Indiana Pension Fund – Chrysler Bankruptcy Fiasco

I wouldn't write this story if there wasn't a story that needed telling. One thing bothered me about the Indiana Pension Fund – Chrysler bankruptcy fiasco is: What really happened? The “rumor” spreading around the Internet and seriously believed by some people I talked to in Indiana in May and June 2009 was that “Obama screwed the Indiana Pension Funds” by speeding up the bankruptcy and forcing Chrysler's sale to Fiat. When someone tells me that the United States President deliberately screwed a specific group of people, my skepticism gauge pegs to the red-alarm side, especially when the president is liberal leaning, which usually means “for people,” i.e., pension funds, verses “for corporations.” There must be more to this story than ideologue-rumor mongering that is intended to turn pension fund employees against a president. No Democrat president would want that.


The best place to start is to identify the players. On the pension funds' side is Indiana State Treasurer, Richard Mourdock, a geologist and Republican elected in 2006, and Indiana Governor Mitch Daniels, also a Republican in his second term. Governor Daniels is noted for his staunch anti-union policies. In his first term in 2005, he issued an executive order that rescinded collective bargaining rights of 23,000 state employees. I noticed in a number of Indiana newspapers that both were frequently making the best of the Chrysler bankruptcy for their own publicity ratings. The three funds Mr. Mourdock represented were the Teachers' Retirement Fund, an $8.6 billion fund, the Police Officers' Retirement Fund valued at $3.1 billion and the Indiana Major Moves Construction Fund (for roads and bridge construction). The values come from audited state financial statements for fiscal year ending June 30, 2008 available at Indiana's web site. I could not find a financial statement for the Major Moves Construction Fund. According to a statement Mr. Mourdock made in his 2006 campaign, the fund has about $500 million in it.

On the corporate side is Chrysler LLC (Limited Liability Company) and private equity firm Cerberus Capital Management that owned and managed Chrysler. Investment bankers included JP Morgan, CitiGroup, Goldman Sachs Group and Morgan Stanley who bought Chrysler's debt in the form of Corporate Bonds.

Labor unions included UAW, International Union, Aerospace Workers, Asbestos Workers and others. The UAW had 6,000 member workers in Indiana alone and 54,000 total members in Chrysler plants. And then there were ad hoc committees representing a gaggle of creditors from hedge funds, private equity companies, car dealerships to individuals injured in Chrysler automobiles.

The U. S. Treasury represented the U. S. Government and the tax payers who loaned $2 billion to Chrysler to pay off its creditors and to help bring the company back to some level of viability that, in the end, the loan failed to do. The $2 billion represented 28.99% of Chrysler's total $6.9 billion debt, or 29¢ on the dollar.

Chrysler's road to bankruptcy isn't about the Great Recession of 2008. The recession just hurried it along. Chrysler started on that road long before. Chrysler's story is the same as Simmons Bedding Company's story that was told in the New York Times recently and the last straw that broke Chrysler's back happened when Cerberus Capital Management bought Chrysler from the German Auto Maker, Daimler, the maker of Mercedes Benz. Daimler's purchase of American Motors and 1998 merger was both courageous and bullheaded. It turned out that neither of the companies could get along and Chrysler's shareholders sued Daimler for fraud, alleging that Daimler mislead shareholders. But, Chrysler never made a competitive car and it was losing money like a sieve and Daimler was eager to get rid of it. Daimler sold Chrysler for a loss and that's what private equity firms are looking for; cheap companies that can be flipped for debt and new buyers. Cerberus Capital Management never intended to make Chrysler a profitable company. Its only intention was to make a profit at the expense of investors and employees.

And that's what Cerberus Capital did. It borrowed $6.9 billion dollars using Chrysler's assets as collateral. By the time of the bankruptcy, Chrysler's tangible assets were valued at $800 million, from what I can tell, an 8.6 to 1 debt ratio, even though court documents stated that Chrysler had assets of about $39.3 billion and liabilities of $55.2 billion; still a hefty $1.4 to 1 ratio and more than Chrysler could afford. Only tangible assets, things you can touch and use can be auctioned in a bankruptcy. In a normal bankruptcy Chrysler would have paid creditors 11¢ on the dollar. So, how did Cerberus Capital borrow so much on so few assets​? In the first place it inflated Chrysler's asset values. According to Mourdock's congressional testimony [pdf], the total assets Chrysler (and Cerberus) claimed in 2005 before the recession were valued at $29 billion, but he testified that $3 billion of that was based on the imagined value of the Jeep brand name, assuming that the Jeep vehicle would continue to be sold and its popularity would continue into the future. So, $6.1 billion of the debt was based on intangible assets; things you cannot touch, feel, move, store, use or sell. The $29 billion was highly inflated. The inflated value, however, allowed Cerberus to sell the intangible debt to investment bankers and other investors in the form of corporation bonds and private shares, since Cerberus' new Chrysler was a private company and its shares were not sold on public exchanges. The sales pitch must have been very slick with lots of graphics, charts and numbers all showing a future profit. Cerberus paid itself fees for handling the purchase of Chrysler, packaging the debt into securities, i.e., bonds, and handling the sale of the debt. It also paid itself for managing Chrysler for the short period it owned it. So, Cerberus made a profit whether Chrysler went bankrupt or not.

