Ethel the Blog

Michael Hudson explains the reality of debt peonage.

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We are not in a cycle but the end of an era. The old world of debt pyramiding to a fraudulent degree cannot be restored, despite the repeal Glass-Steagall Act in 1999 that unleashed financial conflicts of interest when the Clinton Administration backed Treasury Secretary Robert Rubin and financial lobbyist Greenspan in claiming that financial markets would be self-regulating and law-abiding. The real estate bubble was made possible by the unique degree to which America’s population emerged from World War II relatively debt free. Each recovery has taken off from a higher debt level. This something like trying to drive a car with the brakes pressed tighter and tighter to the floor each time there is a stoplight (recession). We have now reached the debt limit, and the economy is stuck. The class war is back in business, with a vengeance. Instead of it being the familiar old class war between industrial employers and their work force, this one reverts to the old pre-industrial class war of creditors versus debtors. Its guiding principle is “Big Fish Eat Little Fish,” mainly by the debt dynamic that crowds out the promised economy of free choice. This is being portrayed as a post-industrial economy, but it is a much older story. No economy in history ever has been able to pay off its debts. That is the essence of the “magic of compound interest.” Debts grow inexorably, making creditors rich but impoverishing the economy in the process, thereby destroying its ability to pay. Recognizing this financial dynamic most societies have chosen the logical response. From Sumer in the third millennium BC and Babylonia the second millennium through Greece and Rome in the first millennium BC, and then from feudal Europe to the Inter-Ally war debts and reparations tangle that wrecked international finance after World War I, the response has been to bring debts back within the ability to pay.

This can be done only by wiping out debts that cannot be paid. The alternative is debt peonage. Throughout most of history, countries have found again and again that bankruptcy – wiping out the debts – is the way to free economies. The idea is to free them from a situation where the economic surplus is diverted away from new tangible investment to pay bankers. The classical idea of free markets is to avoid privatizing monopolies, such as the unique privilege of commercial bankers to create bank-credit and charge interest on it.

Current proposals would replace bad debts that are not publicly insured (except by an “implicit” guarantee that relevant legislators have bought into) with new debts, and new suckers are to be left holding the bag. Bahrainis and Saudis in particular are being courted.

But most of all, there is a public campaign being waged by the FIRE sector (Finance, Insurance and Real Estate) to convince the American public that, in the infamous words of Margaret Thatcher, TINA, “there is no alternative.” (See for instance the Wall Street Journal’s excellent coverage of the FNMA/mortgage crisis on July 11, 2002, p. A12.) When one hears this, it means that political censorship is being mobilized to flood the popular media with the intellectual equivalent of sterile fruit flies being released to stop the spread of a threat. All one hears is a barrage of claims that the government must preserve the financial fictions of FNMA and Freddie Mac in order to “save the market.”

But what is “the market” that is to be “saved”? To Wall Street and its Congressional advocates, it is the mass of bad debts growing at compound “magic” rates of interest, beyond the ability of debtors to pay. If the debtors cannot pay, then the Government – “taxpayers” are to pick up the check to Wall Street. Meanwhile, more tax breaks are to be given to leave the finance, insurance and real estate sectors with enough money to “earn back” their losses, by extracting yet more rent and interest from the industrial economy’s consumers and wage-earners.

The usual hypocrisy is being brought to bear claiming that all this is necessary to “save the middle class,” even as what is being saved are its debts, not its assets. Something must give – and the upper 10 percent of the population wants to make sure that it is not its own economic position, but that of the bottom 90 percent. The “way of life” that is being saved is not that of home ownership, but debt peonage to support the concentration of wealth at the top of the economic pyramid.

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He also offers a solution that will never be implemented given that it doesn’t involve the uber-wealthy realizing the gains while everyone else takes the risks.

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Shareholders of FNMA and Freddie Mac probably will be wiped out, as were S&L shareholders in the bailout of S&L depositors in the 1980s. There’s a simple way to save FNMA’s and Freddie’s public functions, if they indeed are deemed necessary to keep supporting the debt market. This can be done without bailing out the speculators who bought the mortgages it packaged.

