The direct warnings to Mr. Bush about the possibility of a Qaeda attack began in the spring of 2001. By May 1, the Central Intelligence Agency told the White House of a report that “a group presently in the United States” was planning a terrorist operation. Weeks later, on June 22, the daily brief reported that Qaeda strikes could be “imminent,” although intelligence suggested the time frame was flexible.

But some in the administration considered the warning to be just bluster. An intelligence official and a member of the Bush administration both told me in interviews that the neoconservative leaders who had recently assumed power at the Pentagon were warning the White House that the C.I.A. had been fooled; according to this theory, Bin Laden was merely pretending to be planning an attack to distract the administration from Saddam Hussein, whom the neoconservatives saw as a greater threat. Intelligence officials, these sources said, protested that the idea of Bin Laden, an Islamic fundamentalist, conspiring with Mr. Hussein, an Iraqi secularist, was ridiculous, but the neoconservatives’ suspicions were nevertheless carrying the day.

In response, the C.I.A. prepared an analysis that all but pleaded with the White House to accept that the danger from Bin Laden was real.

“The U.S. is not the target of a disinformation campaign by Usama Bin Laden,” the daily brief of June 29 read, using the government’s transliteration of Bin Laden’s first name. Going on for more than a page, the document recited much of the evidence, including an interview that month with a Middle Eastern journalist in which Bin Laden aides warned of a coming attack, as well as competitive pressures that the terrorist leader was feeling, given the number of Islamists being recruited for the separatist Russian region of Chechnya.

And the C.I.A. repeated the warnings in the briefs that followed. Operatives connected to Bin Laden, one reported on June 29, expected the planned near-term attacks to have “dramatic consequences,” including major casualties. On July 1, the brief stated that the operation had been delayed, but “will occur soon.” Some of the briefs again reminded Mr. Bush that the attack timing was flexible, and that, despite any perceived delay, the planned assault was on track.

Yet, the White House failed to take significant action. Officials at the Counterterrorism Center of the C.I.A. grew apoplectic. On July 9, at a meeting of the counterterrorism group, one official suggested that the staff put in for a transfer so that somebody else would be responsible when the attack took place, two people who were there told me in interviews. The suggestion was batted down, they said, because there would be no time to train anyone else.

That same day in Chechnya, according to intelligence I reviewed, Ibn Al-Khattab, an extremist who was known for his brutality and his links to Al Qaeda, told his followers that there would soon be very big news. Within 48 hours, an intelligence official told me, that information was conveyed to the White House, providing more data supporting the C.I.A.’s warnings. Still, the alarm bells didn’t sound.

On July 24, Mr. Bush was notified that the attack was still being readied, but that it had been postponed, perhaps by a few months. But the president did not feel the briefings on potential attacks were sufficient, one intelligence official told me, and instead asked for a broader analysis on Al Qaeda, its aspirations and its history. In response, the C.I.A. set to work on the Aug. 6 brief.

Labels: 9/11, George W. Bush, incompetence, LIHOP

Hewlett-Packard Co named former eBay Inc Chief Executive Meg Whitman its president and CEO, replacing the harshly criticized Leo Apotheker in a bid to restore investor confidence in the iconic Silicon Valley company.

The decision was made without a formal CEO search and piled renewed criticism on the board, which investors have blamed -- at least in part -- for the storied company's recent missteps.

Chairman Ray Lane, who becomes Executive Chairman with a mandate to help Whitman run a sprawling $120 billion empire with over 300,000 employees, tried to assure disillusioned investors by saying HP is making a fresh start with a new CEO and -- crucially -- a virtually revamped board of directors.

Lane vowed that the days of board dysfunction -- the wire-tapping scandal, the firing of Mark Hurd after a sexual harassment probe, and the hiring of Apotheker -- were over.

The board works well together, he said.

"It's amazing how they challenge the management team, challenge each other," Lane said in an interview. "They are smart, they bring great insight to the table and I think we make good decisions."

Analysts had speculated that Apotheker's departure might presage a backtracking on major decisions taken during his 11-month term and announced -- back to back in haphazard fashion -- on August 18. But HP reassured investors on a conference call the board will not reverse course.

"I don't think we ought to be going back in history. This board did not select Leo. This is not the board that was around for pretexting," Lane said, referring to the scandal in which HP hired investigators who impersonated its board members and journalists to obtain their phone records.

"This is not the board that fired Mark Hurd," he noted. "We are embarrassed about the communications of decisions that could have been done much better. But we carefully considered the decisions made. It is our operating execution that needs to improve."

Whitman, an Internet retail expert with a mixed track record, is not an obvious choice to revive HP, analysts said. The failed California gubernatorial candidate transformed eBay from a few dozen employees in 1998 into a global Internet retail powerhouse, but the final years of her reign were marked by sputtering growth, intensifying Wall Street criticism and a string of unwise acquisitions, including of Skype.