I'm not able to find how much actual cash Cerberus received for the face valued $6.9 billion of bonds and stock, but there is a clue in the sale of the bonds that Mr. Mourdock bought from JP Morgan. Bonds are given a credit rating by Moodys and Standards & Poor from AAA, the highest rating, which usually pay the lowest interest and is the least risky, to Ca, that carry the most risk and earn the highest interest. Ratings AAA, AA, A and BBB are considered less risky, investor grade bonds and an investor can earn from 3% to 4% annually for AAA bonds to around 12%-13% for BBB bonds. Beyond BBB are the BB, B, CCC, CC, C, D and unrated bonds that enter the junk bond ratings. These pay enormous interest rates from 15% per year and higher and are the riskiest for not being paid at all in a bankruptcy. It is also usually true that the higher the interest rate, the shorter term for payoff. Ratings BB and lower usually indicate start up companies, companies with financial problems, such as Chrysler would have had when Cerberus bought it, and companies in highly competitive markets, which also could have included the automobile industry. Bonds rated C or D are worthless.

Mourdock paid $17 million to JP Morgan for $42 million in Chrysler Bonds on the secondary market, meaning that JP Morgan bought the bonds for less than $17 million and resold them to Mourdock on the aftermarket for a profit. Mourdock stated that the three funds he represented would lose a total $5.64 million if he accepted the Government's offer of 29¢ on the dollar of the total owed to the funds, $42 million. That meant that the funds would receive $12.2 million from the settlement and already had received $4.82 million in interest payments over a 20-month period. Depending on the term of the bonds, he was receiving between 18.2% to 23% annual interest on his investment. That's a very high interest rate and indicates that the bonds he purchased were high yield, speculative junk bond quality and very risky.

So, did President Obama screw the pension funds? It doesn't appear that way. It looks more like Mourdock got his just dues because he invested in risky bonds. Mourdock gave three reasons when trying to stop the bankruptcy sale of 20% stake in Chrysler to Fiat as ordered by the Southern Bankruptcy Court of New York. According to his congressional testimony (pdf), it was “the right thing to do” and “I pledged to uphold the Constitution of the United States.” His reasons for stopping the sale were: 1) the monetary loss to the funds, 2) the perceived violation of the law, and 3) general principals. Mourdock wanted Chrysler totally liquidated in bankruptcy and for the U. S. Treasury to pay Chrysler's loans in full, which meant that the U.S. Tax Payer would pay off his loan and Chrysler would cease to exist.

Since full payment from tax payers was out of the question, an irony I don't understand from a Republican who is against tax payer bail outs, Chrysler's liquidation was the only thing left to satisfy Mourdock. To send Chrysler into complete liquidation would have meant the loss of approximately 54,000 Chrysler jobs, 6,000 of which were in Indiana, and the sale of all of Chrysler's assets in auction to pay all of the creditors. Mourdock would then have received about 11¢ on the dollar instead of the 29¢ he received and he would have lost $13.2 million instead of $5.6 million. He argued that his loan had “seniority” over Chrysler employees and was, therefore, was a “secured” loan. The bankruptcy court gave seniority to the employees, similar to the seniority given to bank depositors over bank creditors in bank bankruptcies. Chrysler's sale to Fiat would guarantee that more employees kept their jobs and the UAW workers gave up $10 billion in future benefits to buy a 55% stake in the new Chrysler-Fiat company. This latter stake in the new company was what really “irked” Mourdock and other lenders objecting to the Fiat deal; they would not be stakeholders in the new company while the workers would be and this, they claimed, violated the “absolute priority” bankruptcy rule since they saw the workers as “junior creditors.”

Mourdock, therefore, claimed that President Obama's Administration violated the Constitution, Article I, Section 8, which says that the Congress will establish “uniform Laws on the subject of Bankruptcies throughout the United States.” The article means that bankruptcy law will be established at the national level by Congress and not by individual states. Bankruptcy has, for 200 years, offered relief for creditors unable to pay their debts and that's what Chrysler's bankruptcy did. The Northern Bankruptcy Court of New York appears to have followed the established law since the Supreme Court's review of the objections did not merit a Supreme Court hearing. The fact is that the U. S. Treasury participated in presenting a restructuring plan to the court, which included the sale to Fiat, and the court accepted it. There was nothing more to it than that.

The last of Mourdock's reasons was “general principals.” What can one say about principals except that they are likely ideological? The fact is that Mourdock would have lost more for the pension funds by winning his argument and that speaks badly for his sense of responsibility for his fiduciary duties. He's not supposed to lose money if he can prevent it, and if he can't avoid it – then he needs to make sure the loss is as small as possible. He would also have cost 54,000 UAW members their jobs, and that doesn't speak well for a politician who needs votes for reelection. It also doesn't speak well for his sense of compassion for the working person. So, his only argument must have been that he opposed the Obama Administration as an ideologue; pro-business, libertarian and anti-union, anti-government and anti-Obama. He jumped on the anti-Obama band wagon. His congressional testimony stated that President Obama called his complaint “unpatriotic,” “greedy speculators,” and “unwilling to sacrifice.” Obama didn't call him “unpatriotic.” But, Mr. Mourdock's purchase of the bonds was highly speculative and could be greedy. His management of the Teachers' Retirement Fund, for example, shows that he regularly buys “junk” rated, highly speculative bonds for the fund. Of the $3.58 billion invested in bonds for the fund, $922 million (26%) are invested in high yield, high risk bonds rated BB through Ca and unrated ($786mil). I'm sure that the Chrysler bonds are in the latter.

