Monday, February 28, 2011

By Ernest A. Canning on 2/27/2011 6:32pm 

Gov. Walker's Wisconsin 'Union Busting' Exposes 'Tea Party' Scam, Duped Americans

Time for those formerly hoaxed by duplicitious corporate schemes to wake-up and smell what billionaire sociopaths are shoveling...

Guest editorial by Ernest A. Canning

"This is not a budget issue," the policeman speaking to the cheering protesters jammed inside of the capital rotunda in Madison, WI, shouted this weekend, "This is a civil rights issue!"

"Mr. Walker, if you are listening to me, let me tell you something," he continued through the bullhorn as the crowd rallied, "We know pretty well now who you work for. Let me tell you who we work for. We work for all of these people!"

"We're not here, Mr. Walker, to do your bidding. We're here to do their bidding!" he told the crowd in a remarkable video-taped moment posted by RAW STORY on Sunday.

While a wide swath of Wisconsin society, entailing not only both public and private union members, but students, doctors, nurses, teachers, police officers (like the one mentioned above), and fire fighters have swarmed the streets and public buildings of Madison as part of a mass movement rivaling those we've recently seen on the streets of Cairo, there is one sector of our society who should be especially angry with the Wisconsin branch of Corporate America's wholly-owned, public subsidiary, GOP, Inc.

It is the uninformed and misinformed working class stiffs, aka "Tea Partiers," who should be most disturbed by the scam they've been subjected to over the past two years (and many more). It is they who were taken in by the lies and deceptions of billionaire sociopaths, like oil-baron David Koch of the infamous Koch Industries. Koch's aim is not liberty, freedom, and jobs but American fascism, corporatocracy, and the "eternal subjugation of the common man"...

American fascism cloaked as 'patriotism'

On April 9, 1944, while our nation was engaged in a life-and-death struggle with fascism in Europe, an op-ed written by Vice President Henry Wallace appeared in The New York Times:
The American fascist would prefer not to use violence. His method is to poison the channels of information. With a fascist the problem is never how best to present the truth but how best to use the news to deceive the public into giving the fascist and his group more money and more power. 

They claim to be superpatriots, but they would destroy every liberty guaranteed by the Constitution. They demand free enterprise but are the spokesmen for monopoly and vested interest. Their final objective toward which all their deceit is directed is to capture political power so that, using the power of the state and the power of the market simultaneously, they may keep the common man in eternal subjugation.
There is perhaps no more apt example of "the American fascist" than billionaire David Koch. His libertarian rhetoric, as observed by Lisa Graves, Executive Director of the Center for Media and Democracy (see video below), masks a radical-right agenda that includes opposition to Social Security, egalitarian democracy, the minimum wage, and the right of ordinary Americans to organize into an effective check against dictatorial corporate power through collective bargaining --- an agenda fully embraced by Governor Scott Walker (R-WI). It is also an agenda which David inherited from his father, Fred C. Koch, a co-founder of the John Birch Society, a whack organization that was so absurdly radical-right that its members accused the former Republican President and Supreme Commander of Allied Forces in Europe during World War II Dwight D. Eisenhower of being a Communist agent.

David, along with his brother Charles, owns Koch Industries, whose conglomerated holdings include "oil refineries in Alaska, Texas, and Minnesota, and control some four thousand miles of pipeline." Koch Industries produces an estimated $100 billion in annual revenues and so much pollution that it has been listed as one of the nation's ten worst.

The Koch brothers do more than pollute the planet. As revealed by Jane Mayer in Covert Operations, they have funneled so much money into "organizations fighting legislation related to climate change, underwriting a huge network of foundations, think tanks, and political front groups," that Greenpeace has described Koch as "the kingpins of climate science denial."

During a Nov. 27, 2000 episode of 60 Minutes, "Blood and Oil," their brother Bill Koch gave voice to a statement that has, perhaps inaccurately, been ascribed to Honoré de Balzac: "Behind every great fortune there is a great crime."

Bill Koch described David and Charles as "autocratic." Bill said he feared the legacy of Koch Industries would be comparable to that of "organized crime." He alleged that Koch Industries "made millions by stealing oil from the government." According to Bill, the company falsified measurements of the amount of oil Koch was actually acquiring on its run sheets in order to "skim off the top," if you will, just as the mafia is well known to do.

As revealed by 60 Minutes updates, while Koch Industries dismissed Bill Koch as a disgruntled former executive, Bill's 60 Minutes account was supported by the testimony of some 50 former Koch employees in a federal lawsuit. In May, 2001, a settlement was reached which required "Koch Industries to pay $25 million in penalties to the U.S. government for improperly taking more oil than it paid for from federal and Indian lands."

Bill Koch's reference to "organized crime" may understate the problem of impunity that comes with the symbiotic relationship between corporate wealth and political power.

It is difficult to speak of "corporate crime" when it is the criminals who are in charge. As Gordon Gekko (Michael Douglas) observed in Wall Street 2, "Someone reminded me I once said 'Greed is good.' Now it seems it's legal."

During an Aug. 25, 2010 appearance on Democracy Now! Charles Lewis provided a classic example of how these corporate miscreants strive for impunity:

They [Koch] were being prosecuted for 300 oil spills by the Customs and EPA and Justice Department...And they asked the Senate Majority Leader [Bob Dole] to insert in the so-called regulatory reform legislation a clause that would get rid of any current prosecutive effort by the US government against Koch Industries...The person writing the draft for that legislation was the chair of the board of Citizens for a Sound Economy [a Koch-funded front group], former White House counsel... [C.] Boyden Gray. This did not work because several people died from bad hamburgers from an E. coli outbreak, and the public started to realize that maybe we do need regulation.

Last Thursday, the Green News Report described how the symbiotic relationship between Koch Industries and the WI GOP, Inc., had not only netted Governor Walker's union-busting effort, but a plan buried in his controversial legislation that would sell off "state-owned heating, cooling and power plants" to private entities "without solicitation of bids, for any amount" that the WI GOP, Inc., "determines to be in the best interest of the state."

Given the symbiotic relationship between Koch Industries and the WI GOP, Inc., one does not have to be a rocket scientist to realize that the WI GOP, Inc., sees Koch Industries' greed to be "in the best interest of the state."

Piercing the 'Tea Party's' "ecstatic escape of unreason"

It is ironic that Madison, WI, would serve as the backdrop for a genuine democratic uprising against the abuse of power occasioned by the symbiotic relationship between its new governor and unbridled corporate wealth.

It was just last April when the scholarly Noam Chomsky addressed some 1,000 people inside Madison's Orpheum Theater, warning of the ominous features of the Koch-funded and controlled "Tea Party" movement:
I’m just old enough to have heard a number of Hitler’s speeches on the radio, and I have a memory of the texture and the tone of the cheering mobs, and I have the dread sense of the dark clouds of fascism gathering [within these United States].
In an extended piece, Remembering Fascism: Learning from the Past, Chomsky informed us that it is a serious error to ridicule "Tea Party" antics. "It would be far more appropriate to understand what lies behind them and to ask...why justly angry people are being mobilized by the extreme right."

Referring to the deluded followers of the Koch-funded and manipulated "Tea Party" movement, Chomsky observed:
There are poignant studies of the indignation and rage of those who have been cast aside as the state-corporate programs of financialization and deindustrialization have closed plants and destroyed families and communities. They reveal the sense of acute betrayal on the part of working people who believed they had fulfilled their duty to society in a moral compact with business and government, only to discover that they had been only instruments for profit and power, truisms from which they had been carefully protected by doctrinal institutions...
Both in his April 2010 address and in the article, Chomsky observed that the "level of anger and fear in the country is like nothing [he could] recall in [his] lifetime. And since the Democrats are in power, the revulsion over the current social-economic-political world attaches to them."

Chomsky saw a parallel to what Fritz Stern, a scholar of German history, described as "an historic process in which resentment against a disenchanted secular world found deliverance in the ecstatic escape of unreason."

Any doubts one may have about the applicability of the "Tea Party's" ecstatic escape of unreason will instantly be eliminated by watching Brad Friedman's 'Tea Party Express II: Rise of the Tea Bags,' an hilarious short video documentary in which Friedman plays the straight man by asking simple questions. The comedy is furnished by spontaneous answers of the Tea Partiers called to gather in Los Angeles at an event sponsored by one of the Koch Industries front groups, the Tea Party Express.