She has been an HP director about eight months. While her elevation surprised many with its seeming hastiness -- for the second time, internal candidates such as enterprise chief David Donatelli were passed over -- Apotheker's ejection had been a matter of time.

He becomes the third straight HP CEO shown the door.

Labels: corporate assholes, Cronyism, incompetence, Teh Stoopid

In January 2001, with the budget balanced and clear sailing ahead, the Congressional Budget Office forecast ever-larger annual surpluses indefinitely. The outlook was so rosy, the CBO said, that Washington would have enough money by the end of the decade to pay off everything it owed.

Voices of caution were swept aside in the rush to take advantage of the apparent bounty. Political leaders chose to cut taxes, jack up spending and, for the first time in U.S. history, wage two wars solely with borrowed funds. “In the end, the floodgates opened,” said former senator Pete Domenici (R-N.M.), who chaired the Senate Budget Committee when the first tax-cut bill hit Capitol Hill in early 2001.

Now, instead of tending a nest egg of more than $2 trillion, the federal government expects to owe more than $10 trillion to outside investors by the end of this year. The national debt is larger, as a percentage of the economy, than at any time in U.S. history except for the period shortly after World War II.

Polls show that a large majority of Americans blame wasteful or unnecessary federal programs for the nation’s budget problems. But routine increases in defense and domestic spending account for only about 15 percent of the financial deterioration, according to a new analysis of CBO data.

The biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts. Together, the economy and the tax bills enacted under former president George W. Bush, and to a lesser extent by President Obama, wiped out $6.3 trillion in anticipated revenue. That’s nearly half of the $12.7 trillion swing from projected surpluses to real debt. Federal tax collections now stand at their lowest level as a percentage of the economy in 60 years.

Big-ticket spending initiated by the Bush administration accounts for 12 percent of the shift. The Iraq and Afghanistan wars have added $1.3 trillion in new borrowing. A new prescription drug benefit for Medicare recipients contributed another $272 billion. The Troubled Assets Relief Program bank bailout, which infuriated voters and led to the defeat of several legislators in 2010, added just $16 billion — and TARP may eventually cost nothing as financial institutions repay the Treasury.

Obama’s 2009 economic stimulus, a favorite target of Republicans who blame Democrats for the mounting debt, has added $719 billion — 6 percent of the total shift, according to the new analysis of CBO data by the nonprofit Pew Fiscal Analysis Initiative. All told, Obama-era choices account for about $1.7 trillion in new debt, according to a separate Washington Post analysis of CBO data over the past decade. Bush-era policies, meanwhile, account for more than $7 trillion and are a major contributor to the trillion-dollar annual budget deficits that are dominating the political debate.

Labels: Greedy Republican Bastards, incompetence, pouring gasoline on a blazing fire

Just in his mid-20s, Brian Deschane has no college degree, very little management experience and two drunken-driving convictions.

Yet he has landed an $81,500-per-year job in Gov. Scott Walker's administration overseeing environmental and regulatory matters and dozens of employees at the Department of Commerce. Even though Walker says the state is broke and public employees are overpaid, Deschane already has earned a promotion and a 26% pay raise in just two months with the state.

How did Deschane score his plum assignment with the Walker team?

It's all in the family.

His father is Jerry Deschane, executive vice president and longtime lobbyist for the Madison-based Wisconsin Builders Association, which bet big on Walker during last year's governor's race.

The group's political action committee gave $29,000 to Walker and his running mate, Lt. Gov. Rebecca Kleefisch, last year, making it one of the top five PAC donors to the governor's successful campaign. Even more impressive, members of the trade group funneled more than $92,000 through its conduit to Walker's campaign over the past two years.

Total donations: $121,652.

That's big-time backing from the homebuilders.

The younger Deschane didn't respond to questions about his job.

Labels: And You Want To Give Power Back To These People?, government for sale, incompetence, scumbaggery, Wisconsin 2011

Labels: Bret Schundler, Chris Christie, hypocrisy, incompetence, Republican lies

After making a high-profile bid for hundreds of millions of dollars in federal education reform money, New Jersey fell three points short of receiving "Race to the Top" funding, in part because of an error by the Christie administration in the state’s application, records obtained by The Star-Ledger show.

One five-point question on the application asked for budget information comparing the 2008 and 2009 school years. However, the state submitted information comparing the current year to 2011.

That mistake cost the state 4.8 points. The state lost points in other areas as well, the records show.

In the end, New Jersey received 437.8 out of a possible 500 points, placing it 11th in the competition, just behind Ohio, which received $400 million and was the last state to receive funding. The winners of the $4.35 billion competition were announced today in Washington, D.C.