First of all, not all the mortgages that these two agencies have bought or guaranteed are junk. Most are genuine and are being paid. The poor are honest, after all, and think that they should pay as a matter of honor even if it is not in their economic interest to do so when their homes fall into negative equity. Let these mortgages continue to back the existing FNMA and Freddie Mac bonds to the degree that they actually receive mortgage debt service. If there is a shortfall, let bondholders take the usual haircut that is supposed to go hand in hand with risk. That is why these mortgages had such high rates of interest, after all. The loss would be proportional to the financial and real estate fraud they have enabled. This is the law for all other bondholders when their investments go south. Why make an exception for participants in the real estate bubble?

The rule caveat emptor should apply to bankers and investors here. They have bought a product – a flow of income that they either believed or pretended could be paid. Any student taught the mathematics of compound interest knows that in the end no economy’s debts can be paid. So this should be a special financial caveat.

To keep their activities current, let Fannie and Freddie issue a new series of bonds – the “we won’t fake it anymore” series. They would be based on a new honesty based on more realistic appraisals of the affordability of housing, which they were supposed to be promoting all along. These steps would not cause a collapse.

But before stepping up to save FNMA and Freddie Mac, we might ask whether it would be a tragedy for their debt guarantees to cease. Wall Street has given politicians a cover story that to support FNMA and Freddie on the pretense that its packaging and reselling mortgages in big “tranches” provides liquidity. Its defenders claimed to be “modernizing” the real estate mortgage market by creating uniform standards and homogeneous packages. But these packages were increasingly tainted with junk, putting floor sweepings of ARMs with no-down-payment and NINJA (no income, no job) loans into financial sausages.

What Fannie and Freddie did was to provide a vast new source of demand for mortgages. Their role has been to extend the market for mortgage debt, creating opportunities to make money financially in an environment of asset-price inflation – the Bubble Economy. The effect was to push up housing prices. This has been the great American game for a century. And it has turned increasingly to outside investors (including gullible German banks which were the first to go bust by trusting the U.S. junk mortgage market), swelling the supply of loanable funds that bid up property prices.

Prior to FNMA and Freddie Mac, banks that issued mortgages held onto them, because there were no outside blind buyers. This was the pre-fraud era. It is now looking like a Golden Age. Housing prices were lower, and buyers did not have to go so deeply into debt to purchase homes. But the Senate and Congress – at least the Democrats – are urging the FHA and other government agencies to prop up the mortgage market by issuing zero-down-payment loans and other subsidies. The immediate aim is not to help homeowners – who indeed will have to pay more if the housing market re-inflates. Each new economic crisis adds a few new words to the English language. This time we get “reflate.” Others include NYU Prof. Roubini’s “stagdeflation” for a combination of debt deflation of incomes and price inflation for commodities as the dollar sinks in response to the balance-of-payments deficit resulting largely from the war in Iraq. But that is another story. Today’s story is about how Congress is aiming to bail out the banks that have bought or packaged these junk mortgages, about how needless this bailout is, and about how much simpler and more fair to just write off the bad debts.

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Michael Hudson explains how the housing bill is a bailout for the finance industry rather than homeowners.

…The new “housing law” (a more honest title would have been the “financial bailout and giveaway act of 2008”) authorizes the Treasury and Federal Reserve Board to provide unlimited credit to Fannie Mae and Freddie Mac, and infuse new lending power to the Federal Housing Administration (FHA) and localities to support the “real estate market.” This is a euphemism for saving mortgage lenders from the traditional response to falling property prices – defaults and walk-aways. The idea is for government loans to replace the bad loans that existing mortgage holders are stuck with, and to do so before property prices sink by another 25 percent.

The cover story highlighted in the first line of the press release was that the new act was “intended to provide mortgage relief for 400,000 struggling U.S. homeowners and to stabilize financial markets.” The real aim is to help struggling banks and institutional investors, with little likely aid for homeowners. Mortgage defaults and foreclosures were threatening to wipe out the collateral valuations for the loans packaged and sold to U.S. pension funds, other institutional investors and foreign banks – including the $1 trillion in Fannie Mae and Freddie Mac securities to foreign central banks and sovereign wealth funds.