It seems to me that Indiana voters elected the wrong person for State Treasurer. Mr. Mourdock is a geologist, not an accountant, banker or financier who one would expect to be more suitable in an elected financial office. He also holds ideology above his fiduciary responsibilities, similar to the man he works for, Governor Mitch Daniels.

References: Toledo Blade, MSNBC, Fox Business News, Wall Street “Deal” Journal, Richard Mourdock's Web Site, Diamler-Chrysler Merger, OutsideTheBeltWay Blog, President Obama's Remarks and Bloomberg News.

Dave

The Interesting Congressional Budget Office

A Congressional Budget Office (CBO) subscription will open your eyes. I get an email every few days on budget estimates issued by the CBO on the cost of various bills introduced in Congress and the more I read the more interested I am in the process. The CBO is presumably a nonpartisan government office that tries to identify the costs associated with various bills introduced in Congress. I subscribed to see if I could tell whether the office is really nonpartisan or not. I suppose there could be an office in Washington D. C. whose employees are dedicated and sincere government employees who are not affected by the 24/7 inundation of Fox News-like propaganda, but they would have to be exceptional employees. I suspect the office is lobbied just like any government office is and that reports are skewed as a result.

Nevertheless, the CBO's reports are interesting and reading them gives one insight into Congress that you probably would not otherwise have. For example, the H.R. 1319 Informed P2P User Act report. This is a consumer protection bill and since I was born half-geek, I understand it.

H.R. 1319 will require a software developer company to notify you, the computer owner/user/consumer, which, if any, files on your computer the software will share with other computers on the Internet and will have to get your permission to share files before the software does it. Here's a summary of the bill. These software use a peer-to-peer (P2P) distributed transaction to share files. For now, no software you install tells you what files on your computer it is sharing, or what information is in those files, with some far off server or computer. Your Microsoft Operating System, such as Windows XP or Vista, uses distributed transactions all the time. And, every program installed on a Windows system is integrated into the Windows distributed transaction system. To be fair, Microsoft Windows doesn't share private information without telling you, but other software you install on your computer probably does.

The CBO estimates the cost of the bill to be less than $1 million annually. That's chicken feed. Who would be against such a bill? Well, the Business Computing Industry Association and the Business Software Alliance are against it. There are some very hefty member corporations in these associations; Microsoft, Cisco, AT&T, Comcast, McAfee and other large software and high-tech companies. If you read the policies and agendas of these alliances, you can see that the entire focus on sharing the information on your computer is focused on marketing products and business opportunities by knowing who you are and what you do.

The Bill's sponsors are eight Democrats and four Republicans so it looks like nonpartisan support, but I wonder how libertarian Republicans, such as Ron Paul, are going to go. Libertarians support corporate freedoms over individual rights. Personally, there is nothing more aggravating than installing a program on my computer that tracks my usage and personal information and makes me a marketing tool for big corporations and, I believe, imposes on my privacy and freedom without my permission.

But, you probably won't hear about this bill. It is now in the House Energy and Commerce Committee and will likely stay there because of Republican opposition. If you do hear about it at all, you will hear terms like “big government” Democrats once more imposing on the free market and taking away liberty and freedom. Fox News will once more be the Republican propaganda arm, and you, the consumer, will continue to lose your privacy without ever knowing it.

I don't see any bias in the CBO report, but it is nevertheless interesting. You can learn about every House and Senate Bill being considered in Congress. You can subscribe to CBO reports here.

Dave

The Scary Canadian Health Care System

By all of the statistical measures comparing United States health care with Canadian health care, we're stupid by not adopting the Canadian system. We would live 1.3 years longer, have a lower infant mortality rate, increase our standing in world health care from 37 ^th to 30 ^th, or there about, and decrease per-capita spending on health care by half. Why is that? My question is not why the Canadian system is better. My question is why are we stupid.

The answer is that we don't get it. Whether we like it or not, and whether we agree with it or not, we all are a health care statistic. And, whether we like it or not, all insurance companies, hospitals, laboratories, nurses and doctors treat us as such, even with a smile. Our medical treatment, from the time we enter through the door to the time we're sent home, dead or alive, is statistically engineered and statistically tracked. If you don't believe me, ask my brother Dan. He's a nuclear medicine technologist. Ask him what statistics he reports per patient.

But, we sure are afraid of being a statistic. The fact is that when your health condition does not fall into that “average” statistical cost, you are an outlier and you will have a problem getting health insurance in the United States. For example, insurance companies know that if you're pregnant, you are going to cost more than the average woman patient will. You're an outlier. You're going to cost too much for the company to make a profit. It's also true that when your health declines, whether by some contracted disease or broken bone, your insurance may be canceled because you've suddenly become too expensive for your policy. You become unprofitable.

Canada, on the other hand, has taken away many of the medical costs patients, insurance companies and customer companies (i.e., General Motors) usually pay for, such as administrative claim processing costs and medical equipment costs and that broadens or widens the scope of care allowable to include outliers.