"New Jersey did not supply the 2008-2009 data as required and therefore forfeits the points," said the report from one of the federal reviewers scoring the competition.

Gov. Chris Christie this morning acknowledged the state made a clerical error that blew its chance at winning $400 million in federal money for schools, but he blamed Obama administration bureaucrats for not giving New Jersey a chance to correct the mistake.

“This is the stuff, candidly, that drives people crazy about government and crazy about Washington,” Christie said at a news conference after an unrelated bill signing.

Christie slapped two thick three-ringed binders on the podium containing more than 1,000 pages of the state's “Race to the Top” application and appendices, noting that just one piece of paper contained the error.

“The first part of it is the mistake of putting the wrong piece of paper in," Christie said. "It drives people crazy and, believe me, I’m not thrilled about it. But the second part is, does anybody in Washington, D.C. have a lick of common sense? Pick up the phone and ask us for the number.”

[snip]

“That’s the stuff the Obama administration should answer for. Are you guys just down there checking boxes like mindless drones, or are you thinking?” said Christie. “When the president comes back to New Jersey, he’s going to have to explain to the people of the state of New Jersey why he’s depriving them of $400 million that this application earned.”

Questions have been piling up all day, not the least of which is this: Is this incompetence on the part of Education Commissioner Bret Schundler's office - either by an individual or individuals, or as a culture of the way his office works? Or, did Governor Christie's administration treat this program and its opportunities as a political football, punting because they didn't get everything they wanted, throwing the game? Did they give this effort their best, or send in people with poor qualifications in leading public schooling?

Date and time has not yet been set but the hearing will be via the Assembly Appropriations Committee. Christie administration officials who will be called to appear before the panel include Education Commissioner Bret Schundler.

Labels: Chris Christie, incompetence, New Jersey, Republican WATBs

There’s now a concerted effort under way to rehabilitate Mr. Bush’s image on at least three fronts: the economy, the deficit and the war.

On the economy: Last week Mitch McConnell, the Senate minority leader, declared that “there’s no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy.” So now the word is that the Bush-era economy was characterized by “vibrancy.”

I guess it depends on the meaning of the word “vibrant.” The actual record of the Bush years was (i) two and half years of declining employment, followed by (ii) four and a half years of modest job growth, at a pace significantly below the eight-year average under Bill Clinton, followed by (iii) a year of economic catastrophe. In 2007, at the height of the “Bush boom,” such as it was, median household income, adjusted for inflation, was still lower than it had been in 2000.

But the Bush apologists hope that you won’t remember all that. And they also have a theory, which I’ve been hearing more and more — namely, that President Obama, though not yet in office or even elected, caused the 2008 slump. You see, people were worried in advance about his future policies, and that’s what caused the economy to tank. Seriously.

On the deficit: Republicans are now claiming that the Bush administration was actually a paragon of fiscal responsibility, and that the deficit is Mr. Obama’s fault. “The last year of the Bush administration,” said Mr. McConnell recently, “the deficit as a percentage of gross domestic product was 3.2 percent, well within the range of what most economists think is manageable. A year and a half later, it’s almost 10 percent.”

But that 3.2 percent figure, it turns out, is for fiscal 2008 — which wasn’t the last year of the Bush administration, because it ended in September of 2008. In other words, it ended just as the failure of Lehman Brothers — on Mr. Bush’s watch — was triggering a broad financial and economic collapse. This collapse caused the deficit to soar: By the first quarter of 2009 — with only a trickle of stimulus funds flowing — federal borrowing had already reached almost 9 percent of G.D.P. To some of us, this says that the economic crisis that began under Mr. Bush is responsible for the great bulk of our current deficit. But the Republican Party is having none of it.

Finally, on the war: For most Americans, the whole debate about the war is old if painful news — but not for those obsessed with refurbishing the Bush image. Karl Rove now claims that his biggest mistake was letting Democrats get away with the “shameful” claim that the Bush administration hyped the case for invading Iraq. Let the whitewashing begin!

Labels: Bush family, dynastic politics, Greedy Republican Bastards, incompetence

Labels: 2010 Deepwater Horizon oil spill, BP, comedy, incompetence

Two years ago, a top psychiatrist at Walter Reed Army Medical Center was so concerned about what he saw as Nidal Hasan's incompetence and reckless behavior that he put those concerns in writing. NPR has obtained a copy of the memo, the first evaluation that has surfaced from Hasan's file.

Officials at Walter Reed sent that memo to Fort Hood this year when Hasan was transferred there.

Nevertheless, commanders still assigned Hasan — accused of killing 13 people in a mass shooting at Fort Hood on Nov. 5 — to work with some of the Army's most troubled and vulnerable soldiers.