This "ecstatic escape of unreason," aided in no small measure by the 24/7 propaganda emerging from Fox "News" and the rest of the predictable and unavoidable right-wing echo chamber which has taken over our public airwaves, not to mention the systemic failure of the corporate media to speak truth to power, suggests that the heads of most of the Tea Party's rank-and-file are so deeply embedded in the disinformation bubble as to render them impervious to facts and reason. However, the gap between the hard-right's recent rhetoric of "jobs" and "liberty" and the harsh reality of their anti-democratic, union-busting project is so stark that even the rank-and-file "Tea Bagger" may come to understand that their justified anger and revulsion was misdirected.

Infuriated by "Big Government" ruthlessly stealing away freedom from American citizens, Tea Partiers? You need look no further than what Walker and the Republicans are attempting to do in Wisconsin. It is the very definition of what you were (inaccurately) told was happening last year during the health care insurance reform debate.

'The Great American Jobs Scam'
"I’ve known Scott Walker for more than 20 years. His dad pastored my in-laws’ church, and Scott was in my office within three or four months ago, sitting and talking about his whole program. We did hours of discussions about it. He never mentioned going after collective bargaining." – Nation journalist and WI resident, John Nichols
 It should come as no surprise that neither Walker nor any of the other members of corporate America's wholly-owned, public subsidiary, GOP, Inc., openly spoke of destroying the right of working class Americans to organize and engage in collective bargaining before reaching office. It is also no surprise that, after acquiring power, the duplicitous GOP, Inc., would have the temerity to claim a mandate to carry out a radical, union-busting agenda that they'd hidden from the electorate.

The hard-right practices tight message control. Irrespective of mumblings in the corporate media about a "recovery," Koch and friends well understood that U.S. manufacturing, unemployment, and poverty are mired at levels not seen since the Great Depression. They also understood that it was the average citizens, not the corporations, feeling the only real pain, as corporate profits were at a record high last year, even as ordinary Americans struggled to survive in ways they haven't had to since the 1930s.

The 2010 hard-right public message was "jobs, jobs, jobs." It was a message delivered in the carefully scripted ads of all Republican candidates. It was even included in the effort, bankrolled by Koch Industries and two other Texas-based oil industry polluters, Tesoro Corp. and Valero Energy Corp., that went so far as to deceptively label a California ballot measure designed to destroy both jobs and the environment as the "California Jobs Initiative."

But then, the 2010 "jobs" message has been a core staple of what Greg LeRoy has described as The Great American Jobs Scam. LeRoy's is a must-read book which documents how, over the past fifty years, corporations have obtained massive subsidies, outright gifts of land and property and enormous tax breaks from city, county, state, and regional governmental entities by enticing bidding wars between them through empty promises of job creation that are most often never fulfilled.

From a national perspective, the scam does not create jobs. It merely shifts them from one region to another, at least until they are later shipped overseas.

It is a scam that has long been in play in Wisconsin, where, according to the Wisconsin Department of Revenue, "two-thirds of corporations in the state pay no taxes, and the share of corporate tax revenue funding the state government has fallen by half since 1981."

The notion that deregulation, corporate tax breaks, "enterprise zones," and a so-called "business-friendly environment" are needed to create jobs is a lie. So is the Republican suggestion that public sector jobs do not amount to employment.

The cause of the current high level of unemployment lies in the fact that the billionaire class, utilizing so-called "free trade" agreements, starting with NAFTA, have been permitted to outsource the U.S. manufacturing base in search of the $2/day foreign laborer.

The illusion of prosperity was maintained by an unsustainable model of borrowing. That model crashed with the 2008 burst of the housing bubble and the collapse of a credit default swap market that was little more than a giant Ponzi scheme.

So long as we cede control of our government and our economy to the privileged few, there will be high unemployment, and, if collective bargaining ends, no defense against dictatorial corporate wealth and power.

Shouldn't those angry Tea Partiers, so manipulated to be "outraged" by the results of these very shenanigans, be marching side-by-side right now with the protesters in Wisconsin, where the actual results of this Big Government/Big Corporate partnership-against-the people have finally taken full bloom?

The beginning of a second American revolution?

Perhaps the greatest benefit that flows from the prank call from the Buffalo Beast's Ian Murphy, posing as "David Koch," is that it exposed the truth about right-wing duplicity and the severe threat it poses to liberty, equality, and democratic governance.

Former VP Henry Wallace was right. "They claim to be superpatriots, but they would destroy every liberty guaranteed by the Constitution."

The problem we, the American people, now face, is that while we still possess the technical remnants of democracy in the form of the vote, the game, especially in the wake of the U.S. Supreme Court's outrageous Citizens United decision, not to mention easily hacked and 100% unverifiable e-voting systems, is heavily weighted in favor of corporate wealth and power.

Corporations own mass media which produce 95% of what we see, hear, and read, forcing the leadership of the two major political parties to troll for corporate campaign dollars in order to compete on a corporate media playing field. Candidates like Dennis Kucinich (D-OH), who do not toe the corporate line are marginalized as "not viable" and excluded from debates as the corporate media police the range of "acceptable" public discourse --- "acceptable," that is, to corporate America.

Yet, recent events in Egypt and elsewhere substantiate the late Howard Zinn's observation in A Power Governments Cannot Suppress that governmental power becomes "futile against the power of an aroused citizenry."

Our own Declaration of Independence informs us that when government becomes destructive of "life, liberty and the pursuit of is the right of the people to alter or to abolish it."

Our increasingly plutocratic and authoritarian government has become destructive of those ends. It has squandered trillions on weaponry and endless war. It has committed unspeakable atrocities and torture abroad. It threatens humanity's very survival by way of global climate change denial while permitting corporations to poison our water, our food, our public discourse, and the very air we breathe. It panders to the whims of the privileged few, all the while implementing "austerity" measures that will deprive future generations of Americans of a quality of life that includes freedom from want, freedom from fear, and basic levels of education and health care.

It is too soon to tell whether the formerly duped "Tea Baggers" will awaken to reality. We don't know whether the genuinely democratic uprising in Wisconsin will continue to spread; whether it will lead to the type of mass movement, including general strikes, such as those we witnessed on the streets of Cairo --- a movement that can succeed only if growing numbers of Americans abandon the corporate media, turning instead to alternative and foreign media, such as, among the many reliable sources, Democracy Now!, The BRAD BLOG, and al Jazeera English as their primary source of information.

Meaningful democracy and a better tomorrow can be achieved only when the great masses of ordinary U.S. citizens come to appreciate a basic truth that is to be found in the erudition produced by Frederick Douglas after he escaped the clutches of slavery:
Power concedes nothing without a demand. It never did, and it never will. Find out just what people will submit to, and you have found out the exact amount of injustice and wrong which will be imposed upon them; and these will continue until they are resisted with either words or blows, or both. The limits of tyrants are proscribed by the endurance of those whom they oppress..."
UPDATE 2/28/11: News from the front lines of the cyber revolution.

Anonymous, the internet activist group which recently exposed a plot hatched by Hunton & Williams, a law firm that represents the U.S. Chamber of Commerce and Bank of America, to employ “three well-connected, government-contracted cyber-security/intelligence firms (HBGary Federal, Berico Technologies and Palantir Technologies --- calling themselves "Team Themis" collectively) to use nefarious and likely illegal schemes in hopes of discrediting [Velvet Revolution, Brad Friedman] and other progressive citizens, journalists and organizations who had opposed the Chamber's extremist corporate agenda,” has entered the fray in Wisconsin, announcing:
Anonymous hears the voice of the downtrodden American people, whose rights and liberties are being systematically removed one by one, even when their own government refuses to listen or worse --- is complicit in these attacks. We are actively seeking vulnerabilities, but in the mean time we are calling for all supporters of true Democracy, and Freedom of The People, to boycott all Koch Industries’ paper products.
Exploiting vulnerabilities in a matter of minutes, Anonymous took down a web site of Americans for Prosperity, a Koch Industries front group.

On its website, Koch, which acquired Georgia-Pacific Corp. in 2004, states:
Georgia-Pacific’s familiar consumer brands in North America include Quilted Northern®, Angel Soft®, Brawny®, Sparkle® , Soft 'n Gentle®, Mardi Gras®, Vanity Fair®, and the Dixie® brand of tabletop products. The company’s leading European brands include Lotus®, Colhogar®, Delica®, Tenderly® and the Demak'Up® brand of facial cleansing products. The company also markets paper towel, napkin and soap dispensing systems used in commerical settings.

* * *
Video of Lisa Graves appearance on Democracy Now follows...

Ernest A. Canning has been an active member of the California state bar since 1977. Mr. Canning has received both undergraduate and graduate degrees in political science as well as a juris doctor. He is also a Vietnam vet (4th Infantry, Central Highlands 1968).