Canada's system is a single payer system. That means that the Canadian Government pays the claims and THAT MEANS that the claim system is standardized for one system. All the claims for the entire country are in one format, on one computer network and transmitted over one system. A doctor in Alberta submits the same claim form as a doctor in Montreal. So, instead of four claims clerks, a doctor needs only one clerk and that reduces the doctor's cost.

It's the same with medical equipment. Take Pleasanton, California. It is a small city in the Bay Area of about 30,000 people, but it has at least 20 Magnetic Resonance Imaging (MRI) machines in the city. An MRI machine cost between $1 to $3 million each and each facility cost around $500 thousand each, so Pleasanton has between $20 million to $60 million invested in MRI machines. A city the size of Pleasanton in Canada will have two to three conveniently placed MRIs with a total investment of between $2 million to $9 million. All insurance companies, hospitals and doctors in the Canadian city send their patients to the nearest MRI.

Well, that sounds inconvenient! Why would I want to walk, take a car, or an ambulance to another location for an MRI? But, the fact is that the MRIs in Pleasanton are idle more than they are used and MRI staffing (statistically engineered by the way) in Pleasanton is sporadic at best and understaffed in many cases. So, even in Pleasanton, you will have to go to the MRI that's up and running, and staffed, at the time you need it, or you will have to wait until it is available. On the contrary, the MRI in Canada is more efficiently used (higher usage rate) and better staffed and will more than likely be available sooner and in a higher percentage number of cases when you need it. Canada also places its MRIs at locations where they are most needed (higher usage rates). So, it is more likely that you will not have to walk, take a car or an ambulance to an MRI in Canada. Maybe some aide will push you down the hall to the MRI in a wheelchair. That's nice.

Several years ago General Motors began building factories in Canada, and everyone in this country was outraged. But, GM made a good decision. It had figured out that medical costs in Canada were half of what they are in the United States, and that was just the difference between Canadian taxes GM paid for Canadian health care and the costs of paying for health insurance in the United States. There was another 25% savings to GM through staff reductions needed for developing health care plans (it didn't have to) for its employees and handling claims. And, to top it off, GM employees were happier because they could literally walk out of the factory door and go to any doctor in the community they wanted to. The total cost of the visit would be handled by the Canadian Government and charged to the insurance company that covered the employee, if the employee chose added coverage, and/or to the taxes GM paid for the care. Everyone was happy; GM saved billions of dollars, the employee could see any doctor they wanted and the insurance company still made a profit. When I say the employee can see “any doctor,” I don't mean that he has to choose the doctor first, then see that doctor. I mean he or she can see any Canadian doctor, any time they want.

So, why are we stupid? Because we want to be. We want to be afraid and ignorant and we emphatically deny that we are statistics. It's always been that way. Even as far back as the 1950s when W. Edwards Deming taught his statistical engineering methods to improve quality, service and performance in manufacturing, the United States manufacturers emphatically refused to believe him. The U.S. always knows better – just ask us. But, the truth is in the pudding. Deming went to Japan, became a national hero to manufacturing (they even have a “Deming Day” and a “Deming Prize”), Japan's cars went from junk to the best quality built automobiles in the world and the United States auto makers saw theirs take a back seat. So goes United States health care.

The only way to force cost-cutting efficiency on the U. S. health care system is the public option, a severe competition to the profit hungry insurance industry. Of course, even better than the public option is a single payer system like Canada's. But, alas, that would be getting too smart.

Dave

Those Insidious Emails and Family

This is a complete rewrite of my original draft regarding the insidious email my brother received from a person related, somewhat, to our family. I'm sure you've seen the kind of emails I'm referring to; those making outrageous claims about President Obama, the Democrat dominated Congress, Nancy Pelosi, Harry Reid, liberals in general, ACORN, labor unions, the United Nations and just about everything you can think of that doesn't align with the ultra-right wing faction in our country. Most people know generally where they come from and who originate them and the intent of the emails. They are intended to promote fear, ignorance and hate and they distort the truth about whatever they are focusing on. The people who originate them are purposely praying on innocent, but unthinking people for their own gain and interests; usually financial interests. It's the same network that promote Sean Hannity, Bill O'Reilly, Rush Limbaugh, Glenn Beck and others that make outrageous claims and promote lies and ignorance. We see advertisements, too, making false accusations and outrageous claims that scare people into believing distorted truths and outright lies about government programs or congressional bills in Congress. There is big money behind perpetrating these lies and distortions because there is big money to lose when society changes to regulate industries and commerce to make a better society for its people.

Dan very ably discredited the email he received two days ago and responded back to the person who sent it, but that's not likely to cause the person to stop passing on the next despicable email she gets. Many, if not all, of these kind of emails she has forwarded to family members have been discredited and she has been notified, mildly and heatedly, about the lie. She, never the less, keeps sending them. One would think that after a while she would realize the folly of sending these on. One would think that she would send them back to the person who sent them to her saying, at a minimum, she didn't want them anymore, and, even better, that the emails are not credible. That apparently hasn't happened.

