They Won’t Even Create Jobs in the Military-Industrial Complex Anymore

You know how I have argued that our country does have an industrial plan, one that is commonly called the Military-Industrial Complex? The government dumps seemingly unlimited amount of money into selected projects. Defense companies make sure to spread the jobs created by defense contracts around, so members of Congress support those contracts in bipartisan fashion. And then we export things like jets–one of the few things we export anymore.

Only, if we allow defense contractors to use prison labor, then the whole scheme sort of breaks down.

This spring, the United Arab Emirates is expected to close a deal for $7 billion dollars’ worth of American arms. Nearly half of the cash will be spent on Patriot missiles, which cost as much as $5.9 million apiece.

But what makes those eye-popping sums even more shocking is that some of the workers manufacturing parts for those Patriot missiles are prisoners, earning as little as 23 cents an hour. (Credit Justin Rohrlich with the catch.)

The work is done by Unicor,  previously known as Federal Prison Industries. It’s a government-owned corporation, established during the Depression, that employs about 20,000 inmates in 70 prisons to make everything from clothing to office furniture to solar panels to military electronics.

One of the company’s high-tech specialties: Patriot missile parts. “UNICOR/FPI supplies numerous electronic components and services for guided missiles, including the Patriot Advanced Capability (PAC-3) missile,” Unicor’s website explains. “We assemble and distribute the Intermediate Frequency Processor (IFP) for the PAC-3s seeker. The IFP receives and filters radio-frequency signals that guide the missile toward its target.”

The missiles are then marketed worldwide — sometimes by Washington’s top officials.

Funny. Obama told me that government can’t create jobs.

I guess that’s because they’re too busy undercutting private manufacturers with prison labor.

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A Modest Proposal: Indefinitely Detain the Banksters

Obama has declared that he has the authority under the 2001 AUMF to indefinitely hold anyone “if it is necessary to protect against a significant threat to the security of the United States.”

He doesn’t say that person has to be a terrorist, much less part of al Qaeda. He doesn’t say that person has to have any tie to the enemy as defined by the 2001 AUMF, that is, “those nations, organizations, or persons [the President] determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons.” He doesn’t even say that person has to have been rounded up on a battle field, however you define that.

If detaining someone indefinitely is “necessary to protect against a significant threat to the security of the United States,” Obama says, he can do it.

So I say, fine! Let’s indefinitely detain the banksters that crashed our entire economy. They fairly routinely hold the workers and taxpayers of this country hostage these days, just like terrorists do. And when you account for the number of people they’ve left homeless and hungry, the damage they have done may well surpass that of the attack on 9/11. Clearly, the banksters are a “significant threat to the security of the United States”–they’re the biggest threat to the security of the US. And the genius of Obama’s EO is it doesn’t even require the detainees, themselves, represent a threat. Rather, if their detention is necessitated by the security threat, we can detain them. We don’t have to trouble with sorting the good banksters, like Jamie Dimon, from the bad banksters, like Dick Fuld. We can detain them all, just to make sure we don’t accidentally miss any. (Sorry Bill, we can’t take any risks, so this includes you too!)

Simple as that. Our biggest security threat solved!

Mind you, Obama’s Executive Order laying out this amazing limitless standard specifies that the EO only applies to “those detainees held at Guantanamo on the date of this order.”

But we all know that EOs don’t have to say what they mean. We know OLC ruled back in 2001 that, “There is no constitutional requirement for a President to issue a new executive order whenever he wishes to depart from the terms of a previous executive order. Rather than violate an executive order, the President has instead modified or waived it.” We know Bush did just that–change the terms of an EO without changing the text, so none of us had warning we were being spied on. But when national security is threatened–our government has decided–it’s okay to change EOs with no warning.

So all Obama has to do to authorize the indefinite detention of the banksters that represent the biggest threat to our security right now is simply pixie dust his EO, and voila! He can round up the banksters, put them on some tropical island somewhere (I suspect they’ll feel right at home in the Cayman Islands).

It’s as easy as that, vanquishing a security threat, arbitrarily detaining people in the name of security forever.

Right?

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John McCain and iPhone’s Sick Chinese Workers

The buzz today focuses on John McCain’s latest gaff: in his weekly Sunday show appearance with Christiane Amanpour yesterday, he claimed that iPhones and iPads are made in the US.

Host Christiane Amanpour spoke about her network’s project to empty a house of goods that are not made overseas.

McCain responded:

“I think it’s obviously a recognition of the reality and the trends, that cheaper, lower-cost labor products will usually prevail over products made in higher wage and income countries. I would also point out that if you emptied that house–if you had left a computer there or an iPad or an iPhone–those are built in the United States of America.”

