494,131, down 1.8 percent
10. The Arizona Republic, 413,332, down 4.7 percent
11. Newsday, Long Island, 379,613, down 4.7 percent
12. San Francisco Chronicle, 370,345, down 4.2 percent
13. Dallas Morning News, 368,313, down 10.6 percent
14. The Boston Globe, 350,605, down 8.3 percent
15. The Star-Ledger of Newark, N.J., 345,130, down 7.4 percent
16. The Philadelphia Inquirer, 334,150, down 5.1 percent
17. The Plain Dealer, Cleveland, 330,280, down 4.2 percent
18. The Atlanta Journal-Constitution, 326,907, down 8.5 percent
19. Star Tribune of Minneapolis-St. Paul, 321,984, down 6.7 percent
20. St. Petersburg Times, Florida, 316,007, down 2.1 percent
___
Source: Audit Bureau of Circulations
Friday, July 27, 2007
John Yoo -- then and now
http://www.salon.com/opinion/greenwald/?last_story=/opinion/greenwald/2007/07/24/yoo/
Glenn Greenwald
Tuesday July 24, 2007
John Yoo -- then and now
The Wall St. Journal Editorial Page wanted someone to defend George Bush's serial assertions of "Executive Privilege" to block investigations into his wrongdoing, and it turned, of course, to ex-Bush-DOJ-lawyer John Yoo, who is not only the most authoritarian but also the most partisan and intellectually dishonest lawyer in the country. Yoo is not only willing -- but intensely eager -- to defend literally anything George W. Bush does or would want to do, including -- literally -- torturing people and crushing the testicles of children if the Leader decreed that doing so was necessary to fight Terrorists. Yoo, of course, is a principal author of most of the radical executive power theories which have eroded our constitutional framework over the last six years.
In defending the President, Yoo's Op-Ed yesterday touts the grave importance of Executive Privilege and makes all the claims one would expect. He stresses the "president's right to keep internal executive discussions confidential"; proclaims that "without secrecy, the government can't function"; compares Bush's assertions to George Washington's; and concludes that by asserting Executive Privilege (nowhere mentioned in the Constitution), Bush "has the Constitution on his side."
But this isn't the first Op-Ed Yoo has written on the topic of Executive Privilege for the Wall St. Journal. Back in 1998, when Bill Clinton was asserting the same privilege to resist Congressional demands that his closest aides testify about the President's deliberations in responding to the various Lewinsky investigations, Yoo became one of the leading spokespeople denouncing the assertion of this privilege.
On March 2, 1998, Yoo wrote an Op-Ed (sub. req'd) for the WSJ Editorial Page (which back then also opposed the privilege only now to depict it as the anchor of a Free Government). In denouncing Clinton's executive privilege assertions, Yoo began his op-ed this way:
James Madison wrote that a "popular Government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy, or perhaps both."
That is the same Yoo who, under the Bush presidency, has become a virtually absolute defender of presidential secrecy. Yoo continued:
Reports that President Clinton may invoke executive privilege to block the investigation into the Monica Lewinsky affair have elements of both. . . .
Mindful of the extraordinary step of keeping information secret in a democratic government, presidents since Nixon have been wary of resorting to executive privilege. Presidents Ford, Carter and Bush formally raised the privilege only once each, and President Reagan three times in two full terms. In less than 1 1/2 terms, Mr. Clinton has claimed executive privilege at least six times, four times before Congress and twice in court. Like the boy crying wolf, Mr. Clinton's regular use of the privilege threatens to dilute its effectiveness for future presidents on matters of true national importance . . . .
A decision to invoke executive privilege in this case would be yet another example of the Clinton administration's failure to understand the distinction between the office of the president and the person who happens to be the president. In democracies, we distinguish between a public office and the person who holds that office; people for whom the office and the person are one and the same are called kings.
That is from the individual who, from his perch at the Bush DOJ, has done as much as any other single individual to wage war on our constitutional order and drag this country as close to monarchical rule as it has been at any other point in its history. And while Yoo defends Bush's newly announced position that he has the power to block U.S. attorneys from prosecuting his subordinates, Yoo complained in 1998 that "Clinton is effectively the first President to formally assert a complete freedom from the criminal justice system solely because he is President."