On May 17, 2007, Hasan's supervisor at Walter Reed sent the memo to the Walter Reed credentials committee. It reads, "Memorandum for: Credentials Committee. Subject: CPT Nidal Hasan." More than a page long, the document warns that: "The Faculty has serious concerns about CPT Hasan's professionalism and work ethic. ... He demonstrates a pattern of poor judgment and a lack of professionalism." It is signed by the chief of psychiatric residents at Walter Reed, Maj. Scott Moran.

When shown the memo, two leading psychiatrists said it was so damning, it might have sunk Hasan's career if he had applied for a job outside the Army.

Labels: Bush Administration, closing the barn door after the horse escapes, incompetence

I understand how you feel about the loss of Break Room Live. The only thing I can do at the moment is promise you that I will show your comment to upper management.

Also, here are two statements about the cancellation--one from CEO Bennett Zier and one from Program Director Bill Hess. They were released via Twitter this week:

Here’s tweet #1 from Bill Hess –

"For now, the daily live stream of Air America's @BreakRoomLive has been discontinued. Visit your favorite shows here: http://bit.ly/yEZ8Q "

Here’s tweet #2 from Bennett Zier –

"We love @MarcMaron @SamSeder. They are very talented. We hope to work with them in the future."

Thanks,

Bob Drummond
Air America Support

Labels: Air America, despair, incompetence, Marc Maron, Sam Seder, Teh Funny

Top officials from the Bush administration have hit upon a revealing new theme as they retrospectively justify their national security policies. Call it the White House 9/11 trauma defense.

"Unless you were there, in a position of responsibility after September 11, you cannot possibly imagine the dilemmas that you faced in trying to protect Americans," Condoleezza Rice said last month as she admonished a Stanford University student who questioned the Bush-era interrogation program. And in his May 21 speech on national security, Dick Cheney called the morning of Sept. 11, 2001, a "defining" experience that "caused everyone to take a serious second look" at the threats to America. Critics of the administration have become more intense as memories of the attacks have faded, he argued. "Part of our responsibility, as we saw it," Cheney said, "was not to forget the terrible harm that had been done to America."

I remember that morning, too. Shortly after the second World Trade Center tower was hit, I burst in on Rice (then the president's national security adviser) and Cheney in the vice president's office and remember glimpsing horror on his face. Once in the bomb shelter, Cheney assembled his team while the crisis managers on the National Security Council staff coordinated the government response by video conference from the Situation Room. Many of us thought that we might not leave the White House alive. I remember the next day, too, when smoke still rose from the Pentagon as I sat in my office in the White House compound, a gas mask on my desk. The streets of Washington were empty, except for the armored vehicles, and the skies were clear, except for the F-15s on patrol. Every scene from those days is seared into my memory. I understand how it was a defining moment for Cheney, as it was for so many Americans.

Yet listening to Cheney and Rice, it seems that they want to be excused for the measures they authorized after the attacks on the grounds that 9/11 was traumatic. "If you were there in a position of authority and watched Americans drop out of eighty-story buildings because these murderous tyrants went after innocent people," Rice said in her recent comments, "then you were determined to do anything that you could that was legal to prevent that from happening again."

I have little sympathy for this argument. Yes, we went for days with little sleep, and we all assumed that more attacks were coming. But the decisions that Bush officials made in the following months and years -- on Iraq, on detentions, on interrogations, on wiretapping -- were not appropriate. Careful analysis could have replaced the impulse to break all the rules, even more so because the Sept. 11 attacks, though horrifying, should not have surprised senior officials. Cheney's admission that 9/11 caused him to reassess the threats to the nation only underscores how, for months, top officials had ignored warnings from the CIA and the NSC staff that urgent action was needed to preempt a major al-Qaeda attack.

On Sept. 6, 2002, Landay and Strobel reported that there was no known new intelligence indicating that “the Iraqis have made significant advances in their nuclear, biological or chemical weapons programs.” It was two days later that The Times ran its now notorious front-page account of Saddam Hussein’s “quest for thousands of high-strength aluminum tubes.” In the months that followed, as the Bush White House kept beating the drum for Saddam’s imminent mushroom clouds to little challenge from most news organizations, Landay and Strobel reported on the “lack of hard evidence” of Iraqi weapons and the infighting among intelligence agencies. Their scoops were largely ignored by the big papers and networks as America hurtled toward fiasco.

Another reporter who was ahead of the pack in unmasking Bush-Cheney propaganda is the author Ron Suskind. In his 2006 book on the American intelligence matrix, “The One Percent Doctrine,” Suskind wrote about a fully operational and potentially catastrophic post-9/11 Qaeda assault on America that actually was aborted in the Bush years: a hydrogen cyanide attack planned for the New York City subways. It was halted 45 days before zero hour — but not because we stopped it. Al-Zawahri had called it off.