Friday, February 25, 2011

Thursday, February 24, 2011


A homeless resident of a tent city in Sacramento, CA, March 10, 2009 (Justin Sullivan/Getty Images)


At Grave Risk


Published: February 21, 2011

Buried deep beneath the stories about executive bonuses, the stock market surge and the economy’s agonizingly slow road to recovery is the all-but-silent suffering of the many millions of Americans who, economically, are going down for the count.

A 46-year-old teacher in Charlotte, Vt., who has been unable to find a full-time job and is weighed down with debt, wrote to his U.S. senator, Bernie Sanders:

“I am financially ruined. I find myself depressed and demoralized and my confidence is shattered. Worst of all, as I hear more and more talk about deficit reduction and further layoffs, I have the agonizing feeling that the worst may not be behind us.”

Similar stories of hardship and desolation can be found throughout Vermont and the rest of the nation. The true extent of the economic devastation, and the enormous size of that portion of the population that is being left behind, has not yet been properly acknowledged. What is being allowed to happen to those being pushed out or left out of the American mainstream is the most important and potentially most dangerous issue facing the country.

Senator Sanders is a Vermont independent who caucuses with the Democrats. He asked his constituents to write to him about their experiences coping with the recession and its aftermath. Hundreds responded, including several from outside Vermont. A 69-year-old woman from northeastern Vermont wrote plaintively:

“We are the first generation to leave our kids worse off than we were. How did this happen? Why is there such a wide distance between the rich and the middle class and the poor? What happened to the middle class? We did not buy boats or fancy cars or diamonds. Why was it possible to change the economy from one that was based on what we made and grew and serviced to a paper economy that disappeared?”

A woman with two teenagers told the senator about her husband, a building contractor for many years, who has been unable to find work in the downturn:

“I see my husband, capable and experienced, now really struggling with depression and trying to reinvent his profession at age 51. I feel this recession is leaving us, once perhaps a middle-class couple, now suddenly thrust into the lower-middle-class world without loads of options except to try and find more and more smaller jobs to fill in some of the financial gaps we feel day to day.

“All we want to do is work hard and pay our bills. We’re just not sure even that part of the American Dream is still possible anymore.”

One of the things I noticed reading through the letters was the pervasive sense of loss, not just of employment, but of faith in the soundness and possibilities of America. For centuries, Americans have been nothing if not optimistic. But now there is a terrible sense that so much that was taken for granted during the past six or seven decades is being dismantled or destroyed.

A 26-year-old man who emerged from college with big dreams wrote: “I had hoped to be able to support not just myself by this point, but to be able to think about settling down and starting a family. My family always told me that an education was the ticket to success, but all my education seems to have done in this landscape is make it impossible to pull myself out of debt and begin a successful career.”

How bad have things become? According to the National Employment Law Project, a trend is growing among employers to not even consider the applications of the unemployed for jobs that become available. Among examples offered by the project were a phone manufacturer that posted a job announcement with the message: “No Unemployed Candidate Will Be Considered At All,” and a Texas electronics company that announced online that it would “not consider/review anyone NOT currently employed regardless of the reason.”

This is the environment that is giving rise to the worker protests in Wisconsin, Ohio and elsewhere. The ferment is not just about public employees and their unions. Researchers at Rutgers University found last year that more than 70 percent of respondents to a national survey had either lost a job, or had a relative or close friend who had lost a job. That is beyond ominous. The great promise of the United States, its primary offering to its citizens and the world, is at grave risk.

A couple facing foreclosure in Barre, Mass., wrote to Senator Sanders: “We are now at our wits end and in dire straits. Our parents have since left this world and with no place to go, what are we to do and where are we to go?” They pray to God, they said, that they will not end up living in their car in the cold.

Wednesday, February 23, 2011


February 23, 2011

Democracy And The Battle In Wisconsin

John Nichols: We don't elect kings with term limits, democracy is a struggle over public policy

More at The Real News
Go to original


John Nichols, a pioneering political blogger, has written the Beat since 1999. His posts have been circulated internationally, quoted in numerous books and mentioned in debates on the floor of Congress. Nichols writes about politics for The Nation magazine as its Washington correspondent. He is a contributing writer for The Progressive and In These Times and the associate editor of the Capital Times, the daily newspaper in Madison, Wisconsin. His articles have appeared in the New York Times, Chicago Tribune and dozens of other newspapers.Nichols is the author of The Genius of Impeachment (The New Press); a critically acclaimed analysis of the Florida recount fight of 2000, Jews for Buchanan (The New Press); and a best-selling biography of Vice President Dick Cheney, Dick: The Man Who is President (The New Press), which has recently been published in French and Arabic. He edited Against the Beast: A Documentary History of American Opposition to Empire (Nation Books), of which historian Howard Zinn said: "At exactly the time when we need it most, John Nichols gives us a special gift--a collection of writings, speeches, poems, and songs from throughout American history--that reminds us that our revulsion to war and empire has a long and noble tradition in this country." With Robert W. McChesney, Nichols has co-authored the books It's the Media, Stupid! (Seven Stories), Our Media, Not Theirs (Seven Stories), Tragedy and Farce: How the American Media Sell Wars, Spin Elections, and Destroy Democracy (The New Press) and, most recently, The Death and Life of American Journalism (Nation Books). McChesney and Nichols are the co-founders of Free Press, the nation's media-reform network, which organized the 2003 and 2005 National Conferences on Media Reform.

Tuesday, February 22, 2011

Fighting the 5 fascisms in Wisconsin & Ohio

by Bob Fitrakis & Harvey Wasserman
February 21, 2011
go to original

The escalating confrontations in Wisconsin and Ohio are ultimately about preventing the United States from becoming a full-on fascist state. [emphasis added]

The stakes could not be higher---or more clear.

As defined by its inventor, Benito Mussolini, fascism is "corporate control of the state." There are ways to beat around the Bush---Paul Krugman has recently written about "oligarchy"---but it's time to end all illusions and call what we now confront by its true name.

The fights in Wisconsin, Ohio, and in numerous other states are about saving the last shreds of American democracy. They burn down to five basic realities:

1) The bulwark of modern democracy is the trade union. This has been true since the beginning of the Industrial Revolution. All social programs can trace their roots to union activism, as can the protection of our civil liberties.

The first Germans Hitler put in concentration camps were neither Jews nor gypsies---they were trade unionists.

The attacks on state workers in Wisconsin, Ohio and elsewhere have nothing to do with balancing budgets. That could easily be done without destroying collective bargaining.

For the hard-right, this is about busting unions, the last organized force standing in the way of total corporate control of the United States by the rich and richer.

2) The material essence of fascism is the extreme separation of rich and poor, a massive transfer of wealth from those on the bottom to those on the top.

The unbalanced budgets in Ohio and Wisconsin are rooted in huge tax cuts given to the rich at the expense of the middle and lower classes. Widespread poverty among those who might otherwise rebel is essential to fascist control of a government.

A largely ignored aspect of this fight is the hundreds of billions of dollars currently locked up in union, government and Social Security pension funds. With unions destroyed, this huge cache of dollars will fall quickly into corporate hands. The additional "benefit" for the financial elite will be tens of millions of impoverished elders desperate for low-wage jobs in virtual slave labor situations.

3) The crisis crippling states everywhere is directly related to the massive destruction of social resources by war. Since the end of the New Deal and World War II, the American elite have engineered the biggest dump of material wealth by military means in human history.

The trillions of dollars of pure martial waste poured into the Cold War and those in Southeast Asia, central America, the Middle East, Southwest Asia and elsewhere could easily have clothed, housed, fed, educated, and provided otherwise decent lives for all human beings the world over.

Instead, poverty, desperation and stratification have been guaranteed.

The entire economic crisis now gripping the United States can be directly traced to the military budget, which exceeds the sum of what's being spent by all other nations combined. In a brilliant recent column, Robert Greenwald points out that the entire alleged shortfall in Wisconsin could be covered by bringing just 180 troops home from Afghanistan.

But the purpose of that deployment is to undermine national security, not to protect it. A frightened, impoverished, insecure nation is one dependent on its fascist elite.

Democracy demands and protects true material security among the people as a whole. That's what's really at stake in the battle to cut the military budget. The fights in Ohio and Wisconsin are surface manifestations of that bigger battle.

4) Mussolini also made it clear that corporate control of the media is essential to fascist rule. Whoever would seize power first took the radio stations, then the television stations. Now the internet is under attack. The free flow of information is fascism's ultimate enemy.

So the relentless Foxist portrayal of the battles in Wisconsin and Ohio as pitting "responsible, austerity-minded" governors versus "lazy, irresponsible state workers" is utterly predictable.