Piercing the cloud of public relations rhetoric, the actual impact on strapped mortgage debtors is that the increased funding for Fannie Mae, Freddie Mac and FHA are part of a $1.4 trillion emergency supply of government credit intended to keep housing prices from falling back to more affordable levels. An alternative use of this funding would have been to save individual debtors from foreclosure and re-set their mortgages at more realistic levels. But the constituency of the Treasury and Federal Reserve is Wall Street, not homeowners. This is not a constituency whose interests reflect those of the economy as a whole over the long run.

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He then explains how your pension plan is going to end up in the Cayman Islands while you scrounge for edible garbage to take back to your refrigerator carton.

…At first glance the connection between bailing out Fannie Mae and, behind it, the real estate market to keep prices high for American homeowners might not seem closely linked to corporate, state and local pension plans. So let us trace the linkage. Bailing out mortgage lenders ultimately must be achieved at the expense of state and local property tax revenues. Revenue that is used to pay interest is not available to pay taxes. If debts are to continue to grow exponentially and extract more carrying charges, this forces a tax shift onto labor and industry.

For the past century the financial sector has made steady incursions to take over what used to be the role of government. Today’s libertarian anti-tax “free market” rhetoric is simply a cover for the financial sector’s replacement of elected democratic government. Forward planning is being distorted to serve the financial sector, not aiming to promote long-term growth and raise living standards, and certainly not to protect the public sector’s fiscal position.

One of the lesser-known features of this week’s real estate bailout is the endorsement of “negative mortgages.” These debt agreements add the accrual of interest onto the principal. The cover story is that this enables low-income homeowners to keep their houses with a lower carrying charge, borrowing the interest rather than paying it. But this means that what used to accrue to homeowners or their heirs as a “capital” (land-price) gain henceforth will accrue to the mortgage lender. For over a century, the main way that most American families have become rich has been by the free lunch of exponentially rising land prices. What is to rise exponentially in years to come is now their debt overhead. It is the financial sector that will get the free lunch of land-price gains.

Adding the interest charge onto the principal is how Ponzi schemes work. They cannot work for long, because no real economy can keep up with “the magic of compound interest.” The Bush-Paulson bailout plan calls for mortgages to become larger and larger, regardless of whether property prices keep pace. The interest is to accrue to the federal government as mortgagee at first, but this innovation is really a test run. It is the path of least resistance for private banks to start making mortgage loans that give them a return in the form of “capital” gains as well as interest.

These gains consist of the inflation of land prices in cases where state, local and federal government fails to capture this gain for the economy at large. So the scheme obliged the public sector to turn elsewhere than property for its revenues – namely, to consumers and industry.

From corporate balance sheets to today’s state and municipal fiscal crises, what appears at first glance to be a pension and Social Security problem turns out to be a financialization (debt) problem. In an attempt to maximize dividend payouts, companies in the auto, steel airlines and other industries made a bargain with labor to take its wages in the form of deferred pension and health-care payments. And labor – being much more farsighted than corporate financial managers – chose to defer the latter.

In the case of public sector pensions, the problem is the anti-tax ideology promoted by the financial sector, which prefers government to borrow from the wealthy rather than tax them. Cities from New York to San Diego chose not to raise taxes but to promise public sector employees future retirement income and health care. Also like companies, they chose to finance their budgets by borrowing, by issuing bonds rather than by taxing their traditional real estate tax base. In a nutshell, they chose to borrow from the rich rather than tax them.

Corporate and public bond issuers point out that there is not enough revenue to pay all claimants. But rather than blaming the lenders for making loans to be paid by carving up and selling off assets rather than by producing more, financial lobbies are taking a neo-Malthusian position. They are blaming the corporate and public sector cost squeeze on pension obligations stemming from the fact that people are living longer. The number of retirees per employee or taxpayer is rising – and the much-vaunted rise of science, technology and productivity is not supposed to be able to carry this extra load.