Ironically, in his WSJ Op-Ed yesterday, Yoo -- while attempting to distinguish Clinton's allegedly invalid assertions from Bush's (naturally) valid ones -- accuses those who defended Clinton back then but oppose Bush now of "blowing partisan smoke." Yet Yoo never once mentions his own complete reversal in positions.
This is not the first time that Yoo has spouted fundamentally different "legal" views based on his political agenda. As Anonymous Liberal first noted last year, Yoo -- in 2003, before it was known that Bush was eavesdropping outside of FISA -- wrote an Op-Ed praising FISA as a constitutional and important safeguard which gave the President the eavesdropping tools he needed to fight the Terrorists while at the same time protecting our privacy.
But once it was revealed in 2005 that the President was violating FISA, Yoo suddenly reversed course, claiming that FISA was an unconstitutional infringement on the President's power and that Bush's violations of it were necessary to protect us all from being vaporized at the hands of the Terrorists. That behavior is quite similar to the right-wing fanatics who spent the 1990s vocally objecting to the "secret FISA court," whereby Bill Clinton could eavesdrop on us by getting warrants from a secret court (!), only to then defend George Bush's eavesdropping on us with no warrants or judicial oversight of any kind.
Like every good authoritarian, Yoo's only real principle, his only True Conviction, is that the Leader is Good and Right. Everything else he says is but a tool used to achieve that end, and as is true for all authoritarians -- indeed, it is one of their defining mental attributes -- there is no bar against holding fundamentally opposite views simultaneously as long as each is used to strengthen the cause and defend the Leader. John Yoo is the embodiment of the authoritarian mind.
UPDATE: Several months after he boldly spoke out against Executive Privilege during the Lewinsky investigation, John Yoo returned to the Wall St. Journal Op-Ed page, on July 20, 1998, to argue that impeachment of Bill Clinton for defying a Subpoena issued by Ken Starr -- something which had just been advocated by Orrin Hatch -- "would stand on firm constitutional footing."
Yoo specifically (and solemnly) warned that if Clinton decided to defy Starr's Subpoena, Clinton "would be going beyond even Richard Nixon in abusing the presidency." Yoo then praised Nixon because, unlike Clinton, Nixon "chose not to press claims of presidential power to such extremes." Because if there is one thing which the principled, constitutional "scholar" John Yoo cannot abide, it is pressing claims of presidential power to the extreme.
Glenn Greenwald
Tuesday July 24, 2007
John Yoo -- then and now
The Wall St. Journal Editorial Page wanted someone to defend George Bush's serial assertions of "Executive Privilege" to block investigations into his wrongdoing, and it turned, of course, to ex-Bush-DOJ-lawyer John Yoo, who is not only the most authoritarian but also the most partisan and intellectually dishonest lawyer in the country. Yoo is not only willing -- but intensely eager -- to defend literally anything George W. Bush does or would want to do, including -- literally -- torturing people and crushing the testicles of children if the Leader decreed that doing so was necessary to fight Terrorists. Yoo, of course, is a principal author of most of the radical executive power theories which have eroded our constitutional framework over the last six years.
In defending the President, Yoo's Op-Ed yesterday touts the grave importance of Executive Privilege and makes all the claims one would expect. He stresses the "president's right to keep internal executive discussions confidential"; proclaims that "without secrecy, the government can't function"; compares Bush's assertions to George Washington's; and concludes that by asserting Executive Privilege (nowhere mentioned in the Constitution), Bush "has the Constitution on his side."
But this isn't the first Op-Ed Yoo has written on the topic of Executive Privilege for the Wall St. Journal. Back in 1998, when Bill Clinton was asserting the same privilege to resist Congressional demands that his closest aides testify about the President's deliberations in responding to the various Lewinsky investigations, Yoo became one of the leading spokespeople denouncing the assertion of this privilege.