So is the appearance of the media-created Tea Party "movement" on the side of the corporations. It's standard corporate procedure to invent a faux "grassroots" to fight unions and working people. So finding phony corporate "populists" like Sarah Palin and New Jersey's Chris Christie in the right-wing media limelight is utterly predictable.

5) It is no accident that the "job loving" union-hating governors of Wisconsin and Ohio (along with Florida) have rejected billions in federal funds for re-building passenger rail service that would create thousands of jobs.

A corporate state relies on central control of energy. Rail service threatens the power of the oil and auto lobbies. Renewable energy would replace centralized "King Cong" (coal, oil, nukes & gas) sources with decentralized Solartopia photovoltaic panels, bio-fuels, windmills, increased efficiency and the like. The push for federal nuclear loan guarantees is central to the corporate state.

The anti-union governor of Ohio is strongly focused on killing not only train service but all incentives for renewable energy. His energy plan is for extreme right-wing nuke-based monopolies like FirstEnergy to run the show. Atomic power is the ultimate weapon against community control.

For decades the term "fascist" has been dismissed from use in this country, and perhaps rightly so. Corporations have been dominant in the US since the 1880s, but we have managed to maintain a modicum of democracy.

It's hard to see that happening if the remnants of the organized labor movement are crushed in Wisconsin and Ohio. Both states have long, important traditions of union activism.

In the wake of Citizens United, with the courts, media, Congress and presidency firmly in corporate control, we see no easy road to victory for working people.

"Vote the bastards out" has become a pipedream in the age of electronic voting machines. Especially in Ohio, a reliable electoral vote count is a thing of the past. [emphasis added ...because non-fascist Democrats and Republicans have been fighting election theft by election-computer operators, so far without success (see also here).]

We also have a president who was elected with strong labor support and who is now genuflecting toward the unions. But US history is filled with Democrats who have betrayed their working-class backers, and this one may prove no exception.

So in the long run, we have only ourselves to rely on. The way to survival is not clear.

Ultimately, as Martin Luther King said, "the arc of the moral universe is long, but it bends towards justice."

But from time to time, it does break. If these uprisings in Wisconsin and Ohio fail, there will---literally---be hell to pay.

Somehow, we must find a way to make sure they don't.

Bob Fitrakis & Harvey Wasserman have co-authored four books on election protection, which are at, where Bob's FITRAKIS FILES also appear. HARVEY WASSERMAN'S HISTORY OF THE US is at, along with SOLARTOPIA! OUR GREEN-POWERED EARTH. Originally published by


There's a word in the very first line of the Constitution of the United States that describes the instrument through which freedom is held. It's a term for people acting in concert to secure their liberty and hold those rights against any opponent. That word is union.

From its founding, the story of this nation has been the story of union. It is the story of two centuries spent in building up the ability of ordinary citizens to treat with wealthy, powerful, politically connected entities. That story contains instances of tragedy. Thousands died in the struggle, many thousands more suffered poverty or were outcast from communities. But the story of union also contains far-reaching triumphs. Every paid vacation, every weekend, every overtime dollar, every protection from arbitrary dismissal and unfair treatment, everything that makes your working life tolerable, came because people stood together in union at risk to their own livelihoods and often their own lives. Some of those laws exist only because workers stood in union when not only corporations but their own government attacked them not just with guns, but with bombers. They paid the price. You reap the benefits.

When we talk about "the greatest generation" that brought the nation through World War II and built America into a post-war powerhouse, we're speaking of a population where nearly a third of workers were union members. It's no coincidence that the peak period of growth and progress coincides with the peak period of union membership. When people act in union, there's nothing they can't accomplish. When people cannot join in union, when everyone must face the powerful alone, all rights are nothing more than words.

Whether in a union of states and nations or a union of workers and citizens, only by working in concert can rights be wrested from oppressors and held against despots. That's why tyrants quake at the sound of union. That's why the right to act in union is the ability that the downtrodden most desire and authorities first attack. Union is the measure of freedom.

The outlawing of independent unions is the clearest and most consistent marker of despotism around the world. When Gaddafi seized control of Libya in 1969, his first speech proclaimed the end of labor unions. No sooner had he secured control of Cuba than Fidel Castro banned the ability of unions to strike or to bargain over salary and benefits, saying such demands were detrimental to "the national economy." In Colombia today, right-wing militias work together with corporations to keep down costs and demands for decent working conditions in the most effective way they know–they execute union leaders.

There's a good reason why governments and corporations alike show trepidation when people are able to organize. Union is effective. For all the pretty speeches and all the ham-handed threats, the signal that the Iron Curtain was finally rising didn't come in Berlin or Washington, D.C., it came in the shipyards of Gdańsk, when men dared to wave the flag of an independent union. Want to determine where governments are actually concerned about the rights of their people? You only have to look at how free people are to organize for a cause. Without that, no other rights matter. With it, all other rights will follow.

The First Amendment to the Constitution enshrines a number of freedoms including religion, speech and the press, but this amendment should not be read as a random list of disconnected items. Everything in it directly depends on the liberties held out in the closing words: the ability of the people to peacefully assemble and to petition for redress. When the Constitution extends the right of assembly, it's not just giving us the right to gather together for no purpose. What's protected is the right to join together in common cause, and to seek as a group to move institutions that would not respond to individuals acting alone.

The American dream—the dream that an average citizen can enjoy a decent life, raise a family, and hope for the future—was created in union, sustained by union, and is dependent on union. That dream stands on a knife edge. Already the forces that oppose union have torn away the hopes of many Americans. As union membership has fallen, decent pensions have disappeared. As union membership has fallen, health care costs have increased. As union membership has fallen, pay for workers has stagnated. As union membership has fallen corporate profits—and executive pay—have soared. The decline of union is the birthplace of inequity.

At this moment, the same forces that have ripped union away from most workers are acting against those few who still share the ability to speak with a collective voice. They want to wreck this last bastion, burn it down, stomp it, bury it, extinguish it forever, so that they can sleep safe knowing their power will not be challenged. They want to erase the work of two centuries, turn the American dream into a subject for nostalgia, and make the Bill of Rights into a sheet of paper.

That is what's on the line in Wisconsin.

Nothing has changed since the time that first line of the Constitution was written. Union is not just a means to oppose tyranny, it is the only means.

Monday, February 21, 2011


Exposing the Republicans' 3-Part Strategy to Tear the Middle Class Apart -- Let's Stop Them in Wisconsin

GOP forces are trying to deflect attention from the growing wealth transfer to the richest 1 percent while the jobs and wages of everyone else languish.

February 20, 2011 | The Republican strategy is to split the vast middle and working class - pitting unionized workers against non-unionized, public-sector workers against non-public, older workers within sight of Medicare and Social Security against younger workers who don't believe these programs will be there for them, and the poor against the working middle class.

By splitting working America along these lines, Republicans want Americans to believe that we can no longer afford to do what we need to do as a nation. They hope to deflect attention from the increasing share of total income and wealth going to the richest 1 percent while the jobs and wages of everyone else languish.

Republicans would rather no one notice their campaign to shrink the pie even further with additional tax cuts for the rich - making the Bush tax cuts permanent, further reducing the estate tax, and allowing the wealthy to shift ever more of their income into capital gains taxed at 15 percent.

The strategy has three parts:

1. The Battle over the Federal Budget

The first is being played out in the budget battle in Washington. As they raise the alarm over deficit spending and simultaneously squeeze popular middle-class programs, Republicans want the majority of the American public to view it all as a giant zero-sum game among average Americans that some will have to lose.

The President has already fallen into the trap by calling for budget cuts in programs the poor and working class depend on - assistance with home heating, community services, college loans, and the like.

In the coming showdown over Medicare and Social Security, House budget chair Paul Ryan will push a voucher system for Medicare and a partly-privatized plan for Social Security - both designed to attract younger middle-class voters.

2. The Assault on Public Employees

The second part of the Republican strategy is being played out on the state level where public employees are being blamed for state budget crises. Unions didn't cause these budget crises -- state revenues dropped because of the Great Recession -- but Republicans view them as opportunities to gut public employee unions, starting with teachers.

Wisconsin's Republican governor Scott Walker and his GOP legislature are seeking to end almost all union rights for teachers. Ohio's Republican governor John Kasich is pushing a similar plan in Ohio through a Republican-dominated legislature. New Jersey's Republican governor Chris Christie is attempting the same, telling a conservative conference Wednesday, "I'm attacking the leadership of the union because they're greedy, and they're selfish and they're self-interested."