Or rather, economies cannot carry this load and also pay exponentially rising debt service and money-management fees. But this blame-the-victim logic ignores the fact that today’s debts – and property prices – are growing at compound interest, beyond the ability of economies to produce a net economic surplus to pay. Something has to give. For the financial sector, what gives is supposed to be labor’s wages, industry’s profits and the government’s taxing power.

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In the midst of the predictable batches of email attachments from the usual dittohead mouth-breathers “explaining” how the sub-prime mortgage crisis was caused solely by the mental deficiencies of the darkies, Greg Palast supplies an explanation that actually involves the facts.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Palast then relates how the cuffs were slapped on Spitzer on that very same day. And who says the ruling olasses donn’t have a great sense of humor? Given various revelations over that last couple of years about prostitution rings in Washington D.C. - hell, make that over the last 200 years - it’s basically a matter of prosecutorial discretion as to who gets pinched.

In case anyone’s confused: $200 billion of taxpayer money is being given to bail out the companies of those who deliberately engaged in fraudulent loan practices. The former homeowners, the stockholders, and many of the lower-level employees who implemented the details of the fraud (rather than lose their jobs for failing to follow marching orders) are all losing out in various degrees. That is, the former head of Countrywide will be “punished” for his knowing (that is, unless he was the stupidest man in history) fraud with nearly 3/4 of a trillion dollars, while everybody else is “rewarded” with, variously, the loss of a home, a job, or a retirement income. And yet the only response some proto-sentients can offer to these basic facts is to blame the victims, a group which, ironically enough, includes themselves.

A judge deciding that NBC should allow Dennis Kucinich to participate in a debate in Nevada - as per a previous agreement apparently amounting to a binding contract - has been predictably met with a braying chorus of accusations of “judicial activisim” from the usual suspects. I’ve realized for quite a while that “judicial activism” is nothing more than a code phrase for “that’s ideologically unacceptable so I’ll throw a hissy fit,” although I’ve avoided the issue ever since the Shiavo case. I’ve never quite recovered from the utterly blank and uncomprehending stare I received after asking a normally rational, intelligent person - after they’d been snarling about the evil judicial activist judge who’d made a decision not consonant with that week’s RNC official talking points - just which law the Republican judge had overridden in his decision.

Glenn Greenwald nicely sums up the reality behind the “judicial activism” chorus:

“All day we’re going to be subjected to commentary about “activist judges.” That term has long ceased to mean anything other than “judges who issue rulings that compel outcomes which conservatives dislike.” Perhaps the most egregious instance was when leading conservative activists were pathetically applying that term to the Republican Southern Baptist state court judge presiding over the Terry Schiavo case by faithfully applying clear mandates of Florida state law — all because they wanted a different outcome, regardless of what the law required.

The systematic erosion of the rule of law in America has many aspects, and one significant one is that conservatives have been trained that they have the right to have judges issue rulings that produce outcomes they like, and when that doesn’t happen, it means the judicial process is flawed and corrupt. Put another way, those marching under the banner purportedly opposed to “judicial activism” have been taught that they are entitled to have courts ignore the law in order to ensure the outcomes they want.

What else could possibly explain how someone can be convinced that they are in a position to condemn a judicial ruling without bothering to learn anything about the laws and legal issues in play? Hence: Bush should be able to eavesdrop on Americans without warrants and any judge who rules that — under the law — he can’t, is guilty of “judicial activism.” They’ve been trained to believe they’re entitled to have judges give them the outcomes they want, and when that doesn’t happen, that alone is grounds for proclaiming that the courts and judges are not just corrupt, but illegitimate.

Yep, another lame-assed attempt to flog this cadaver back to life.

I think I’ve got it figured out. The posting jones was greatly diminished when I got that anger thing largely dissipated a few years back. Perhaps I just need to schedule a regular time in the evenings - say, between beer 3 and 4 - to post whatever inanity was shiny enough to get my attention that day. We’ll attempt yet another restart - not unlike those who attempt to stop smoking on a quasi-regular basis - by whorishly and shamelessly imitating a widely used blog space filler.