On March 2, 1998, Yoo wrote an Op-Ed (sub. req'd) for the WSJ Editorial Page (which back then also opposed the privilege only now to depict it as the anchor of a Free Government). In denouncing Clinton's executive privilege assertions, Yoo began his op-ed this way:
James Madison wrote that a "popular Government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy, or perhaps both."
That is the same Yoo who, under the Bush presidency, has become a virtually absolute defender of presidential secrecy. Yoo continued:
Reports that President Clinton may invoke executive privilege to block the investigation into the Monica Lewinsky affair have elements of both. . . .
Mindful of the extraordinary step of keeping information secret in a democratic government, presidents since Nixon have been wary of resorting to executive privilege. Presidents Ford, Carter and Bush formally raised the privilege only once each, and President Reagan three times in two full terms. In less than 1 1/2 terms, Mr. Clinton has claimed executive privilege at least six times, four times before Congress and twice in court. Like the boy crying wolf, Mr. Clinton's regular use of the privilege threatens to dilute its effectiveness for future presidents on matters of true national importance . . . .
A decision to invoke executive privilege in this case would be yet another example of the Clinton administration's failure to understand the distinction between the office of the president and the person who happens to be the president. In democracies, we distinguish between a public office and the person who holds that office; people for whom the office and the person are one and the same are called kings.
That is from the individual who, from his perch at the Bush DOJ, has done as much as any other single individual to wage war on our constitutional order and drag this country as close to monarchical rule as it has been at any other point in its history. And while Yoo defends Bush's newly announced position that he has the power to block U.S. attorneys from prosecuting his subordinates, Yoo complained in 1998 that "Clinton is effectively the first President to formally assert a complete freedom from the criminal justice system solely because he is President."
Ironically, in his WSJ Op-Ed yesterday, Yoo -- while attempting to distinguish Clinton's allegedly invalid assertions from Bush's (naturally) valid ones -- accuses those who defended Clinton back then but oppose Bush now of "blowing partisan smoke." Yet Yoo never once mentions his own complete reversal in positions.
This is not the first time that Yoo has spouted fundamentally different "legal" views based on his political agenda. As Anonymous Liberal first noted last year, Yoo -- in 2003, before it was known that Bush was eavesdropping outside of FISA -- wrote an Op-Ed praising FISA as a constitutional and important safeguard which gave the President the eavesdropping tools he needed to fight the Terrorists while at the same time protecting our privacy.
But once it was revealed in 2005 that the President was violating FISA, Yoo suddenly reversed course, claiming that FISA was an unconstitutional infringement on the President's power and that Bush's violations of it were necessary to protect us all from being vaporized at the hands of the Terrorists. That behavior is quite similar to the right-wing fanatics who spent the 1990s vocally objecting to the "secret FISA court," whereby Bill Clinton could eavesdrop on us by getting warrants from a secret court (!), only to then defend George Bush's eavesdropping on us with no warrants or judicial oversight of any kind.
Like every good authoritarian, Yoo's only real principle, his only True Conviction, is that the Leader is Good and Right. Everything else he says is but a tool used to achieve that end, and as is true for all authoritarians -- indeed, it is one of their defining mental attributes -- there is no bar against holding fundamentally opposite views simultaneously as long as each is used to strengthen the cause and defend the Leader. John Yoo is the embodiment of the authoritarian mind.
UPDATE: Several months after he boldly spoke out against Executive Privilege during the Lewinsky investigation, John Yoo returned to the Wall St. Journal Op-Ed page, on July 20, 1998, to argue that impeachment of Bill Clinton for defying a Subpoena issued by Ken Starr -- something which had just been advocated by Orrin Hatch -- "would stand on firm constitutional footing."
Yoo specifically (and solemnly) warned that if Clinton decided to defy Starr's Subpoena, Clinton "would be going beyond even Richard Nixon in abusing the presidency." Yoo then praised Nixon because, unlike Clinton, Nixon "chose not to press claims of presidential power to such extremes." Because if there is one thing which the principled, constitutional "scholar" John Yoo cannot abide, it is pressing claims of presidential power to the extreme.
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