When Bush and Cheney learned of the cancellation later on from conventional intelligence, they were baffled as to why. The answer: Al-Zawahri had decided that a rush-hour New York subway attack was not enough of an encore to top 9/11. Al Qaeda’s “special event” strategy, Suskind wrote, requires the creation of “an upward arc of rising and terrible expectation” that is “multiplied by time passing.” The event that fits that bill after 9/11 must involve some kind of nuclear weapon.

“What are the lessons of this period?” Suskind asked when we spoke last week. “If you draw the wrong lessons, you end up embracing the wrong answers.” They are certainly not the lessons cited by Cheney. Waterboarding hasn’t and isn’t going to save us from anything. The ticking time-bomb debate rekindled by Cheney’s speech may be entertaining on “24” or cable-news food fights, but is a detour from the actual perils before the country. “What we’re dealing with is a patient foe who thinks in decades while we tend to think more in news cycles,” Suskind said. “We have to try to wrestle this fear-based debate into something resembling a reality-based discussion.”

The reality is that while the Bush administration was bogged down in Iraq and being played by Pervez Musharraf, the likelihood of Qaeda gaining access to nuclear weapons in a Taliban-saturated Pakistan was increasing by the day. We know that in the month before 9/11, bin Laden and al-Zawahri met with the Pakistani nuclear scientist Sultan Bashiruddin Mahmood. That was the real link between 9/11 and nuclear terror that the Bush administration let metastasize while it squandered American resources on a fictional link between 9/11 and a “nuclear” Saddam.

And where are we now? On the eve of Obama’s inauguration, David Sanger reported in The Times that military and nuclear experts agree that if “a real-life crisis” breaks out in Pakistan “it is unlikely that anyone would be able to assure an American president, with confidence, that he knew where all of Pakistan’s weapons were — or that none were in the hands of Islamic extremists.”

Pakistan is the time bomb. But with a push from Cheney, abetted by too many Democrats and too many compliant journalists, we have been distracted into drawing the wrong lessons, embracing the wrong answers. We are even wasting time worrying that detainees might escape from tomb-sized concrete cells in Colorado.

What we need to be doing instead, as Suskind put it, is to “build the thing we don’t have — human intelligence. We need people who are cooperating with us, who step up and help, and who won’t turn away when they see things happening. Hearts and minds — which we’ve botched — must be corrected and corrected quickly. That’s what wins the battle, not going medieval.

Labels: 9/11, Dick Cheney, incompetence, LIHOP, war crimes

Labels: cynicism, idiocy, incompetence, Republic Party

The Obama administration is increasingly concerned about a populist backlash against banks and Wall Street, worried that anger at financial institutions could also end up being directed at Congress and the White House and could complicate President Obama’s agenda.

The administration’s sharp rebuke of the American International Group on Sunday for handing out $165 million in executive bonuses — Lawrence H. Summers, director of the president’s National Economic Council, described it as “outrageous” on “This Week” on ABC — marks the latest effort by the White House to distance itself from abuses that could feed potentially disruptive public anger.

“We’ve got enormous problems that need to be addressed,” David Axelrod, Mr. Obama’s senior adviser, said in an interview. “And it’s hard to address because there’s a lot of anger about the irresponsibility that led us to this point.”

“This has been welling up for a long time,” he said.

Mr. Obama’s aides said any surge of such a sentiment could complicate efforts to win Congressional approval for the additional bailout packages that Mr. Obama has signaled will be necessary to stabilize the banking system.

As it is, there have already been moves in Congress to limit compensation to executives at banks and Wall Street firms that are receiving government help to survive.

Beyond that, a shifting political mood challenges Mr. Obama’s political skills, as he seeks to acknowledge the anger without becoming a target of it. A central question for Mr. Obama is whether his cool style — “in a time of crisis, we cannot afford to govern out of anger,” he said in his address to Congress last month — will prove effective when the country may be feeling more emotional.

Even as Mr. Summers was denouncing A.I.G. for the bonuses, he suggested that there was little if anything the government could do to stop them, seconding the conclusion of Treasury Secretary Timothy F. Geithner. But even if their reasoning was legally sound, they also risked having the administration look ineffectual in the face of what Mr. Summers said was the worst financial abuse of the last 18 months, since the economy began turning down in earnest.

“Never underestimate the capacity of angry populism in times of economic stress,” said Robert Reich, a professor of public policy at the University of California, Berkeley, and labor secretary under President Bill Clinton. “A big challenge for President Obama will be to maintain a rational and tactical public discussion in the midst of this severe downturn. The desire for culprits at times like this is strong.”