The demonizing of public employees is not only based on the lie that they've caused these budget crises, but it's also premised on a second lie: that public employees earn more than private-sector workers. They don't, when you take account of their education. In fact over the last fifteen years the pay of public-sector workers, including teachers, has dropped relative to private-sector employees with the same level of education - even including health and retirement benefits. Moreover, most public employees don't have generous pensions. After a career with annual pay averaging less than $45,000, the typical newly-retired public employee receives a pension of $19,000 a year.

Bargaining rights for public employees haven't caused state deficits to explode. Some states that deny their employees bargaining rights, such as Nevada, North Carolina, and Arizona, are running big deficits of over 30 percent of spending. Many states that give employees bargaining rights -- Massachusetts, New Mexico, and Montana -- have small deficits of less than 10 percent.

Republicans would rather go after teachers and other public employees than have us look at the pay of Wall Street traders, private-equity managers, and heads of hedge funds - many of whom wouldn't have their jobs today were it not for the giant taxpayer-supported bailout, and most of whose lending and investing practices were the proximate cause of the Great Depression to begin with.

Last year, America's top thirteen hedge-fund managers earned an average of $1 billion each. One of them took home $5 billion. Much of their income is taxed as capital gains - at 15 percent - due to a tax loophole that Republican members of Congress have steadfastly guarded.

If the earnings of those thirteen hedge-fund managers were taxed as ordinary income, the revenues generated would pay the salaries and benefits of 300,000 teachers. Who is more valuable to our society - thirteen hedge-fund managers or 300,000 teachers? Let's make the question even simpler. Who is more valuable: One hedge fund manager or one teacher?

3. The Distortion of the Constitution

The third part of the Republican strategy is being played out in the Supreme Court. It has politicized the Court more than at any time in recent memory.

Last year a majority of the justices determined that corporations have a right under the First Amendment to provide unlimited amounts of money to political candidates. Citizens United vs. the Federal Election Commission is among the most patently political and legally grotesque decisions of our highest court - ranking right up there with Bush vs. Gore and Dred Scott.

Among those who voted in the affirmative were Clarence Thomas and Antonin Scalia. Both have become active strategists in the Republican party.

A month ago, for example, Antonin Scalia met in a closed-door session with Michele Bachman's Tea Party caucus - something no justice concerned about maintaining the appearance of impartiality would ever have done.

Both Thomas and Scalia have participated in political retreats organized and hosted by multi-billionaire financier Charles Koch, a major contributor to the Tea Party and other conservative organizations, and a crusader for ending all limits on money in politics. (Not incidentally, Thomas's wife is the founder of Liberty Central, a Tea Party organization that has been receiving unlimited corporate contributions due to the Citizens United decision. On his obligatory financial disclosure filings, Thomas has repeatedly failed to list her sources of income over the last twenty years, nor even to include his own four-day retreats courtesy of Charles Koch.)

Some time this year or next, the Supreme Court will be asked to consider whether the nation's new healthcare law is constitutional. Watch your wallets.

The strategy as a whole

These three aspects of the Republican strategy - a federal budget battle to shrink government, focused on programs the vast middle class depends on; state efforts to undermine public employees, whom the middle class depends on; and a Supreme Court dedicated to bending the Constitution to enlarge and entrench the political power of the wealthy - fit perfectly together.

They pit average working Americans against one another, distract attention from the almost unprecedented concentration of wealth and power at the top, and conceal Republican plans to further enlarge and entrench that wealth and power.

What is the Democratic strategy to counter this and reclaim America for the rest of us?
Robert B. Reich has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He also served on President Obama's transition advisory board. His latest book is Supercapitalism.

Sunday, February 20, 2011


Bloggers Suggestion: First watch the short video. Then read the article below if you wish to know all of the shocking evidence.

Why Isn't Wall Street in Jail?

Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them

By Matt Taibbi
February 16, 2011 9:00 AM ET
link to original

Illustration by Victor Juhasz
Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.

"Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that."

I put down my notebook. "Just that?"

"That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there."

Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.

This article appears in the March 3, 2011 issue of Rolling Stone. The issue is available now on newsstands and will appear in the online archive February 18.

The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose. Yet not one of them has faced time behind bars.

Invasion of the Home Snatchers

Instead, federal regulators and prosecutors have let the banks and finance companies that tried to burn the world economy to the ground get off with carefully orchestrated settlements — whitewash jobs that involve the firms paying pathetically small fines without even being required to admit wrongdoing. To add insult to injury, the people who actually committed the crimes almost never pay the fines themselves; banks caught defrauding their shareholders often use shareholder money to foot the tab of justice. "If the allegations in these settlements are true," says Jed Rakoff, a federal judge in the Southern District of New York, "it's management buying its way off cheap, from the pockets of their victims."

Taibblog: Commentary on politics and the economy by Matt Taibbi

To understand the significance of this, one has to think carefully about the efficacy of fines as a punishment for a defendant pool that includes the richest people on earth — people who simply get their companies to pay their fines for them. Conversely, one has to consider the powerful deterrent to further wrongdoing that the state is missing by not introducing this particular class of people to the experience of incarceration. "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once."

But that hasn't happened. Because the entire system set up to monitor and regulate Wall Street is fucked up.

Just ask the people who tried to do the right thing.

Wall Street's Naked Swindle

Here's how regulation of Wall Street is supposed to work. To begin with, there's a semigigantic list of public and quasi-public agencies ostensibly keeping their eyes on the economy, a dense alphabet soup of banking, insurance, S&L, securities and commodities regulators like the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC), as well as supposedly "self-regulating organizations" like the New York Stock Exchange. All of these outfits, by law, can at least begin the process of catching and investigating financial criminals, though none of them has prosecutorial power.

The major federal agency on the Wall Street beat is the Securities and Exchange Commission. The SEC watches for violations like insider trading, and also deals with so-called "disclosure violations" — i.e., making sure that all the financial information that publicly traded companies are required to make public actually jibes with reality. But the SEC doesn't have prosecutorial power either, so in practice, when it looks like someone needs to go to jail, they refer the case to the Justice Department. And since the vast majority of crimes in the financial services industry take place in Lower Manhattan, cases referred by the SEC often end up in the U.S. Attorney's Office for the Southern District of New York. Thus, the two top cops on Wall Street are generally considered to be that U.S. attorney — a job that has been held by thunderous prosecutorial personae like Robert Morgenthau and Rudy Giuliani — and the SEC's director of enforcement.

The relationship between the SEC and the DOJ is necessarily close, even symbiotic. Since financial crime-fighting requires a high degree of financial expertise — and since the typical drug-and-terrorism-obsessed FBI agent can't balance his own checkbook, let alone tell a synthetic CDO from a credit default swap — the Justice Department ends up leaning heavily on the SEC's army of 1,100 number-crunching investigators to make their cases. In theory, it's a well-oiled, tag-team affair: Billionaire Wall Street Asshole commits fraud, the NYSE catches on and tips off the SEC, the SEC works the case and delivers it to Justice, and Justice perp-walks the Asshole out of Nobu, into a Crown Victoria and off to 36 months of push-ups, license-plate making and Salisbury steak.

That's the way it's supposed to work. But a veritable mountain of evidence indicates that when it comes to Wall Street, the justice system not only sucks at punishing financial criminals, it has actually evolved into a highly effective mechanism for protecting financial criminals. This institutional reality has absolutely nothing to do with politics or ideology — it takes place no matter who's in office or which party's in power. To understand how the machinery functions, you have to start back at least a decade ago, as case after case of financial malfeasance was pursued too slowly or not at all, fumbled by a government bureaucracy that too often is on a first-name basis with its targets. Indeed, the shocking pattern of nonenforcement with regard to Wall Street is so deeply ingrained in Washington that it raises a profound and difficult question about the very nature of our society: whether we have created a class of people whose misdeeds are no longer perceived as crimes, almost no matter what those misdeeds are. The SEC and the Justice Department have evolved into a bizarre species of social surgeon serving this nonjailable class, expert not at administering punishment and justice, but at finding and removing criminal responsibility from the bodies of the accused.

The systematic lack of regulation has left even the country's top regulators frustrated. Lynn Turner, a former chief accountant for the SEC, laughs darkly at the idea that the criminal justice system is broken when it comes to Wall Street. "I think you've got a wrong assumption — that we even have a law-enforcement agency when it comes to Wall Street," he says.