This particular(ly) strained plot contrivance was precipitated by my first use of the iTunes shuffle feature today, which was itself precipitated (yes, there’s been a lot of rain here in Tejas lately) by my typical incapability of actually choosing what I want to hear from the 70 GB or so of music I’ve got stored for a - you guessed it - rainy day.

So here’s my initial attempt to prove how much more retro-hip and obscure I am than thou.

• “About Her” - Malcolm McLaren - Kill Bill 2 OST - A slowed and slightly fuzzified remake of the Zombies’ (aka Rod Argent’s) “She’s Not There” as performed by the man who gave John Lydon well more than his requisite 15 minutes (or at least as performed by whomever Malcolm was trying to make the next John Lydon).
• “So Sad About Me” - Cowboy Mouth - All You Need Is Live - I ordered 5 of their albums the morning after I first encountered them at the Galveston version of Mardi Gras, at which I also first saw the Blue Oyster Cult live. I can’t think of many other newly discovered bands that categorize themselves as rock and/or roll that I’ve enjoyed as much in the last decade.
• “Since I Met You” - Junior Brown - Live in Sarasota, FL, 2000 - A fine sounding boot of a little-known Texas treasure, with this track featuring his wife - a former guitar student of his who really impressed Prof. Brown.
• “Evonce (alt. take)” - Thelonious Monk - Complete Blue Note Recordings - Monk. Aaaaah.
• “All the Things You Are” - Connie Evingson - Some Cats Know - An obscure Minnesota-based jazz singer every bit as good as several others whose fame generally well exceeds their talent. Her version of this chestnut is as enjoyable as I’ve heard, and I’ve heard a few.
• “Undercover of the Night” - Rolling Stones - Undercover - The title tune from a fairly obscure album, at least for these lads. I’m not much of a fan of their albums after this, maintaining that the Keith Richards X-Pensive Winos albums are the best Stones albums in the last 20 years.
• “Pedal Point Blues” - Charles Mingus - Mingus Ah Um - One of the lesser tunes from my favorite Mingus album. This - like much of the Mingus output - is evocative of the business of the big city.
• “Sultans of Swing” - Dire Straits - Coming as it did in the midst of the cacophony of beeps, chirps and buzzes characterizing the early 80s new wave period, this was - well - music to my ears. I remember mistaking it for the next Men at Work single. Or was it the other way around?
• “When the Spell is Broken” - Richard Thompson - Live 3/7/91 - A solo Thompson boot, wherein he yet again proves the over-ranked pretender status of most others in the singer-songwriter genre.
• “At the Crossroads” - Sir Douglas Quintet - An early piece from Texas giant Doug Sahm. My first experience of Sahm was when I bought a vinyl album of his back in the late 1970s, mainly (solely) because Dylan guested. This is in my Sahm top five.

This will get even more obscure when I get a 500GB disc to hang off this thing and fill it will my krautrock, jazz and African music collections. As for the shuffle thing, I’m hooked. It saves my thinking juices for more important things like being really clever on a blog.

Undernews excerpts a piece by Jacob Sullum at Reason explaining how Texas gleefully one-ups the insanity of the Holy and Forever War on Drugs.  Don’t bet against Governor Goodhair doing nothing about this.  Hell, don’t bet against that empty suit trying to transmogrify Brown’s sentence into a death penalty.

The Drug War Chronicle reports that pressure is building for Texas Gov. Rick Perry to commute the sentence of Tyrone Brown, who was sentenced to life in prison for smoking pot. In 1990, when he was 17, Brown took part in a $2 robbery in which the victim was not physically injured, a crime for which he received 10 years of probation. A few weeks later, he tested positive for marijuana, and the judge not only revoked his probation but inexplicably re-sentenced him to a life term. Now, after local and national media attention . . . Perry has been urged to commute Brown’s sentence not only by outraged citizens but by Dallas District Attorney Bill Hill, Sheriff Louie Valdez, and even the sentencing judge, Keith Dean, who is no longer in office. . . The Dallas Morning News contrasted Dean’s ridiculously harsh treatment of Brown, a poor black teenager, with the lenience he showed a wealthy white guy, John Alexander Wood, who received a 10-year suspended sentence for killing a prostitute. When Wood repeatedly tested positive for cocaine, Dean did not send him to jail, let alone give him a life sentence. Instead he arranged things so Wood didn’t have to take drug tests anymore.

