State of the Union 2012 rebuttal

[chunksmediocrites]

So I know the State of the Union Address is a meaningless gesture- but I have a hard time listening to the thing even in non-election years. It is packed with so much propaganda that I get angry and turn off the radio. But a couple things stood out as blatantly false and portrayed as if occurring in an historical vacuum, and I'm going to quote from the text and rebut here.

Last month, I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq. Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought – and several thousand gave their lives.

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world. For the first time in nine years, there are no Americans fighting in Iraq.

There is substantial evidence from our own government that the occupation of Iraq increased militant attacks against the US and around the world, and increased recruitment to groups opposed to the US.
The Obama administration actively sought to keep substantial US troops in Iraq after the timeline outlined in the Status of Forces Agreement that Bush signed; the sticking point was primarily that Iraq would not agree to US troop immunity from prosecution for crimes committed in Iraq.

For the first time in two decades, Osama bin Laden is not a threat to this country. Most of al Qaeda’s top lieutenants have been defeated. The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home.

Either Osama bin Laden was- depending on your view- a criminal, or a war criminal. Do you remember when we used to try criminals in our regular courts? Do you remember when we used to try war criminals?
The CIA set up a hepatitis B vaccination program as cover in Abottabad, in an attempt to get DNA from the children in the compound where Osama bin Laden was suspected of staying. This is a continuation of the intelligence services massively increasing risks and undermining legitimate aid workers and journalists, by using those roles to gain access.
Is the Taliban a threat to the US? Was it ever? What evidence is there that the "momentum" has been broken?

Let’s remember how we got here. Long before the recession, jobs and manufacturing began leaving our shores. Technology made businesses more efficient, but also made some jobs obsolete. Folks at the top saw their incomes rise like never before, but most hardworking Americans struggled with costs that were growing, paychecks that weren’t, and personal debt that kept piling up.

Let's do remember how we got here. Clinton and the Democrats supporting NAFTA and other neoliberal globalization schemes that encouraged the export of capital and jobs. The giant sucking sound Ross Perot described back in 1992. The same thing that Obama is continuing today, adding Colombia, Panama, and South Korea to Free Trade agreements.
Folks at the top didn't look on in astonishment at their incomes rising. They hired lobbyists to lobby on their behalf for substantial reductions in their tax rates. They convinced cronies and colleagues in the corporate boardrooms to give them massive pay hikes, golden parachutes, and huge bonuses. They did their best to convert the system to private profits and socialized losses, through revolving doors between industry and the upper tiers of government.

In 2008, the house of cards collapsed. We learned that mortgages had been sold to people who couldn’t afford or understand them.

Sold by predatory lenders, that the government did not and will not prosecute in any way.

Banks had made huge bets and bonuses with other people’s money. Regulators had looked the other way, or didn’t have the authority to stop the bad behavior.

It was wrong. It was irresponsible. And it plunged our economy into a crisis that put millions out of work, saddled us with more debt, and left innocent, hard-working Americans holding the bag.

And the Obama administration made secret bail-outs to the worst of these too-big-to-fail banks. Approved weak-tea regulation at best. And is now currently accepting massive donations from these same offenders for his reelection campaign, while they walk away with no consequences. Meanwhile, whistle-blowers get prosecuted. Drug offenders get prosecuted. But Wall Street criminals remain untouched.

... we’ve put in place new rules to hold Wall Street accountable, so a crisis like that never happens again.

Really? Dodd-Frank was the least amount of regulation that could possibly be applied. The SEC ranking officials migrate like clockwork from "regulating", to working for those they "regulated", and push for no-fault settlements that leave the offenders profiting from their frauds. And Obama's financial advisers are all Wall Street insiders. I'm pretty sure not holding Wall Street accountable is a failure, and will not prevent future crises.

So on to other highlights...I'm fine with the idea of a corporate minimum tax. I'm fine with funding for job training. I applaud his call to an end to the demonizing of teachers. I appreciate his calls for bills that require a 30% tax rate minimum for millionaires, for banning Congressional insider trading. I applaud his call for infrastructure spending.

His "look into" financial crimes proposals sounds like whitewash, and I'm not the only one saying it.

The greatest blow to confidence in our economy last year didn’t come from events beyond our control. It came from a debate in Washington over whether the United States would pay its bills or not. Who benefited from that fiasco?