In the hierarchy of the SEC, the chief accountant plays a major role in working to pursue misleading and phony financial disclosures. Turner held the post a decade ago, when one of the most significant cases was swallowed up by the SEC bureaucracy. In the late 1990s, the agency had an open-and-shut case against the Rite Aid drugstore chain, which was using diabolical accounting tricks to cook their books. But instead of moving swiftly to crack down on such scams, the SEC shoved the case into the "deal with it later" file. "The Philadelphia office literally did nothing with the case for a year," Turner recalls. "Very much like the New York office with Madoff." The Rite Aid case dragged on for years — and by the time it was finished, similar accounting fiascoes at Enron and WorldCom had exploded into a full-blown financial crisis. The same was true for another SEC case that presaged the Enron disaster. The agency knew that appliance-maker Sunbeam was using the same kind of accounting scams to systematically hide losses from its investors. But in the end, the SEC's punishment for Sunbeam's CEO, Al "Chainsaw" Dunlap — widely regarded as one of the biggest assholes in the history of American finance — was a fine of $500,000. Dunlap's net worth at the time was an estimated $100 million. The SEC also barred Dunlap from ever running a public company again — forcing him to retire with a mere $99.5 million. Dunlap passed the time collecting royalties from his self-congratulatory memoir. Its title: Mean Business.

The pattern of inaction toward shady deals on Wall Street grew worse and worse after Turner left, with one slam-dunk case after another either languishing for years or disappearing altogether. Perhaps the most notorious example involved Gary Aguirre, an SEC investigator who was literally fired after he questioned the agency's failure to pursue an insider-trading case against John Mack, now the chairman of Morgan Stanley and one of America's most powerful bankers.

Aguirre joined the SEC in September 2004. Two days into his career as a financial investigator, he was asked to look into an insider-trading complaint against a hedge-fund megastar named Art Samberg. One day, with no advance research or discussion, Samberg had suddenly started buying up huge quantities of shares in a firm called Heller Financial. "It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller," Aguirre recalls. "And he wasn't just buying shares — there were some days when he was trying to buy three times as many shares as were being traded that day." A few weeks later, Heller was bought by General Electric — and Samberg pocketed $18 million.

After some digging, Aguirre found himself focusing on one suspect as the likely source who had tipped Samberg off: John Mack, a close friend of Samberg's who had just stepped down as president of Morgan Stanley. At the time, Mack had been on Samberg's case to cut him into a deal involving a spinoff of the tech company Lucent — an investment that stood to make Mack a lot of money. "Mack is busting my chops" to give him a piece of the action, Samberg told an employee in an e-mail.

A week later, Mack flew to Switzerland to interview for a top job at Credit Suisse First Boston. Among the investment bank's clients, as it happened, was a firm called Heller Financial. We don't know for sure what Mack learned on his Swiss trip; years later, Mack would claim that he had thrown away his notes about the meetings. But we do know that as soon as Mack returned from the trip, on a Friday, he called up his buddy Samberg. The very next morning, Mack was cut into the Lucent deal — a favor that netted him more than $10 million. And as soon as the market reopened after the weekend, Samberg started buying every Heller share in sight, right before it was snapped up by GE — a suspiciously timed move that earned him the equivalent of Derek Jeter's annual salary for just a few minutes of work.

The deal looked like a classic case of insider trading. But in the summer of 2005, when Aguirre told his boss he planned to interview Mack, things started getting weird. His boss told him the case wasn't likely to fly, explaining that Mack had "powerful political connections." (The investment banker had been a fundraising "Ranger" for George Bush in 2004, and would go on to be a key backer of Hillary Clinton in 2008.)

Aguirre also started to feel pressure from Morgan Stanley, which was in the process of trying to rehire Mack as CEO. At first, Aguirre was contacted by the bank's regulatory liaison, Eric Dinallo, a former top aide to Eliot Spitzer. But it didn't take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm's lawyers, Mary Jo White, was on the phone with the SEC's director of enforcement. In a shocking move that was later singled out by Senate investigators, the director actually appeared to reassure White, dismissing the case against Mack as "smoke" rather than "fire." White, incidentally, was herself the former U.S. attorney of the Southern District of New York — one of the top cops on Wall Street.

Pause for a minute to take this in. Aguirre, an SEC foot soldier, is trying to interview a major Wall Street executive — not handcuff the guy or impound his yacht, mind you, just talk to him. In the course of doing so, he finds out that his target's firm is being represented not only by Eliot Spitzer's former top aide, but by the former U.S. attorney overseeing Wall Street, who is going four levels over his head to speak directly to the chief of the SEC's enforcement division — not Aguirre's boss, but his boss's boss's boss's boss. Mack himself, meanwhile, was being represented by Gary Lynch, a former SEC director of enforcement.

Aguirre didn't stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. "It all happened so fast, I needed a seat belt," recalls Aguirre, who had just received a stellar performance review from his bosses. The SEC eventually paid Aguirre a settlement of $755,000 for wrongful dismissal.

Rather than going after Mack, the SEC started looking for someone else to blame for tipping off Samberg. (It was, Aguirre quips, "O.J.'s search for the real killers.") It wasn't until a year later that the agency finally got around to interviewing Mack, who denied any wrongdoing. The four-hour deposition took place on August 1st, 2006 — just days after the five-year statute of limitations on insider trading had expired in the case.

"At best, the picture shows extraordinarily lax enforcement by the SEC," Senate investigators would later conclude. "At worse, the picture is colored with overtones of a possible cover-up."

Episodes like this help explain why so many Wall Street executives felt emboldened to push the regulatory envelope during the mid-2000s. Over and over, even the most obvious cases of fraud and insider dealing got gummed up in the works, and high-ranking executives were almost never prosecuted for their crimes. In 2003, Freddie Mac coughed up $125 million after it was caught misreporting its earnings by $5 billion; nobody went to jail. In 2006, Fannie Mae was fined $400 million, but executives who had overseen phony accounting techniques to jack up their bonuses faced no criminal charges. That same year, AIG paid $1.6 billion after it was caught in a major accounting scandal that would indirectly lead to its collapse two years later, but no executives at the insurance giant were prosecuted.

All of this behavior set the stage for the crash of 2008, when Wall Street exploded in a raging Dresden of fraud and criminality. Yet the SEC and the Justice Department have shown almost no inclination to prosecute those most responsible for the catastrophe — even though they had insiders from the two firms whose implosions triggered the crisis, Lehman Brothers and AIG, who were more than willing to supply evidence against top executives.

In the case of Lehman Brothers, the SEC had a chance six months before the crash to move against Dick Fuld, a man recently named the worst CEO of all time by Portfolio magazine. A decade before the crash, a Lehman lawyer named Oliver Budde was going through the bank's proxy statements and noticed that it was using a loophole involving Restricted Stock Units to hide tens of millions of dollars of Fuld's compensation. Budde told his bosses that Lehman's use of RSUs was dicey at best, but they blew him off. "We're sorry about your concerns," they told him, "but we're doing it." Disturbed by such shady practices, the lawyer quit the firm in 2006.

Then, only a few months after Budde left Lehman, the SEC changed its rules to force companies to disclose exactly how much compensation in RSUs executives had coming to them. "The SEC was basically like, 'We're sick and tired of you people fucking around — we want a picture of what you're holding,'" Budde says. But instead of coming clean about eight separate RSUs that Fuld had hidden from investors, Lehman filed a proxy statement that was a masterpiece of cynical lawyering. On one page, a chart indicated that Fuld had been awarded $146 million in RSUs. But two pages later, a note in the fine print essentially stated that the chart did not contain the real number — which, it failed to mention, was actually $263 million more than the chart indicated. "They fucked around even more than they did before," Budde says. (The law firm that helped craft the fine print, Simpson Thacher & Bartlett, would later receive a lucrative federal contract to serve as legal adviser to the TARP bailout.)

Budde decided to come forward. In April 2008, he wrote a detailed memo to the SEC about Lehman's history of hidden stocks. Shortly thereafter, he got a letter back that began, "Dear Sir or Madam." It was an automated e-response.

"They blew me off," Budde says.

Over the course of that summer, Budde tried to contact the SEC several more times, and was ignored each time. Finally, in the fateful week of September 15th, 2008, when Lehman Brothers cracked under the weight of its reckless bets on the subprime market and went into its final death spiral, Budde became seriously concerned. If the government tried to arrange for Lehman to be pawned off on another Wall Street firm, as it had done with Bear Stearns, the U.S. taxpayer might wind up footing the bill for a company with hundreds of millions of dollars in concealed compensation. So Budde again called the SEC, right in the middle of the crisis. "Look," he told regulators. "I gave you huge stuff. You really want to take a look at this."

But the feds once again blew him off. A young staff attorney contacted Budde, who once more provided the SEC with copies of all his memos. He never heard from the agency again.

"This was like a mini-Madoff," Budde says. "They had six solid months of warnings. They could have done something."