The financial danger is that the Treasury will burn through the money approved by Congress without fixing the system. The political danger is that Republicans will posture as the populists, expressing faux-indignation that so much taxpayer money has gone to Wall Street. The overarching risk to Obama's presidency is that the plan won't work, and his political capital will evaporate along with the financial capital.

There is a whole other path to repairing the banking system, and a whole other set of experts, equally brilliant and better in touch with financial realities. But their unfiltered views are not reaching the president. This loyal opposition, of which more shortly, is not limited to lefties; it spans the ideological spectrum.

Though the details are numbingly technical (and deliberately mystified both by the investment bankers and their allies at the Treasury), the basics of what's wrong with the banking system and how to fix it are, at bottom, very simple.

After all, what do banks do? They take in deposits and they put out loans and make other investments.

In the past decade, far too many of the banks' investments were far too speculative. They lost vast sums, which now exceed the value of their capital. In plain English, they are insolvent.

In a situation like this, a busted banking system can push the whole economy into prolonged depression. We are right on the edge of that condition, and there is little time to lose.

As the president of the Federal Reserve Bank of Kansas City, Thomas Hoenig, explained March 6 in a brilliant speech (PDF) that is being widely circulated on Capitol Hill, "Too Big Has Failed," to save the banking system we need a public corporation like the Reconstruction Finance Corporation of the 1930s, which at one point held about one-third of all U.S. bank stock, and by the time it wrapped up its affairs it did not cost taxpayers a penny.

A modern RFC would be given the technical competence and manpower to audit just how bad things are. It needs to determine how far underwater is each of the large banks. (The top four hold about 55 percent of all deposits; fix them and you fix the system.)

The public corporation, according to Hoenig, would need to decide which banks to take into receivership, which ones have competent management teams, and which managers need to go.

Once the size of the hole in bank capital is determined -- and it will be on the scale of two trillion dollars -- the government needs to decide who eats the loss. How much do the taxpayers put in, and how much do the bondholders have to sacrifice?

Owners of bank stocks are not really relevant. They have already lost upwards of 95 percent of their investments. When a bank is taken into receivership, they will lose the rest. But it's no big deal for the system. Trying to use public money to pump up the value of bank stocks -- Geithner's approach -- has it backwards.

Labels: greed, incompetence, Tim Geithner

Alaska budget reserve suffers billion-dollar loss

Because Department of Revenue officials plowed a big chunk of the Constitutional Budget Reserve into stocks shortly before the meltdown started, the state suffered the same kind of stinging losses many Americans have experienced in their personal retirement portfolios.

Revenue officials, as well as state legislators who encouraged the stock investments in hopes of generating bigger profits, acknowledge their timing was dreadful.

But they're hoping the market rebounds in coming years and the bet pays off over the long haul.

Others say they're concerned about further losses for the budget reserve, which legislators might have to tap as soon as this year to help balance the state budget.

"Are we still at risk for going down the tubes further?" asked Rep. Harry Crawford, an Anchorage Democrat and member of the House Finance Committee.

[snip]

During last year's legislative session, lawmakers had a huge stack of surplus dollars on hand because of a run of record-high oil prices, so they put more than $4 billion into the Constitutional Budget Reserve as savings.

Instead of parking the money in the reserve's conservative investment account, it was shifted to a subaccount that's invested more aggressively in stocks.

That subaccount had a market value of about $4.5 billion in the summer. But with the stock market crash, its value has plunged to $3.5 billion -- meaning a $1 billion loss, said Jerry Burnett, the state's deputy revenue commissioner.

Labels: economic death watch, incompetence, Sarah Palin

WALL STREET was braced last night for one of the biggest bank failures in US history after Barclays walked away from a deal to save investment bank Lehman Brothers from bankruptcy.

Federal Reserve officials and leaders of big financial institutions continued to meet in New York late last night to try to avert a fire sale of Lehman assets today that could have a devastating effect on the share prices of other banks, insurers and securities firms.

Barclays withdrew from the talks after two days of emergency negotiations, saying it could not take over Lehman without the support of the US government and other financial institutions.

"The proposed transaction required a guarantee for the trading obligations of Lehman Brothers which was potentially open-ended. Barclays wasn't willing to assume such an open-ended obligation," it said in a statement.

Throughout the weekend negotiators had worked on a plan to divide Lehman into a "good bank" that included the parts of the 158-year-old company that have been performing well, and a "bad bank" containing about $85 billion (€59.5 billion) in so-called toxic mortgage and real estate assets.

Under the plan Barclays or Bank of America, which had also shown interest in taking over Lehman, would buy the assets ring-fenced in the "good bank".

Other financial institutions would pump capital into the "bad bank" to keep it afloat for a few months and prevent a flood of bad assets into the market, which could depress the value of similar assets held by other banks and insurance companies.