So everybody’s been having a lot of fun laughing at the ignorance of the guy with the 10 houses again.

But in spite of the fact that, in an earlier segment, the Steelworkers’ Leo Gerard described safety and environmental problems with goods imported from China, I’ve seen no mention of the fact that the workers at one Chinese iPhone plant were all getting sick because an iPhone manufacturer, Wintek, switched to n-hexane rather than alcohol to make the manufacturing process seconds faster.

Last summer, workers began fainting on the job and dozens made their way to the hospital. The company started testing workers and found mass exposure: Wintek says 62 employees had confirmed nerve damage from inhalation exposure to n-hexane, which the company admits it used illegally for nearly a year in the production process. The illness, a form of peripheral neuropathy, came on so slowly that most didn’t know they were ill until it was serious. Workers say others were sickened, but left the factory without treatment.

Their troubles began in October 2008, when Wintek’s Suzhou factory introduced n-hexane to clean touch screens in the final stages of production. According to the local government, the company lacked necessary permits to handle the toxin, which dries more quickly than alcohol, shaving seconds from production time and speeding up the line.

[snip]

Each worker was required to clean 1,000 screens per day, dipping cotton cloths into a tray of hexane, swabbing the glass screens carefully and moving on, according to workers interviewed by GlobalPost. Over the course of a 12-hour shift, workers said one person would go through six trays of n-hexane, protected only by latex gloves and simple cotton masks — nothing close to the equipment that Chinese safety standards require for handling the chemical.

[snip]

So what do these workers, who earned about $220 a month and lost nearly a year of their lives to illness, think of customers who buy the products that made them sick?

“I haven’t really thought about it before,” says the woman in the pink pajamas, pausing to consider.

Then, she decides, and says in a steady voice: “It would be good for the people who use those phones so happily to consider the sacrifice we made.” [my emphasis]

This is not just about what an out-of-touch fool McCain is, or the importance of making something here in the US again. There are also real consequences for the people that make it easier for Apple to get rich off of the latest gadgets by manufacturing in China.

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American Girl, Made in China, The Reality Show

This is a really cool project. ABC’s World News has a series this week on whether or not a typical upper middle class family can survive without consumer goods made in America. It includes:

  • Footage of a bunch of Americans claiming to buy America
  • ABC’s news team going through the house of one family–the Usrys–and taking out everything not made in America (the footage brings up the flags of the countries where their stuff was made
  • Replacements for those goods that were made in the US

Plus there are stats about how much an impact on jobs it would have if people just made an effort to buy American. And a separate website to find–or submit–items made in America.

And thus far, at least, the whole thing comes off like a reality show, down to the little girl sheepishly admitting her American Girl doll was made in China.

It’s the kind of thing you might find in some lefty magazine. But because it’s ABC, a subsidiary of the Disney Corporation (which makes a lot of their loot overseas), it hits the appeal to patriotism (and shame) pitch perfect.

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Bankster-Coddling Party Suffers “Electoral Meltown”

Everyone knew that Fianna Fáil was going to lose Friday’s election in Ireland. But the results (still coming in because the Irish hand count their paper ballots and have an instant runoff voting system) are pretty stunning. Here’s how Fianna Fáil did in Laois-Offaly (both Mr. EW’s home district and that of outgoing Taoiseach Brian Cowen) in 2007 (these graphics are from the Irish Times):

And here’s how they did Friday:

And Laois-Offaly is going to be one of Fianna Fáil’s stronger districts (Cowen’s brother, Barry, will likely take one of the five seats). In Dublin, FF went from holding 13 seats in parliament to just one, that of the former Finance Minister Brian Lenihan. And the Green Party, which had been in coalition with FF, will lose all 6 of the seats it held.

Now, it’s not clear that Fine Gael–which will rule with Labor–will be all that much better than FF with regards to coddling banksters. Rising Taoiseach Enda Kenny has promised to renegotiate the bailout, but unless and until he threatens to default, Ireland will still be taking money from retirees to pay off the banksters.

But what will be interesting is the presence of more further left members of Parliament. And Gerry Adams, Sinn Féin’s President, will have a seat in the Republic’s parliament for the first time. He’s been getting a lot of press for his populist criticism of the bailout:

Sinn Féin leader Gerry Adams says a good government requires a good opposition, vowing his party would oppose the “swingeing, anti-citizen, economically-illiterate measures” being proposed by the establishment parties.

So it’s not clear whether this “electoral meltdown” will have an effect on the banks. But it sure is interesting to see how political accountability works in a system with more than two parties.