That I can hear. But the Republicans benefited quite a bit from endless pretend negotiations where they got 95% of what they wanted. Who was in charge of that fiasco?

Government should do for people only what they cannot do better by themselves, and no more. That’s why my education reform offers more competition, and more control for schools and States. That’s why we’re getting rid of regulations that don’t work. That’s why our health care law relies on a reformed private market, not a Government program.

In regards to the bolded: that is outright bullshit.

From Pakistan to Yemen, the al Qaeda operatives who remain are scrambling, knowing that they can’t escape the reach of the United States of America.

The drone program Obama won't acknowledge or discuss, that indiscriminately rain missiles of death from the sky on men, women, children. That commits extra-judicial assassinations of US citizens. Basically a recruitment program for the next generation of militants who revile the war crimes of the United States.

From this position of strength, we’ve begun to wind down the war in Afghanistan. Ten thousand of our troops have come home. Twenty-three thousand more will leave by the end of this summer. This transition to Afghan lead will continue, and we will build an enduring partnership with Afghanistan, so that it is never again a source of attacks against America.

I understand the idea behind preventing areas from being safe-havens for non-state actors like al-Qaeda. But I disagree vociferously about the causes and methodology, and do not believe Afghanistan will be anything but a failed state for decades and decades to come, helped along that path by the decades of warfare the US has funded and waged there. I know of no evidence that the US warfare in Afghanistan can be termed a success. None in any way.

As the tide of war recedes, a wave of change has washed across the Middle East and North Africa, from Tunis to Cairo; from Sana’a to Tripoli. A year ago, Qadhafi was one of the world’s longest-serving dictators – a murderer with American blood on his hands.

The tide of unjust war predicated on a lie; a wave of change against dictatorships and governments the US supported and aided for decades; the same Qadhafi regime that the CIA sent captives to torture at black-site prisons, the same regime we were happy to do business with.

And we will safeguard America’s own security against those who threaten our citizens, our friends, and our interests. Look at Iran.

Iran has oil, Iran is in the Middle East, Iran won't puppet: therefore Iran is a threat. Got it.

Through the power of our diplomacy, a world that was once divided about how to deal with Iran’s nuclear program now stands as one. The regime is more isolated than ever before; its leaders are faced with crippling sanctions, and as long as they shirk their responsibilities, this pressure will not relent. Let there be no doubt: America is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal.

India, Pakistan, Israel are all rogue nuclear states that we have massive business and military dealings with. The difference is they play ball. The difference is Iran is Shiite and our Saudi allies are Sunni. The difference is for perpetual war to work we need an exit strategy, which is always an entrance strategy into another war. The difference is to justify the War on Terror (tm) you need a boogeyman threat. For Iran to justify its repressive theocracy, it also needs an external threat- except of course we actually have occupied Iraq on one of its borders, after helping them wage war on Iran. We occupy Afghanistan on its other border. We have nuclear weapons and a military presence in Turkey on its northern border. We support or enact cyber attacks on Iran, and the murder of its nuclear scientists. And we propped up Iran's Shah, after deposing its democratically elected government. Why wouldn't they trust us?

From the coalitions we’ve built to secure nuclear materials, to the missions we’ve led against hunger and disease; from the blows we’ve dealt to our enemies; to the enduring power of our moral example, America is back.
Anyone who tells you otherwise, anyone who tells you that America is in decline or that our influence has waned, doesn’t know what they’re talking about.

Make believe and shiny rhetoric won't float that boat. We are in decline. There are ways to change that, but in no way has our path as a nation been sustainable, in foreign policy, military spending, lack of infrastructure spending, declining education, or unreal consumption levels. We can do things to pull out of a slow dive and level off. But I'm not betting that's going to work with the status quo at the wheel.

[Vivisectus]

One small quibble though - as far as I am aware, these bankers did not break any major laws. You can call their behaviour criminal, as being immoral and having huge repercussions on the rest of the nation, but the laws that should make this criminal are simply not there, as far as I know.

[chunksmediocrites]

Originally Posted by Vivisectus

One small quibble though - as far as I am aware, these bankers did not break any major laws. You can call their behaviour criminal, as being immoral and having huge repercussions on the rest of the nation, but the laws that should make this criminal are simply not there, as far as I know.