Barclays said it was unable to win guarantees in relation to financial commitments faced by Lehman, and the British bank's withdrawal from the talks brought closer the prospect of bankruptcy.

Between 1993 and 2007, Mr. Fuld took home about $466 million in compensation, including base salary, bonuses, long-term incentive plan payouts and the value of stock options he exercised. That’s according to calculations from Equilar, an executive compensation research firm.

The bulk of that amount — about $363 million — was from stock-option gains, Equilar said.

Setting aside the slump that began last summer, Lehman’s shares have had an impressive run in recent years, going from below $10 in late 1998 to more than $80 in early 2007, adjusted for stock splits.

Mr. Fuld doesn’t have a severance agreement that would kick in if he were to lose his job.

Even so, if he were to be terminated “without cause,” Mr. Fuld would walk away with a substantial sum.

According to an analysis by James F. Reda & Associates, a consulting firm, Mr. Fuld would receive about $16.8 million in pension-related benefits and $5.6 million in deferred compensation on the way out.

That doesn’t include the value of Mr. Fuld’s restricted stock units that have vested and the shares of Lehman stock that he holds. Including those, the value of his exit package would come to about $64.8 million, based on Lehman’s share price of about $4.38 on Thursday.

Bank of America has struck a $44 billion deal to buy Merrill Lynch, according to two people familiar with the negotiations, a merger that will unite the nation's largest consumer bank with one of its most celebrated investment banking firms.

Both boards have approved the deal and it is now being reviewed by lawyers, the sources said. Bank of America will pay about $29 for each share of Merrill Lynch stock. A formal announcement is expected tomorrow morning.

Bank of America is in a position to buy Merrill Lynch because until now the Charlotte company has been a bit player on Wall Street. Instead it runs the nation's largest retail bank, a business that remains highly profitable. That now gives it the money to go shopping for an investment bank, continuing a long tradition of opportunistic acquisitions.

Insurer American International Group Inc., succumbing to relentless investor pressure that drove its shares down 31% on Friday alone, is pulling together a survival plan that includes selling off some of its most valuable assets, raising more capital and going to the Federal Reserve for help, people familiar with the situation said.

Labels: corruption, economic death watch, FUBAR, greed, incompetence, mortgage crisis

But even after the government seized the mortgage finance companies on Sunday and dismissed their chief executives, the companies’ outgoing leaders could see big paydays — a prospect that angers many investors, particularly because ordinary stockholders could be virtually wiped out.

Under the terms of his employment contract, Daniel H. Mudd, the departing head of Fannie Mae, stands to collect $9.3 million in severance pay, retirement benefits and deferred compensation, provided his dismissal is deemed to be “without cause,” according to an analysis by the consulting firm James F. Reda & Associates. Mr. Mudd has already taken home $12.4 million in cash compensation and stock option gains since becoming chief executive in 2004, according to an analysis by Equilar, an executive pay research firm.

Richard F. Syron, the departing chief executive of Freddie Mac, could receive an exit package of at least $14.1 million, largely because of a clause added to his employment contract in November of last year as his company’s troubles deepened. He has taken home $17.1 million in pay and stock option gains since becoming chief executive in 2003.

Labels: corporatism, greed, incompetence

The evidence amassed by F.B.I. investigators against Dr. Bruce E. Ivins, the Army scientist who killed himself last week after learning that he was likely to be charged in the anthrax letter attacks of 2001, was largely circumstantial, and a grand jury in Washington was planning to hear several more weeks of testimony before issuing an indictment, a person who has been briefed on the investigation said on Sunday.

While genetic analysis had linked the anthrax letters to a supply of the deadly bacterium in Dr. Ivins’s laboratory at Fort Detrick, Md., at least 10 people had access to the flask containing that anthrax, said the source, who spoke on condition of anonymity because he was not authorized to discuss the investigation publicly.

Agents from the Federal Bureau of Investigation also have no evidence proving that Dr. Ivins visited New Jersey on the dates in September and October 2001 when investigators believe the letters were sent from a Princeton mailbox, the source said.

The source acknowledged that there might be some elements of the evidence of which he was unaware. And while he characterized what he did know about as “damning,” he said that instead of irrefutable proof, investigators had an array of indirect evidence that they argue strongly implicates Dr. Ivins in the attacks, which killed 5 people and sickened 17 others.

Atrios writes: "now that we know that the US gov't believes that anthrax came from the inside, shouldn't Cohen be a wee bit curious about what this warning was based on?"

That applies to much of the Beltway class, including many well-connected journalists, who were quietly popping cipro back then because, like Cohen, they heard from Government sources that they should. Leave aside the ethical questions about the fact that these journalists kept those warnings to themselves. Wouldn't the most basic journalistic instincts lead them now -- in light of the claims by our Government that the attacks came from a Government scientist -- to wonder why and how their Government sources were warning about an anthrax attack? Then again, the most basic journalistic instincts would have led ABC News to reveal who concocted and fed them the false "Saddam/anthrax" reports in the first place, and yet we still are forced to guess at those questions because ABC News continues to cover up the identity of the perpetrators.