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The John Walsh-Liz Warren-Investors & Homeowners Cage Fight

I noted the other day that the Administration was floating a ridiculously small $20 billion Get out of Jail Free plan to excuse the banksters fort their foreclosure fraud. Apparently, the banksters think that $20 billion is just a “crazy figure” that will never be imposed. The actual homeowners affected by the banksters’ crime, however, believe it is “chump change.” From a press release from the CrimeShouldn’tPay effort:

“We need more than just another slap on the wrist.  Home prices have plummeted by $9 trillion over the last four years because of the massive fraud that the big banks perpetrated on the American people. $20 billion is chump change, especially when you divide that amongst the nation’s 14 largest banks,” says Gina Gates from San Jose, CA who lost her home fraudulently to JP Morgan Chase.  “This cannot be more ‘business as usual’ for the nation’s biggest banks – break the law, make hundreds of billions of dollars doing so, and then pay a small percentage of their bounty in fines while leaving everyone else suffering the consequence of their actions. No, this time, the punishment must fit the crime. The big banks must pay commensurate to the pain and suffering they’ve caused so many people.”

But the truth behind the figure is–as Shahien Nasiripour reports–actually that Elizabeth Warren and Office of the Comptroller of the Currency, headed by John Walsh, are fighting over what an appropriate remedy might be. Warren, along with the FDIC and FHA, believes a still-too-paltry $25-$30 billion penalty is in order.

Officials at the Federal Deposit Insurance Corporation, the Federal Housing Administration, and those now creating a fledgling consumer financial protection bureau are inclined to seek as much as $30 billion in fines, making those funds available to provide relief to borrowers at risk of losing their homes.

[snip]

Elizabeth Warren of the Consumer Financial Protection Bureau has floated a figure of about $25 billion for a unified settlement, according to people familiar with the situation.

But OCC–which has a long history of protecting banksters from actual regulation–wants just a $5 billion penalty with no principal reductions.

The Office of the Comptroller of the Currency, which oversees the nation’s largest banks, intends to pursue its own settlement with lenders, a track distinct from the talks conducted by its federal counterparts, the sources said. The OCC, eager to protect major banks from expensive fines, is seeking to limit the terms to $5 billion, while also ensuring that lenders retain wide latitude in how to administer relief for homeowners, the sources said.

[snip]

Housing experts assert that mortgage companies have been largely unwilling to shrink principal balances on first mortgages, because they understand that that this would trigger huge losses on the second mortgages they own themselves.

The OCC is opposing a settlement that would entail large-scale write-downs of mortgages precisely because of concerns about this very scenario, the sources said.

Problem is, the OCC, as the banskters’ primary regulator enabler, has control of the key documents demonstrating the banksters’ fraud.

Read more

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Vikram Pandit’s Material Mistatements

It appears that Vikram Pandit’s failure to disclose material problems with Citibank’s valuation of its shitpile is another of the crimes we’re supposed to look forward and ignore. Jonathan Weil looks at how one of the documents disclosed in the FCIC dump–a February 14, 2008 OCC report finding that Citibank’s models for measuring the value of its shitpile were crap.

The gist of the regulator’s findings: Citigroup’s internal controls were a mess. So were its valuation methods for subprime mortgage bonds, which had spawned record losses at the bank. Among other things, “weaknesses were noted with model documentation, validation and control group oversight,” the letter said. The main valuation model Citigroup was using “is not in a controlled environment.” In other words, the model wasn’t reliable.

That report was addressed to Vikram Pandit.

But eight days later, in the annual report that Pandit certified himself, Citibank made no mention of its shitpile valuation problems.

Eight days later, on Feb. 22, Citigroup filed its annual report to shareholders, in which it said “management believes that, as of Dec. 31, 2007, the company’s internal control over financial reporting is effective.” Pandit certified the report personally, including the part about Citigroup’s internal controls. So did Citigroup’s chief financial officer at the time, Gary Crittenden.The annual report also included a Feb. 22 letter from KPMG LLP, Citigroup’s outside auditor, vouching for the effectiveness of the company’s financial-reporting controls. Nowhere did Citigroup or KPMG mention any of the problems cited by the OCC. KPMG, which earned $88.1 million in fees from Citigroup for 2007, should have been aware of them, too. The lead partner on KPMG’s Citigroup audit, William O’Mara, was listed on the “cc” line of the OCC’s Feb. 14 letter.

Now, if DOJ actually want to jail a high level criminal, this is the kind of easy thing they ought to look into. And perhaps Pandit’s failure to disclose Citi’s problems modeling shitpile is one of the things FCIC referred to DOJ.