There were many actual crimes committed. Forging signatures and robosigning is fraud. Internal memos at Goldman Sachs show that the company knew the financial instruments that they were selling constituted a big risk to themselves- which is why they were unloading them as fast as they could on their clients- and then making huge bets that those instruments would fail. That's fraud.
Magnetar was clearly fraud.
Abacus was clearly fraud.
Taibbi outlines in broad strokes here:

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."

Here's Taibbi's article, The People vs. Goldman Sachs Wherein he details fraud- and then executives lying under oath to Congress, which is also a crime.

Here's my round-up on JPMorgan Chase, involving a number of cases of fraud.

The SEC cases and the cases in the 50 states brought by the states attorneys general- that the federal government is desperately trying to settle- are all fraud cases.

[SR71]

Powerful stuff, chunksmediocrites. It's been three years now, no major prosecutions, just pennies on the dollar fines in settlements, and no admissions of guilt. The financial damages seem almost irrelevant now, an increasingly accepted, for lack of alternatives, part of the national landscape.

What still galls after all this time is the utter lack of accountability. For argument's sake, suppose the banks are legally guilty of fraud or any other crime. Why the lack of admissions of guilt in the settlements? Why the glaring dearth of prosecutions? Again for argument's sake, suppose the .gov had policies that forced banks into making all these bad loans (I don't buy it myself). Why no admission of guilt or responsibility for the crisis from the government?

The majority of us who played by the rules and spent within our financial limits have been hurt as much as anyone else through lowered property values, higher rents, and the job losses and small business losses pursuant to the catastrophe. So we know the blame lies somewhere, either a failure of fiduciary responsibility and unethical behavior, a failure of regulation, or a failure of legislation, yet we get no admission of culpability from any quarter. It is enough to make one lose faith with our institutions. Somebody, somewhere, needs to fess up. My personal disillusionment index is at an all time high.

[Sock Puppet]

I don't understand the "Why the lack of admissions of guilt" question. Why would you expect there to be any?

[SR71]

If the government settles, shouldn't there be something to settle over? When a common criminal makes a deal with prosecutors, don't they ordinarily need to admit guilt to avoid prosecution?

I like this judge - this is from last November.
Judge Blocks S.E.C. Settlement With Citigroup - NYTimes.com

Taking a broad swipe at the Securities and Exchange Commission’s practice of allowing companies to settle cases without admitting that they had done anything wrong, a federal judge on Monday rejected a $285 million settlement between Citigroup and the agency.

The agency in particular, Judge Rakoff argued, “has a duty, inherent in its statutory mission, to see that the truth emerges.” But it is difficult to tell what the agency is getting from this settlement “other than a quick headline.” Even a $285 million settlement, he said, “is pocket change to any entity as large as Citigroup,” and often viewed by Wall Street firms “as a cost of doing business.”

In his decision, Judge Rakoff called Citigroup “a recidivist,” or repeat offender, for having previously settled other fraud cases with the agency where it neither admitted nor denied the allegations but agreed never to violate the law in the future.

In the Citigroup case, no such facts were agreed on. “An application of judicial power that does not rest on facts is worse than mindless, it is inherently dangerous,” Judge Rakoff wrote. “In any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth.”


If the bank won't admit any wrongdoing, what are we settling over? The .gov is facilitating dangerous, harmful behavior by settling with no admissions of quilt.

[Vivisectus]

yup that qualifies all right. So it is not merely a failure to regulate, as I thought, but more a huge failure to enforce.

[Sock Puppet]

A settlement is different from a plea bargain. Settlements almost always contain stipulations that the asshole company doesn't admit guilt. Otherwise they wouldn't settle.


ETA: Sorry, skimmed without reading the linked article. It sounded at first like you were asking for the offenders to volunteer their admission of guilt out of the goodness of their hearts or something. I agree that they should be held accountable, but nobody, not even those outside the slime of humanity known as the banking industry, is going to admit guilt for a crime unless given no other choice.

[chunksmediocrites]

Originally Posted by SR71

What still galls after all this time is the utter lack of accountability. For argument's sake, suppose the banks are legally guilty of fraud or any other crime. Why the lack of admissions of guilt in the settlements? Why the glaring dearth of prosecutions? Again for argument's sake, suppose the .gov had policies that forced banks into making all these bad loans (I don't buy it myself). Why no admission of guilt or responsibility for the crisis from the government?