Well, she's free to do what she wants, she will say, and what's the danger in these emails, or, for that matter, the malicious cable networks and radio talk shows that perpetrate the faction opposing the current political trend? The danger is the destruction of the country, the very thing they claim will happen under President Obama. It's true that she's free to do what she wants even when her claims are outrageous. Anyone who takes the time to search out truths about President Obama's policies, whether economic, foreign relations, Iraq and Afghanistan wars, Health Care, Environmental, Climate Change, Energy, Education or Wall Street can find the overwhelming evidence that favor his approach. They will also see that he frequently takes the middle road in spite of pressures to lean to the far left and in fact may sometimes lean too far to the right. Yet, this faction opposes him on every front holding instead to the principals of the last Bush administration's unbending and impractical principals that were adversarial to more true American ideals.

I don't think I've read anything more appropriate on how to deal with factions than James Madison's 10 ^th Federalist Paper. I encourage you to read it. I can't help but quot part of his prescription for dealing with factions:

“ By a faction, I understand a number of citizens, whether amounting to a majority or a minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens, or to the permanent and aggregate interests of the community.

There are two methods of curing the mischiefs of faction: the one, by removing its causes; the other, by controlling its effects.

There are again two methods of removing the causes of faction: the one, by destroying the liberty which is essential to its existence; the other, by giving to every citizen the same opinions, the same passions, and the same interests.

It could never be more truly said than of the first remedy, that it was worse than the disease. Liberty is to faction what air is to fire, an aliment without which it instantly expires. But it could not be less folly to abolish liberty, which is essential to political life, because it nourishes faction, than it would be to wish the annihilation of air, which is essential to animal life, because it imparts to fire its destructive agency.

The second expedient is as impracticable as the first would be unwise. As long as the reason of man continues fallible, and he is at liberty to exercise it, different opinions will be formed. As long as the connection subsists between his reason and his self-love, his opinions and his passions will have a reciprocal influence on each other; and the former will be objects to which the latter will attach themselves. The diversity in the faculties of men, from which the rights of property originate, is not less an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties.

The latent causes of faction are thus sown in the nature of man; and we see them everywhere brought into different degrees of activity, according to the different circumstances of civil society. A zeal for different opinions concerning religion, concerning government, and many other points, as well of speculation as of practice; an attachment to different leaders ambitiously contending for pre-eminence and power; or to persons of other descriptions whose fortunes have been interesting to the human passions, have, in turn, divided mankind into parties, inflamed them with mutual animosity, and rendered them much more disposed to vex and oppress each other than to co-operate for their common good. So strong is this propensity of mankind to fall into mutual animosities, that where no substantial occasion presents itself, the most frivolous and fanciful distinctions have been sufficient to kindle their unfriendly passions and excite their most violent conflicts. But the most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society. Those who are creditors, and those who are debtors, fall under a like discrimination. A landed interest, a manufacturing interest, a mercantile interest, a moneyed interest, with many lesser interests, grow up of necessity in civilized nations, and divide them into different classes, actuated by different sentiments and views. The regulation of these various and interfering interests forms the principal task of modern legislation, and involves the spirit of party and faction in the necessary and ordinary operations of the government.

… <snipped>

The inference to which we are brought is, that the CAUSES of faction cannot be removed, and that relief is only to be sought in the means of controlling its EFFECTS.”

The stakes couldn't be higher. This faction is supported by and includes most Republican politicians and if they return to power in 2010 in the Congress with the ideas of this faction, it may be the last straw that breaks America's back. We need to compete in a world of equal economic powers and corporations. We need to compete for natural resources that are becoming more and more scarce. And, we need to somehow control our destiny in a climate that's changing, getting warmer and more violent. We cannot be belligerent in a world that doubts our intent for peaceful cooperation and goodwill. We really have no choice except control the effects of this faction. The only way I know of is to respond to these malicious and seditious emails with truth and find some way to stop the spread. Maybe it can be accomplished by embarrassing the sender. Maybe they will be stopped by constantly responding that the emails are not appreciated. Maybe I need to cut my ties to this person entirely. Somehow we need to shut off the source and become more informed and educated about our place in this world.

The latest email she passed on to family members, except to me of course because of my past responses to these emails, is the typical hate email; the anti-liberal, smearing, rumor and fear mongering and, as usual, false. The email (Subject: CRITICAL INFO ABOUT OUR HISTORY) claims to have been written by Doctor David Kaiser, a professor at the Navy War College, book author and historian and also the author of the blog History Unfolding. Doctor Kaiser's denial of being the email's author is enlightening and his true point of view is expressed, as only a learned professor can do, in his blog entry “ Why Obama won the prize.” I've added a permanent link to his blog on my blog.

The gist of the long, rambling email she sent is that President Obama's Administration is ushering in a fascist, anti-capitalist and anti-American era and gives clues that “something ominously historical” is happening in America that is sinister to our way of life. As I said, it is intended to instill fear and ignorance and it is completely false. You can see a full, but slightly different version of the email, in this case attributed to History Professor Timothy Wood (who also denies being the author), at Truthorfiction.com (scroll down the page). (A side note: It appears that “ Truthorfiction.com” web site is also a front for ultra-right wing propaganda, even though it is telling the truth about the authorship of the email. The deception never ends.)