Three weeks later, Budde was shocked to see Fuld testifying before the House Government Oversight Committee and whining about how poor he was. "I got no severance, no golden parachute," Fuld moaned. When Rep. Henry Waxman, the committee's chairman, mentioned that he thought Fuld had earned more than $480 million, Fuld corrected him and said he believed it was only $310 million.

The true number, Budde calculated, was $529 million. He contacted a Senate investigator to talk about how Fuld had misled Congress, but he never got any response. Meanwhile, in a demonstration of the government's priorities, the Justice Department is proceeding full force with a prosecution of retired baseball player Roger Clemens for lying to Congress about getting a shot of steroids in his ass. "At least Roger didn't screw over the world," Budde says, shaking his head.

Fuld has denied any wrongdoing, but his hidden compensation was only a ripple in Lehman's raging tsunami of misdeeds. The investment bank used an absurd accounting trick called "Repo 105" transactions to conceal $50 billion in loans on the firm's balance sheet. (That's $50 billion, not million.) But more than a year after the use of the Repo 105s came to light, there have still been no indictments in the affair. While it's possible that charges may yet be filed, there are now rumors that the SEC and the Justice Department may take no action against Lehman. If that's true, and there's no prosecution in a case where there's such overwhelming evidence — and where the company is already dead, meaning it can't dump further losses on investors or taxpayers — then it might be time to assume the game is up. Failing to prosecute Fuld and Lehman would be tantamount to the state marching into Wall Street and waving the green flag on a new stealing season.

The most amazing noncase in the entire crash — the one that truly defies the most basic notion of justice when it comes to Wall Street supervillains — is the one involving AIG and Joe Cassano, the nebbishy Patient Zero of the financial crisis. As chief of AIGFP, the firm's financial products subsidiary, Cassano repeatedly made public statements in 2007 claiming that his portfolio of mortgage derivatives would suffer "no dollar of loss" — an almost comically obvious misrepresentation. "God couldn't manage a $60 billion real estate portfolio without a single dollar of loss," says Turner, the agency's former chief accountant. "If the SEC can't make a disclosure case against AIG, then they might as well close up shop."

As in the Lehman case, federal prosecutors not only had plenty of evidence against AIG — they also had an eyewitness to Cassano's actions who was prepared to tell all. As an accountant at AIGFP, Joseph St. Denis had a number of run-ins with Cassano during the summer of 2007. At the time, Cassano had already made nearly $500 billion worth of derivative bets that would ultimately blow up, destroy the world's largest insurance company, and trigger the largest government bailout of a single company in U.S. history. He made many fatal mistakes, but chief among them was engaging in contracts that required AIG to post billions of dollars in collateral if there was any downgrade to its credit rating.

St. Denis didn't know about those clauses in Cassano's contracts, since they had been written before he joined the firm. What he did know was that Cassano freaked out when St. Denis spoke with an accountant at the parent company, which was only just finding out about the time bomb Cassano had set. After St. Denis finished a conference call with the executive, Cassano suddenly burst into the room and began screaming at him for talking to the New York office. He then announced that St. Denis had been "deliberately excluded" from any valuations of the most toxic elements of the derivatives portfolio — thus preventing the accountant from doing his job. What St. Denis represented was transparency — and the last thing Cassano needed was transparency.

Another clue that something was amiss with AIGFP's portfolio came when Goldman Sachs demanded that the firm pay billions in collateral, per the terms of Cassano's deadly contracts. Such "collateral calls" happen all the time on Wall Street, but seldom against a seemingly solvent and friendly business partner like AIG. And when they do happen, they are rarely paid without a fight. So St. Denis was shocked when AIGFP agreed to fork over gobs of money to Goldman Sachs, even while it was still contesting the payments — an indication that something was seriously wrong at AIG. "When I found out about the collateral call, I literally had to sit down," St. Denis recalls. "I had to go home for the day."

After Cassano barred him from valuating the derivative deals, St. Denis had no choice but to resign. He got another job, and thought he was done with AIG. But a few months later, he learned that Cassano had held a conference call with investors in December 2007. During the call, AIGFP failed to disclose that it had posted $2 billion to Goldman Sachs following the collateral calls.

"Investors therefore did not know," the Financial Crisis Inquiry Commission would later conclude, "that AIG's earnings were overstated by $3.6 billion."

"I remember thinking, 'Wow, they're just not telling people,'" St. Denis says. "I knew. I had been there. I knew they'd posted collateral."

A year later, after the crash, St. Denis wrote a letter about his experiences to the House Government Oversight Committee, which was looking into the AIG collapse. He also met with investigators for the government, which was preparing a criminal case against Cassano. But the case never went to court. Last May, the Justice Department confirmed that it would not file charges against executives at AIGFP. Cassano, who has denied any wrongdoing, was reportedly told he was no longer a target.

Shortly after that, Cassano strolled into Washington to testify before the Financial Crisis Inquiry Commission. It was his first public appearance since the crash. He has not had to pay back a single cent out of the hundreds of millions of dollars he earned selling his insane pseudo-insurance policies on subprime mortgage deals. Now, out from under prosecution, he appeared before the FCIC and had the enormous balls to compliment his own business acumen, saying his atom-bomb swaps portfolio was, in retrospect, not that badly constructed. "I think the portfolios are withstanding the test of time," he said.

"They offered him an excellent opportunity to redeem himself," St. Denis jokes.

In the end, of course, it wasn't just the executives of Lehman and AIGFP who got passes. Virtually every one of the major players on Wall Street was similarly embroiled in scandal, yet their executives skated off into the sunset, uncharged and unfined. Goldman Sachs paid $550 million last year when it was caught defrauding investors with crappy mortgages, but no executive has been fined or jailed — not even Fabrice "Fabulous Fab" Tourre, Goldman's outrageous Euro-douche who gleefully e-mailed a pal about the "surreal" transactions in the middle of a meeting with the firm's victims. In a similar case, a sales executive at the German powerhouse Deutsche Bank got off on charges of insider trading; its general counsel at the time of the questionable deals, Robert Khuzami, now serves as director of enforcement for the SEC.

Another major firm, Bank of America, was caught hiding $5.8 billion in bonuses from shareholders as part of its takeover of Merrill Lynch. The SEC tried to let the bank off with a settlement of only $33 million, but Judge Jed Rakoff rejected the action as a "facade of enforcement." So the SEC quintupled the settlement — but it didn't require either Merrill or Bank of America to admit to wrongdoing. Unlike criminal trials, in which the facts of the crime are put on record for all to see, these Wall Street settlements almost never require the banks to make any factual disclosures, effectively burying the stories forever. "All this is done at the expense not only of the shareholders, but also of the truth," says Rakoff. Goldman, Deutsche, Merrill, Lehman, Bank of America ... who did we leave out? Oh, there's Citigroup, nailed for hiding some $40 billion in liabilities from investors. Last July, the SEC settled with Citi for $75 million. In a rare move, it also fined two Citi executives, former CFO Gary Crittenden and investor-relations chief Arthur Tildesley Jr. Their penalties, combined, came to a whopping $180,000.

Throughout the entire crisis, in fact, the government has taken exactly one serious swing of the bat against executives from a major bank, charging two guys from Bear Stearns with criminal fraud over a pair of toxic subprime hedge funds that blew up in 2007, destroying the company and robbing investors of $1.6 billion. Jurors had an e-mail between the defendants admitting that "there is simply no way for us to make money — ever" just three days before assuring investors that "there's no basis for thinking this is one big disaster." Yet the case still somehow ended in acquittal — and the Justice Department hasn't taken any of the big banks to court since.

All of which raises an obvious question: Why the hell not?

Gary Aguirre, the SEC investigator who lost his job when he drew the ire of Morgan Stanley, thinks he knows the answer.

Last year, Aguirre noticed that a conference on financial law enforcement was scheduled to be held at the Hilton in New York on November 12th. The list of attendees included 1,500 or so of the country's leading lawyers who represent Wall Street, as well as some of the government's top cops from both the SEC and the Justice Department.

Criminal justice, as it pertains to the Goldmans and Morgan Stanleys of the world, is not adversarial combat, with cops and crooks duking it out in interrogation rooms and courthouses. Instead, it's a cocktail party between friends and colleagues who from month to month and year to year are constantly switching sides and trading hats. At the Hilton conference, regulators and banker-lawyers rubbed elbows during a series of speeches and panel discussions, away from the rabble. "They were chummier in that environment," says Aguirre, who plunked down $2,200 to attend the conference.