Chris Floyd offers a bit of background on the folks spinning the Litvinenko story.

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Of course, one of the chief obstacles in assessing the situation is the fact that almost everything we knew about the case for weeks was spoonfed to the media by the most elite PR operation in Britain. Almost from the moment that Litvinenko fell ill, he disappeared behind a phalanx of handlers paid for by his patron, Boris Berezovsky, the fugitive Russian billionaire and shadowlands operator par excellence. To handle – and generate – the publicity surrounding the incident, Berezovsky called on his old friend, Baron Bell of Belgravia, who, back when he was just plain old Tim Bell, served as the private propaganda chief for Margaret Thatcher, as Sourcewatch reports. The baron has also flacked for disgraced media mogul Conrad Black, disgraceful media mogul Rupert Murdoch, and the Coalition Provisional Authority, the mechanism set up by the Bush Administration to eviscerate Iraq.

(Speaking of the CPA, UK investigators now say they’ve found traces of Polonium 201, the radioactive isotope believed to have killed Litvinenko, in the London offices of Erinys, a private security company. As I noted in CounterPunch back in December 2003, Bush’s CPA gave Erinys’ Iraqi branch – formed as a joint venture with business cronies and family members of bigtime shadowlander Ahmad Chalabi – $40 million to guard oil pipelines in the conquered land. This has grown into a much larger stashn, not to mention an armed force of 16,000 men – something of a militia, one might say. The freebooters also bagged big money riding shotgun for Halliburton and Bechtel in those palmy CPA days of yore. And as the Guardian reports, Erinys is also active in Russia. You pull at one string in the shadowlands, and a whole tangled nest of other dark business starts shaking somewhere else.)

The leaping lord’s PR shop has also represented Ukraine President Viktor Yushchenko, another victim of a spectacularly ham-handed poisoning laid at the Kremlin’s door. Yet another client was former Russian President Boris Yeltsin, whose “miraculous” 1996 election victory – in the face of single-digit approval ratings – was engineered by a small group of oligarchs who were later given carte blanche to plunder Russia’s state-owned enterprises and vast natural resources for private profit. The acknowledged leader of this clique – which had muscled its way to riches and power in the brutal, Hobbesian free-for-all that characterized the Yeltsin years – was of course a certain Boris Berezovsky.

As one of the prime vetters of political aspirants in the Yeltsin court, Berezovsky was instrumental in bringing the obscure but presumably biddable ex-KGB apparatchik Vladimir Putin to power. But Putin had a clique of his own, based in the security organs – and soon the oligarchs found themselves out-muscled, on the receiving end of the state machinery they had manipulated for so long. Most fled abroad, where they’d stashed their billions; some were jailed. Berezovsky, charged with embezzlement and money laundering, repaired to sumptuous digs in London and environs, there to become Putin’s most ferociously outspoken critic. He also found new friends in high places – including Neil Bush, George W.’s scandal-ridden brother. Berezovsky is one of the backers of Neil’s “educational software” company, which peddles a dumbed-down “interactive teaching” system called COW to public school systems loath to risk their federal funding by rejecting a First Family boondoggle.

This then is the team that controlled the flow of information during the three agonizing weeks it took Litvinenko to die. They set out the basic storyline that was followed, with scarcely a variation, by all the leading UK papers and most of the world media. The Cold War had come again, we were told: a bold dissident against the tyrannical Putin regime had been assassinated in the streets of London by the undead KGB, wielding strange poisons concocted in secret laboratories. (All this while the latest James Bond movie was having its gala premiere!) A carefully composed photograph of the martyr was released by the baronial PR outfit, and quickly became the global emblem of the case. This is what Putin has done, Litvinenko was said to have said: see his evil handiwork with your own eyes.