Anyone who objectively watches President Obama and his administration and hears what they say and uses reason and logic to sort through the myriad information and misinformation to the truth will clearly see that President Obama is no where close to being a fascist. Nor can he be described as a socialist or a communist, as some emails, cable news networks and talk radio have attempted to do. From all I've seen and heard both from him and truths about him, he's about as close to an American who believes in democracy and liberty as you can get; a full-blooded American who has studied the Federalist Papers, the Constitution and American Law and who understands and is loyal to these foundations of our government. Also, anyone who has done even the slightest research to understand fascism and its characteristics will know that the closest thing we've recently had to fascism is the Bush Administration; where nationalism, fake patriotism, secrecy and disregard for individual rights and Constitutional law was astonishing.

So, my dilemma is what to do about our loosely connected relative who, by the way and as if you couldn't guess, supported Bush. Of course I can't speak for other family members. They can, and have every right to, continue their relationship with her and to even believe what she says. But, I think they do that at their own peril by unknowingly exposing themselves to lies. I no longer respect her judgment and her opinions are no longer credible.

It is difficult enough to sort through the misinformation coming at us from thousands of sources these days without also having to constantly disprove misinformation coming from within ones own family. I've come to the point of simply turning off those outside sources of lies and disinformation and I believe that my thoughts on this have evolved to include inside sources. It seems that the way to clean up our own house is by closing the door on those who once were welcome but who have become the false witnesses and rumor mongers. They are no longer welcome. If they want back in, they will have to behave more honorably.

Dave

“The Dark Side” by Jane Mayer – The Easy American Coup

What is glaringly clear from reading the first eighty pages of The Dark Side is how easy it was and how so few individuals it took to subvert the Constitution, American law and American ideals. I have always assumed, without knowing the details, that it would take at least a hundred well placed appointments to take over the United States Government. That's apparently not true. All you need is a chance of history that puts a man like G. W. Bush in the White House with a man like Dick Cheney as Vice President and a hand full of lawyers.

It's clear that Dick Cheney manipulated Bush, probably from the instant that Bush asked him to find a Vice President candidate for his running mate and he chose himself. But, Dick Cheney saw Bush as egotistical and self-serving, and also naive and ignorant of government protocol and procedures and especially ignorant of American Constitutional Government, and easily manipulated. Bush really had no idea what the Presidency was all about. From the first moment, Cheney was more than happy to let Bush take the spotlight, be “the decider,” while he operated the prompts behind the scenes, controlling access and the paper flow to Bush; limiting Bush's choices. Bush probably thought Cheney was loyal to his legacy, loyal to the Office of the President and loyal to the Constitution, making all the right decisions on things Bush knew nothing about. Cheney gave these things little thought. His primary agenda was executive power.

David Addington, Cheney's Vice President Legal Council, was the workaholic lawyer with an overpowering personality behind Cheney, with Cheney's full support, who dominated the legal advice and forming the doctrine that Bush signed off on. Bush probably had no idea that it was Addington's particularly skewed view of Constitutional law he was endorsing. Addington controlled the legal arguments.

John Yoo, the Vice Deputy of the Department of Justice Office of Legal Council, came next. He, and Patrick Philbin, also of the Office of Legal Council and a pre-Bush associate of Yoo's, wrote the secret memos that justified torture and extreme Presidential powers.

Alberto Gonzales, Legal Council to the President, came next, but he was in over his head in the Addington dominated group. He would have followed along like a puppy no matter what Addington suggested.

Timothy Flanigan, also Legal Council to the President, joined the small group and he also appears to be a follower rather than equal to Addington and Yoo.

Last was William “Jim” Haynes, the Pentagon General Council, who was appointed at Addington's suggestion. He appears to have only filled a seat at the table, but he was a primary force in controlling access and the paper flow to Defense Secretary Rumsfeld who, similar to Bush, was all ego and self-serving and cared little about legalities.

These five attorneys formed “The War Council” and, along with Dick Cheney as the point man, controlled American policy on nearly every front; from policy formation, budgets, implementation and war and limiting Congressional oversight through their secrecy.

No wonder Cheney is afraid of Attorney General Eric Holder. If Holder investigates Cheney's cabal, he'll find the dirt and enough evidence to convict him and his little group.

Of course, the group had their friends, who are no less culpable. Friends such as I. Lewis “Scooter” Libby in the VP Office, and Paul Wolfowitz, Eric Edelman, Stephen Cambone, Douglas Feith, General Boykin in Defense, and John Bolton in State and others spread around. They were more than happy to let these others do the dirty work while The War Council bolstered their efforts with mistaken and illegal justifications in the dark.

I wonder if Addington gave any thought to Presidential term limits, four or eight years. I'll bet he did. He strikes me as someone who wouldn't want it to end. He strikes me as someone who wants a King or dictator rather than a President. I'll bet he even studied how extending power might have been accomplished, avoiding the problematic and inconvenient Democratic elections. He likely dreamed about it.

I hope Attorney General Holder investigates the little cabal that created the mess and prosecutes the deserving. We need to make sure this kind of thing never happens again. What if Sarah Palin, even more naive and ignorant than Bush, becomes President? It's scary to think what attorneys would be manipulating her!