Aguirre saw a lot of familiar faces at the conference, for a simple reason: Many of the SEC regulators he had worked with during his failed attempt to investigate John Mack had made a million-dollar pass through the Revolving Door, going to work for the very same firms they used to police. Aguirre didn't see Paul Berger, an associate director of enforcement who had rebuffed his attempts to interview Mack — maybe because Berger was tied up at his lucrative new job at Debevoise & Plimpton, the same law firm that Morgan Stanley employed to intervene in the Mack case. But he did see Mary Jo White, the former U.S. attorney, who was still at Debevoise & Plimpton. He also saw Linda Thomsen, the former SEC director of enforcement who had been so helpful to White. Thomsen had gone on to represent Wall Street as a partner at the prestigious firm of Davis Polk & Wardwell.

Two of the government's top cops were there as well: Preet Bharara, the U.S. attorney for the Southern District of New York, and Robert Khuzami, the SEC's current director of enforcement. Bharara had been recommended for his post by Chuck Schumer, Wall Street's favorite senator. And both he and Khuzami had served with Mary Jo White at the U.S. attorney's office, before Mary Jo went on to become a partner at Debevoise. What's more, when Khuzami had served as general counsel for Deutsche Bank, he had been hired by none other than Dick Walker, who had been enforcement director at the SEC when it slow-rolled the pivotal fraud case against Rite Aid.

"It wasn't just one rotation of the revolving door," says Aguirre. "It just kept spinning. Every single person had rotated in and out of government and private service."

The Revolving Door isn't just a footnote in financial law enforcement; over the past decade, more than a dozen high-ranking SEC officials have gone on to lucrative jobs at Wall Street banks or white-shoe law firms, where partnerships are worth millions. That makes SEC officials like Paul Berger and Linda Thomsen the equivalent of college basketball stars waiting for their first NBA contract. Are you really going to give up a shot at the Knicks or the Lakers just to find out whether a Wall Street big shot like John Mack was guilty of insider trading? "You take one of these jobs," says Turner, the former chief accountant for the SEC, "and you're fit for life."

Fit — and happy. The banter between the speakers at the New York conference says everything you need to know about the level of chumminess and mutual admiration that exists between these supposed adversaries of the justice system. At one point in the conference, Mary Jo White introduced Bharara, her old pal from the U.S. attorney's office.

"I want to first say how pleased I am to be here," Bharara responded. Then, addressing White, he added, "You've spawned all of us. It's almost 11 years ago to the day that Mary Jo White called me and asked me if I would become an assistant U.S. attorney. So thank you, Dr. Frankenstein."

Next, addressing the crowd of high-priced lawyers from Wall Street, Bharara made an interesting joke. "I also want to take a moment to applaud the entire staff of the SEC for the really amazing things they have done over the past year," he said. "They've done a real service to the country, to the financial community, and not to mention a lot of your law practices."

Haw! The line drew snickers from the conference of millionaire lawyers. But the real fireworks came when Khuzami, the SEC's director of enforcement, talked about a new "cooperation initiative" the agency had recently unveiled, in which executives are being offered incentives to report fraud they have witnessed or committed. From now on, Khuzami said, when corporate lawyers like the ones he was addressing want to know if their Wall Street clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the SEC.

"We are going to try to get those individuals answers," Khuzami announced, as to "whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client."

Aguirre, listening in the crowd, couldn't believe Khuzami's brazenness. The SEC's enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time. Khuzami was basically outlining a four-step system for banks and their executives to buy their way out of prison. "First, the SEC and Wall Street player make an agreement on a fine that the player will pay to the SEC," Aguirre says. "Then the Justice Department commits itself to pass, so that the player knows he's 'safe.' Third, the player pays the SEC — and fourth, the player gets a pass from the Justice Department."

When I ask a former federal prosecutor about the propriety of a sitting SEC director of enforcement talking out loud about helping corporate defendants "get answers" regarding the status of their criminal cases, he initially doesn't believe it. Then I send him a transcript of the comment. "I am very, very surprised by Khuzami's statement, which does seem to me to be contrary to past practice — and not a good thing," the former prosecutor says.

Earlier this month, when Sen. Chuck Grassley found out about Khuzami's comments, he sent the SEC a letter noting that the agency's own enforcement manual not only prohibits such "answer getting," it even bars the SEC from giving defendants the Justice Department's phone number. "Should counsel or the individual ask which criminal authorities they should contact," the manual reads, "staff should decline to answer, unless authorized by the relevant criminal authorities." Both the SEC and the Justice Department deny there is anything improper in their new policy of cooperation. "We collaborate with the SEC, but they do not consult with us when they resolve their cases," Assistant Attorney General Lanny Breuer assured Congress in January. "They do that independently."

Around the same time that Breuer was testifying, however, a story broke that prior to the pathetically small settlement of $75 million that the SEC had arranged with Citigroup, Khuzami had ordered his staff to pursue lighter charges against the megabank's executives. According to a letter that was sent to Sen. Grassley's office, Khuzami had a "secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend" of his and "who was counsel for the company." The unsigned letter, which appears to have come from an SEC investigator on the case, prompted the inspector general to launch an investigation into the charge.

All of this paints a disturbing picture of a closed and corrupt system, a timeless circle of friends that virtually guarantees a collegial approach to the policing of high finance. Even before the corruption starts, the state is crippled by economic reality: Since law enforcement on Wall Street requires serious intellectual firepower, the banks seize a huge advantage from the start by hiring away the top talent. Budde, the former Lehman lawyer, says it's well known that all the best legal minds go to the big corporate law firms, while the "bottom 20 percent go to the SEC." Which makes it tough for the agency to track devious legal machinations, like the scheme to hide $263 million of Dick Fuld's compensation.

"It's such a mismatch, it's not even funny," Budde says.

But even beyond that, the system is skewed by the irrepressible pull of riches and power. If talent rises in the SEC or the Justice Department, it sooner or later jumps ship for those fat NBA contracts. Or, conversely, graduates of the big corporate firms take sabbaticals from their rich lifestyles to slum it in government service for a year or two. Many of those appointments are inevitably hand-picked by lifelong stooges for Wall Street like Chuck Schumer, who has accepted $14.6 million in campaign contributions from Goldman Sachs, Morgan Stanley and other major players in the finance industry, along with their corporate lawyers.

As for President Obama, what is there to be said? Goldman Sachs was his number-one private campaign contributor. He put a Citigroup executive in charge of his economic transition team, and he just named an executive of JP Morgan Chase, the proud owner of $7.7 million in Chase stock, his new chief of staff. "The betrayal that this represents by Obama to everybody is just — we're not ready to believe it," says Budde, a classmate of the president from their Columbia days. "He's really fucking us over like that? Really? That's really a JP Morgan guy, really?"

Which is not to say that the Obama era has meant an end to law enforcement. On the contrary: In the past few years, the administration has allocated massive amounts of federal resources to catching wrongdoers — of a certain type. Last year, the government deported 393,000 people, at a cost of $5 billion. Since 2007, felony immigration prosecutions along the Mexican border have surged 77 percent; nonfelony prosecutions by 259 percent. In Ohio last month, a single mother was caught lying about where she lived to put her kids into a better school district; the judge in the case tried to sentence her to 10 days in jail for fraud, declaring that letting her go free would "demean the seriousness" of the offenses.

So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero. The math makes sense only because the politics are so obvious. You want to win elections, you bang on the jailable class. You build prisons and fill them with people for selling dime bags and stealing CD players. But for stealing a billion dollars? For fraud that puts a million people into foreclosure? Pass. It's not a crime. Prison is too harsh. Get them to say they're sorry, and move on. Oh, wait — let's not even make them say they're sorry. That's too mean; let's just give them a piece of paper with a government stamp on it, officially clearing them of the need to apologize, and make them pay a fine instead. But don't make them pay it out of their own pockets, and don't ask them to give back the money they stole. In fact, let them profit from their collective crimes, to the tune of a record $135 billion in pay and benefits last year. What's next? Taxpayer-funded massages for every Wall Street executive guilty of fraud?

The mental stumbling block, for most Americans, is that financial crimes don't feel real; you don't see the culprits waving guns in liquor stores or dragging coeds into bushes. But these frauds are worse than common robberies. They're crimes of intellectual choice, made by people who are already rich and who have every conceivable social advantage, acting on a simple, cynical calculation: Let's steal whatever we can, then dare the victims to find the juice to reclaim their money through a captive bureaucracy. They're attacking the very definition of property — which, after all, depends in part on a legal system that defends everyone's claims of ownership equally. When that definition becomes tenuous or conditional — when the state simply gives up on the notion of justice — this whole American Dream thing recedes even further from reality.