But I doubt it. Pandit’s a former MOTU, after all, and MOTUs simply shouldn’t be bothered with minor things like misleading stockholders.

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HAMP II: The $20 Billion Get Out of Jail Free Card

A day after the Case-Shiller Index confirmed that the housing market is in a double dip, the Powers that Be (a subsidiary of the Masters of the Universe, currently CEOed by one Barack Obama) have floated their proposal for a mortgage fraud settlement.

The settlement terms remain fluid, people familiar with the matter cautioned, and haven’t been presented to banks. Exact dollar amounts haven’t been agreed on by U.S. regulators and state attorneys general.

For the low, low price of $20 billion, the Administration proposes, banks could be excused for the abundant mortgage fraud they’ve committed.

Terms of the administration’s proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth, people familiar with the matter said. The cost of those writedowns won’t be borne by investors who purchased mortgage-backed securities, these people said.

But basically, it sounds like HAMP II–a “plan” that still lets banks decide how to implement that “plan”–with the sole improvement on HAMP I that it requires 2nd Liens to be “reduced” (but not eliminated) in the process of modifying the first liens.

The deal wouldn’t create any new government programs to reduce principal. Instead, it would allow banks to devise their own modifications or use existing government programs, people familiar with the matter said. Banks would also have to reduce second-lien mortgages when first mortgages are modified.

In short, it includes bailout within bailout (since 2nd liens should be eliminated).

Over a quarter of mortgage holders are underwater on their homes. A big chunk of these people were sold houses at artificially inflated prices, courtesy of the bank and captured appraisers. Every single one of them is owed compensation for being cheated at the hands of the banks.

But $20 billion won’t even begin to compensate those victims of fraudulent appraisals for the fraud committed on them.

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Angelo Mozilo Will Not Be Charged

In news that will not surprise you in the least–but will put you off your breakfast–Countrywide CEO Angelo Mozilo will not be charged.

Federal prosecutors have shelved a criminal investigation of Angelo R. Mozilo after determining that his actions in the mortgage meltdown — which led to $67.5-million settlement against him — did not amount to criminal wrongdoing.

Perhaps the most insightful comment in LAT’s coverage of Mozilo’s escape of any liability is this:

Columbia University law professor John Coffee said mortgage cases like Mozilo’s were muddied by the numerous parties involved, unlike Enron and other “cook the books” cases in which executives were convicted.

Countrywide’s model was to make or buy mortgages only to sell them off immediately to Fannie Mae or Wall Street as fodder for securities.

Given that model, Coffee said, blame could be assigned to an entire chain of players: mortgage brokers who falsified applications; investment bankers who concocted complex and “opaque” mortgage bonds; rating firms that provided high ratings on the bonds but said they were lied to; and institutional investors that relied on dubious ratings because the securities carried above-market interest while promising to be risk-free.

“All share responsibility, but none are culpable enough by themselves to compare with [Enron’s] Ken Lay, Jeff Skilling or the WorldCom CEO,” Coffee said.

I guess we could write a new corollary to the line, “If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” If you commit massive amounts of fraud by yourself, even George Bush’s DOJ will indict you; but if everyone in an industry conspires to commit the same kind of fraud, Barack Obama’s DOJ won’t charge anyone.

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Hunton & Williams Left Fingerprints at SEIU

Hunton & Williams, the law firm that solicited HBGary and two other security firms to spy on Chamber of Commerce opponents, has remained silent so far about its efforts.

But it hasn’t covered its tracks. The SEIU reports that people from Hunton & Williams spent 20 hours last November–at the time when Themis was pitching H&W to use a JSOC approach to go after Chamber opponents–on the SEIU sites.

Server logs and leaked emails reveal that employees at Hunton & Williams, the principal law firm of the U.S. Chamber of Commerce, spent 20 hours on SEIU websites last November while partners from the firm were working with private security firms on an illegal “dirty tricks” campaign aimed at undermining the credibility of the Chamber’s political opponents, including the Service Employees International Union (SEIU).

And of course SEIU is able to see precisely what H&W was looking at in that period: top H&W page views in 2010 include SEIU’s page on the Chamber and on big banks. People from H&W searched on individuals at SEIU as well as on SEIU’s organizing of protests outside of BoA’s General Counsel. They even searched on “hourly pay for SEIU organizers.” (Whatever that is, it’s less than Themis was going to charge for its paid trolls.)

No wonder H&W has been so quiet about their role in this campaign.

Update: This post has been edited for accuracy.

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