Companies are unlikely to admit legal guilt if there is a possibility of getting away with something less than that. Admitting guilt or fault opens those companies to liabilities, and it is in their interest to minimize that in every case.
The SEC allows settlements with no admission of guilt because taking a case to court, against a bank whose legal department probably bills more hours than the SEC budget, can be risky, protracted, and politically challenging, since every major investment bank has past- and most likely future- employees working at the highest levels of government. The regulators at the SEC routinuely go work for the Wall Street firms and their pet law firms. SEC regulators in the past that have attempted to investigate hedge funds, for example, have been stomped on by their bosses within the SEC after being warned off. Gary Aguirre is exhibit A. So the SEC is, like most of the bank regulatory agencies, a captured agency.

The Justice Department is highly politicized, and is apparently too busy prosecuting whistleblowers uncovering fraud and waste, to spend any time pursuing these fraud cases.

I think the ratings agencies and the banks have a bigger role here, but the SEC bringing record low numbers of cases forwarded for prosecution, as well as no one regulating the derivatives market, and the removal of the Glass-Steagall Act during the Clinton Administration are all areas for criticism of the government. The government also admits no guilt on anything, for the same reason- they have lawyers to argue cases in court for decades, they don't want to open themselves up to costly liability.

Also it is an easier story for the government and business to point at the least powerful- and it is more comprehensible for the consumers of media to think of someone being greedy to get a big house but not having the money to pay the mortgage. It is harder for most to concieve of fraud in the hundreds of millions that involves taking collateralized debt obligations, slicing and dicing, bundling, reslicing, taking out insurance on the riskiest portion of that piece of pie that is composed of bets on another pie that is built out of tens of thousands of individual mortgages- that all sounds like pretend numbers and pretend in general, and is hard to wrap one's head around. And requires that people in the media actually learn how to explain complex and byzantine financial instruments.

[SR71]

chunksmediocrites, I agree entirely with you. You present a very realistic assessment. Therein lies the evidence that our institutions have failed us. As Judge Rakoff said, “An application of judicial power that does not rest on facts is worse than mindless, it is inherently dangerous,” Judge Rakoff wrote. “In any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth.”

At the very least, there is an absolutely vital and justifiable public interest in knowing the truth. Somebody, somewhere owes us an explanation. Whichever agencies are proximately causal must be held to account. If that is not true, than I have no faith at all in our financial, judicial, legislative, and regulatory institutions.

I fully understand and concur with your description of the circumstances that prevent any assignment or shouldering of the burden of guilt, and take this assessment as primary evidence that our institutions no longer serve the interests of the public at large.

[Sauron]

Originally Posted by Vivisectus

One small quibble though - as far as I am aware, these bankers did not break any major laws. You can call their behaviour criminal, as being immoral and having huge repercussions on the rest of the nation, but the laws that should make this criminal are simply not there, as far as I know.

The various state AGs are now suing the banks

Diane Thompson, an attorney with the National Consumer Law Center, says she has defended hundreds of foreclosure cases, and in nearly all of them, the homeowner was not in default. "The record-keeping on the part of the mortgage servicers is not to be trusted."

The problems grew from a lot of sloppy recordkeeping that began during the housing boom, when Wall Street built a quick-and-dirty back-office operation to process mortgages quickly so lenders could sell as many loans as possible. As the loans were later sold to investors, and then resold around the world, the back office system sidestepped crucial legal procedures.

Now it's becoming clear just how dysfunctional and, according to several state attorneys general, how fraudulent the whole system was.

Depositions from "affidavit slaves" depict a surreal, assembly-line world in which the banks and their partner firms hired hair stylists, fast-food kids and Wal-Mart floor workers, paying them $10 an hour, to pose as bank vice presidents, assistant secretaries and corporate attorneys.

These "robosigners" became a national sensation in the fall of 2010 when it was revealed that they faked titles, forged documents and backdated affidavits so they could make up for the bypassed procedures and foreclose on properties.

They passed around notary stamps as if they were salt. They did all of this, they testified, without verifying a single word in any of the documents - as is required by law.