Dave

The Injustice of Misdirected Conviction

Two stories in the New York Times caught my eye this morning. One tells the story of anti-abortion activists' journey to the streets. The other tells a story of an environmental activist disrupting the process of auctioning off federal land for oil and gas leases. These are seemingly unrelated articles until you think about it.

I guess I'm being affected by Micheal Sandel and his Harvard University lectures on Justice. Right or wrong is not obvious. Invariably, the anti-abortion crowd are born-again Christians, usually uninformed and ignorant. They cherry pick from the Bible to support one cause or another, and ignore the rest of the Bible. What's more, the Bible they use is invariably the King James version, the worst of the worst translations. They haven't read it, and if they have they didn't understand the archaic English. It's the most difficult Bible version to get meaning from, so why use it? Instead, they listen to pastors who interpret it for them but who are just as ignorant. Any sound and reasonable teaching is lost on them.

In my humble opinion, the entire Bible is about Justice... period. The famous Rabbi Hillel said this about the The Torah (The Old Testament to us), “That which is hateful to you, do not do to your fellow. That's the whole of The Torah. The rest is explanation. Go and learn.” It's all about justice.

What meaning would we get from the Bible if we read the best translation and thought about what we read from Hillel's point of view? Would we be so convinced that it is literal, historical fact? Or would we learn the philosophical and metaphorical teachings? Well, there are historical events in the Bible, but that's not the point. The point is whether we can learn to be more just from reading the Bible. Many more people of Earth read the Bible than any other book of philosophy. In fact, it is the only book of philosophy that most will ever read or be exposed to. It is my observation that most take a fundamentalist, literal meaning from it than a more just, philosophical meaning and, in the end, create more injustice and harm than good.

For example, what are you going to do with the mother when you make her a criminal by making abortions illegal? How did she get in that predicament in the first place? There are many causes: From the young teenager who accidentally gets pregnant because she was ignorant of contraception to the abused child raped by her father to the young woman who was raped by an assailant. It seems to me that the anti-abortionist picketing the clinic are the very same people who shout the loudest against teaching contraception in school Biology classes. It's the same crowd that condemn a young, unmarried pregnant woman as a sinner in their midst, shaming her into doing something regrettable and avoidable if she had somewhere to turn. It's the same crowd who claim the poorest in our society should fiend for themselves, without society's help, in high-crime neighborhoods or in incestuous homes. It's the same crowd who, in the end, created the unjust circumstances that drove the woman to abortion that now wants to make her a criminal.

They, “that crowd,” do more than that and it's an old argument but one I can't get past. What do you do for children after they are born? What do you do for the young man or woman you send off to unjust wars? Do you set up your pickets when an over zealous prosecutor charges a twelve year old as an adult for a particularly heinous crime, but never the less is still a child? Or, even for a lessor crime when a court sends a young person to prison for an extraordinarily, inappropriate and even criminal long period of time? It seems that it is the same crowd that shout the loudest for unequal treatment in courts of law and corporal punishment that, it turns out, sends many more innocent people to prison or to death than we ever thought.

And then there is the false outrage in our media. One case I keep repeating to anyone who will listen concerns a young 17 year old who earned Eagle Scout merits in Washington State. He let it be known one day that he was an atheist and he was kicked out of his Boy Scout Troop. He filed a lawsuit and it made national news. Fox News invited him on Bill O'Rielly's “No Spin Zone” for an interview; at least that's what they told him. But, it wasn't an interview and was never intended to be. Instead, Mr. O'Rielly, in a fit of false outrage, figuratively assassinated the young man's character on national television. To his credit, they young man stood up for his beliefs in the face of O'Rielly's attacks as best he could, but he was no match for O'Rielly. Until that day, I watched O'Rielly's show out of curiosity and entertainment. That was the last episode I watched. As far as I was concerned, O'Rielly's behavior gave me a more horrifying picture of his own character than it did of the young man's character.

It turned out that the young man, Darrell Lambert, was a good and decent, well adjusted young man and did not deserve the treatment he got from O'Rielly. I doubt, at 17 years old, whether he had any long-lasting conviction or belief. But, after a national dressing down and humiliation, how likely is it that he will ever consider God or even respect the beliefs of those who believe in God? Not likely. The community of scouts would have been better served to have kept Mr. Lambert in the scouts. His exposure, over time, to others' beliefs may have changed his mind more than any other approach.

In the end, all of the outrage expressed by the anti-abortionist and the Christian fundamentalists' views of education and justice defeat their own causes. It's all the same thing. Gandhi said, “I like your Christ. I don't like your Christians. Your Christians don't behave like your Christ.” Well said.

The other story is about 27-year old Tim DeChristopher who bid on oil and gas leases in a federal land auction. He had no money nor resources, however, to produce oil or gas from the land. He never intended to. His intention was to prevent the oil or gas from ever being used. His cause was to do his share to fight climate change and global warming that will cause millions of deaths, cause his future children to suffer and world suffering. His dilemma is having to prove whether his fraud will actually save lives, in which case he may get off. He committed his crime in the last “drill-baby-drill” year of the Bush Presidency when the Bureau of Land Management was practically giving away federal land for destructive development by big land developers and oil and gas corporations without the slightest consideration for the environment. There is no end to greed. There's also something about the Federal Government nearly giving away, sometimes for as little as 5¢ an acre, to a corporation that makes billions of dollars from the lease. There's something unethical about that. I'm on DeChristopher's side, but that probably won't help him.