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Wikipedia takes all the fun out of life. Here I was all hepped up to start a list of canines in literature - prompted by Robert Grudin’s Book (even though the author unforgiveably offs the marvelously named Doppler therein) - when I find a huge list already in place at that repository of all knowledge (real or otherwise).  Ah well, if anyone has any further suggestions that aren’t on that list - or even if they are on the list and you want to say something about it - then have at it.

James Yeager entertains us with how Junior’s going to get rid of the evil Cheney cyborg.

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In current presidential history, Bush Minor is too shallow for persuasion, too unsubtle for domination. What he likes is having the fix put in for so long in advance that he thinks nobody’s going to notice it’s been fixed. Like being a Yale legacy, or being let into and then skipping out on the National Guard.

So when Bush finally realizes he needs to persuade Cheney to leave for the good of the country, it will be done an entirely different way. But rest assured Cheney’s defrocking cannot fail to reveal the kind of sly idiocy this administration customarily mistakes for fancy footwork.

About the best thing Bush can do to appear to refurbish his pluperfect irrelevance is to dump Cheney and appoint John McCain vice president. Safe move, Senate’s already gone Democratic. One less vote isn’t going to matter.

McCain’s the heir-apparent already. That’s his reward for caving into Bush on torture and warrantless wiretapping while giving the dimmer bulbs among the media glare the impression of not having done so.

Cheney’s going to have to go as part of the Iraq policy realignment anyway. The one that dare not speak its name. The one that takes until the next presidential term because the situation is so ineffably infundibulated that the best bipartisan military and civilian minds in America will have to take that long to work it out. By comparison, extracting an army in the field from the midst of civil war took Napoleon the better part of four years, and he at least had the merit of being a military genius.

The only real question for now is, do they need to pull a Bill Casey on Cheney or not? Some will recall that new Defense guy Bob Gates was Casey’s deputy CIA Director when Casey had a sudden brain aneurysm the day before he was supposed to testify to Congress about linking Reagan to the Iran-Contra scandal of fragrant memory.

Completely unexpected. Nobody had any idea. Why, Casey was in perfect health. Old, but, you know, perfect health. Took one for the Gipper, perhaps.

Well, Cheney’s never been in perfect health since his first heart attack, much less his last one. So if he disappeared into an ambulance and failed to emerge vigorously on the other end of the ride nobody, nobody, would be surprised.

It may not come to that. Cheney may prefer to take his dour and impervious self-righteousness back to Wyoming where he can drunkenly shoot endangered species, pollute his ranch, and count his money all he wants.

But there are two kinds of craziness infesting the top of the Bush-Cheney cluster-failure. One of them is Cheney’s insistence that he alone interprets the world correctly and anybody who says different is a sissy. The other is Bush’s stark operating principle that words have no inherent meaning.

The divorce from reality that these habits of thought engender is so severe that you have to wonder if their practitioners were ever married to actuality at all. Or even went out on dates.

Given the complex psycho-daddy relationship Cheney has with Bush Minor, it is not too far-fetched to think Bush may want to remove Cheney for non-political reasons too. Remember what the prison shrink says to the condemned murderer Williams in the Lemmon/Matthau remake of The Front Page? The shrink asks Williams to tell him about his youth; Williams says it was wonderful, happy, no tension. “Completely normal childhood.” The shrink says, “I see. So you wanted to kill your father and sleep with your mother.”

Since we know nobody on the face of God’s good earth wants to sleep with Bar, and Poppy still has Secret Service protection, taking out Father-Figure might be the only avenue to psychic relief left for poor little Georgie, especially if he hasn’t already started drinking again.

Nobody as lethargically concerned with his legacy as Bush is could omit an opportunity to wipe away the appearances of the past and substitute the illusion of progress while, in fact, altering nothing of substance whatsoever. The frat boy who would do anything crude to be the center of attention at parties hasn’t changed.

McCain’s replacing Cheney. Don’t know how, don’t know when. But it makes more sense than the war in Iraq, tax cuts for the rich, legislation for sale, or gay Republicans. Oh, but wait. Maybe that’s why it won’t happen after all. Makes too much sense.

Be sure to also read the priceless LBJ anecdote at the start of the piece.