Labels: anthrax, incompetence, tinfoil

The White House has increased its estimate for next year's deficit to nearly $490 billion, a record figure that will saddle the next president with deepening budget problems in his first year in office, a report due out today shows.

The projected deficit for the fiscal year that begins Oct. 1 is being driven higher by the continuing economic slowdown and larger than anticipated costs of the two-year, $168 billion fiscal stimulus package passed by Congress, said two senior administration officials with direct knowledge of the report.

Labels: Cronyism, government waste, incompetence, Republicans

John McCain's campaign just released the following statement from Gramm:

"It is clear to me that Democrats want to attack me rather than debate Senator McCain on important economic issues facing the country. That kind of distraction hurts not only Senator McCain's ability to present concrete programs to deal with the country's problems, it hurts the country. To end this distraction and get on with the real debate, I hereby step down as Co-Chair of the McCain Campaign and join the growing number of rank-and-file McCain supporters."

European terrorists are trying to enter the United States with European Union passports, and there is no guarantee officials will catch them every time, Homeland Security Secretary Michael Chertoff said Thursday.

[snip]

In his last scheduled appearance before the House Homeland Security Committee, Chertoff said that the more time and space al-Qaida and its allies have to recruit, train, experiment and plan, the more problems the U.S. and Europe will face down the road.

"The terrorists are deliberately focusing on people who have legitimate Western European passports, who don't appear to have records as terrorists," Chertoff told lawmakers. "I have a good degree of confidence we can catch people coming in. But I have to tell you ... there's no guarantee. And they are working very hard to slip by us."

Chertoff and other intelligence officials have delivered similar warnings before, and he offered no new information about specific threats or an imminent attack.

Labels: Bush Administration, Department of Homeland Security, icepick meet forehead, incompetence, You can't make this shit up

Darrell in Iowa writes:

I am in Mason City.  Our levees broke Sunday morning.  Flood stage is 7 foot and waters are now at 19 feet.  Hundreds of homes and businesses are underwater.  The City's water plant was flooded and the entire city of 30,000 is without potable water.  A couple of hours ago the main electric substation flooded and failed and much of the city is without power.  People remain in flooded homes.  Early tonight I saw people wandering the streets not knowing where to go.  There are entrie areas of the city with NO emergency personnel on hand.

NOBODY from the outside has come to help.  Our local first responders are exhausted and overwhelmed.  Small rural towns downstream tonight are being devasted.  Levees everywhere are failing.  Calls for help in these small towns have been unmet.  Portions of our local guard are in Iraq.

The homeland has been left unprotected and people are suffering horribly.

A dam near the Wisconsin Dells resort area broke on Monday, sweeping away some homes, as torrential rains caused more flooding across parts of the U.S. Midwest, authorities said.

No deaths or injuries were reported, though residents living beside a few rain-swollen rivers in central Wisconsin were urged to evacuate, the Columbia County Sheriff's office said.

The failure of the Delton Dam on Lake Delton caused mudslides that swept away a few homes. The water rushed to form a new tributary to the Wisconsin River, which eventually empties into the Mississippi River.

Police issued a warning about debris swept into rivers from collapsed buildings and roads.

Other dams in the Wisconsin Dells region, which is famous for its scenic lakes and resorts, were also threatened by a series of drenching storms in recent weeks, authorities said.

Gov. Jim Doyle declared a state of emergency in 30 counties in the southern half of Wisconsin. Similar declarations have been made in recent days in Iowa and Indiana, with flooding also affecting parts of Illinois, Michigan and Minnesota.

"This is an area that's been bombarded with rain over the weekend, anywhere from 5 to 10 inches, and you're dealing with saturated soils. So any rain that falls becomes run-off," the National Weather Service's Pat Slattery said.

Nearly one-third of Iowa's 99 counties were experiencing flooding, according to Gov. Chet Culver.

Flood damage estimated in the tens of millions of dollars were being added to recent storm damage in Iowa, including a tornado that flattened the town of Parkersburg two weeks ago.

The water treatment plant Mason City, Iowa, was swamped this weekend by the Winnebago River, three of four bridges in the town of Charles City were swept away by flooding of the Cedar River, and the town of New Hartford was evacuated.

Many corn and soybean acres were under water in Midwestern states, hurting farmers' prospects after a wet spring that had already delayed planting in many places.

Iowa and Illinois alone produce one-third of U.S. corn and soybeans, usually the world's biggest harvests of those crops.

Labels: incompetence, media, Midwest storms