I believe Hell is the profound knowledge we will suddenly get at the end of our lives that causes profound regrets for all of the wrongs we did in our short lives; by doing nothing or being unjust. A way around the Hell of profound regrets are for the anti-abortionists to sit down with those on the side of pro-choice and begin to repair our society where both a child, unborn or not, and a mother are wanted and loved in this world. And, DeChristopher has done no harm except to himself and may have saved lives; let him go.

There is a scene in the movie “Gandhi” that I've heard is a true account of an incident in his life. Gandhi is fasting in protest to the Hindu-Muslim war, a war that eventually split Pakistan from India. He was near death and Hindus from all around are trying to convince him to eat and to live. A Hindu stood in line waiting to talk to Gandhi and, when he eventually was able to see him, he said (my paraphrase) in great distress, “I have done a huge wrong. I have killed a Muslim child and I am going to Hell.”

Gandhi's reply was, “I know a way out of Hell. Find an orphaned Muslim child and adopt him and raise him as your own. Except, you must raise him as a Muslim, not a Hindu.” The look of terror on the man's face was enough to describe his aversion to Gandhi's suggestion; a Hindu raising a Muslim child as a Muslim would make him an outcast to his own people.

It doesn't matter whether that is a true account in Gandhi's life, it is still profound wisdom to walk justly and speak against injustice.

A way out of the Hell is Justice, even if cast out.


Dave

Justice at Harvard University

Now here is an interesting web site: Justice with Micheal Sandal given to the world at Harvard University. I wish I had taken a course like that years ago. Perhaps I would not have made so many mistakes or have so many regrets or have covered my ass in so many ways. It took too long to realize that Dad was right: a noble and honest life is best.

The Right-Wing Blather Market

It’s said that Limbaugh has 20 million listeners and O’Rielly has as many. I think they are the same 20 million. And, of the same 20 million, some listen to Beck, Hannity and Savage. It’s the same 20 million who listen to the crazy Congresswoman Bachmann, Congressman Boehner (pronounced baynor, not boner, although the latter is preferable) and Senators Mitch McConnell, Grassley, Hatch and Ensign, and Sarah Palin, Anne Coulter and Fox News and another hundred or so neoconservatives, libertarians and right-wing nut job pundits. So, of the 305 million people in the U.S. only 6.5% are full of shit. That’s not so bad when you think of it that way. In fact, it gives us a little more hope. The rest, 93% or so, are a little more practical – and silent. I’m just using a little macro-marketing analysis here. I can guess as well as any professional marketing analyst, can’t I?

The rumor is, from the New York Post, that Sarah Palin’s lecture popularity is fading among the professional lecture buyers. Professional organizations are shying away with one organizer calling her a “blithering idiot.” Several delegates at the Hong Kong event walked out embarrassed by Palin’s naiveté and bad-mouthing the United States in a Communist country. Still using the macro-marketing analysis, I think I can safely say that Palin’s total market of admirers consist of those among the 6.5% of Americans; probably those to the far right of the right.

Let’s make another leap starting with a question. Why do CNN, and in some respects MSNBC and nearly all local television and radio stations try to Out-Fox Fox when there is a much larger audience out there who would listen to good, factual news and talk-radio? Take Anderson Cooper’s 360 “Keeping them Honest” segment. As far as I can tell, this segment never answers a question. Every time I’ve watched it, there are at least two opposing pundits from both extremes on the issue discussed and never a resolution. It’s all about controversy. KGO radio News-Talk is another example. They will schedule an expert to discuss a significant issue, such as an environmental scientist who legitimately speaks for scientific environmental research, and then act as devil advocates to make it appear that there is “another side,” though fake, to the issue. The result is that listeners are just as mystified and confused after the interview as they were before it. Why is the Fox news format the standard?

MSNBC is somewhat better in that they at least report facts on the issues. Rachel Maddow, a hometown girl, is quickly becoming an excellent source of fact and truth and her show does a good job searching out those hidden power brokers behind much of the Republican and industry misinformation. She is fearless. But, if I had my choice, I would rather not have to go to so much trouble to sort out or to hear the truth. I’d rather it be reported in the first place.

I particularly like Brother Dan’s approach. He doesn’t listen to any of it. In fact, he can’t listen to it. His television reception area is limited to local and Public Broadcasting System stations in Lafayette, Indiana. He uses a T.V. Antenna, not a cable or Dish Network subscription. Good for him! He might not even know of Bill O’Rielly! I can’t imagine what serenity that would bring. From what I can tell, he’s pretty level headed about everything. If he’s an example of the 93% silent majority, maybe O’Rielly is irrelevant.

I’m elated that Sarah Palin is losing her appeal. I hear her unpublished book is already number one in sales, but it is not on my buying list and I suggest that 95% of the reading market will not buy it either. With such a large audience out there waiting for legitimate news and commentary, you have to wonder why the “other” major media networks try to Out-Fox Fox. As far as I’m concerned, the entire Republican Party and all those that take their philosophy and views are losing their appeal. I hope I’m right. I hope the 2010 election will see them further diminished to something like a background noise, like a distant freeway hum.

Dave