Someone Else's Money

One lesson of this world financial crisis is that there has to be accountability when people are investing, well, let's use the real word, "playing" with, other people's money.

So far, after wildly successful gains, and now precipitous losses, there hasn't been any accountability.

There has been a lot of fooling around with other people's money. Not just your 401 k and mine, not just your pension fund, if you are lucky enough to have one, not just your money market.

How about your alma mater?

According to TheDailyBeast.com, in an article "The Man Who Gutted The Ivy League," written by Edward Jay Epstein, Yale's endowment has been managed by David Swensen since 1985. He changed the rules of endowment investment, even wrote a book about it, Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment, at first being wildly successful, and now, well, Yale doesn't know how much money it's lost.

The heart of his strategy was to reduce drastically the allocation for bonds, equities, and cash, and substitute for them a portfolio of illiquid investments that included participation in leveraged buyouts, hedge funds, and stockpiles of physical assets. Swensen argued in his book that such illiquid investments carry less risk and more potential for high returns than stocks or bonds. His case was that because endowment funds did not have to concern themselves with withdrawals for taxes or redemptions to their investors, they did not need the liquidity of the major stock and bond markets and could therefore avoid losses from short-term fluctuations.

Yale was the leader in moving endowment investment away from traditional blue chip investments and into the unregulated world of hedge funds, private equity, and physical asset acquisitions. The other ivy league and prestige schools followed suit. No one quite knows how much money they have lost, and in the letters to parents and alum, that figure is not mentioned. What is stated is that because of the losses, operating expenses have been slashed as services vanish. Tuition hikes are looming.

Epstein ends his piece: The real issue underlying the Swensen strategy is what the purpose of an endowment fund is. If it is to gamble on creating a jackpot large enough for a university to finance large-scale future expansion, his strategy may make sense, as it promises long-term profits. But if its purpose is to assure an institution’s continuity in bad as well as good times, the strategy may be inappropriate, especially if in times of crises, when other money raising is diminished, a university may have to borrow enormous sums to meet capital calls from private-equity houses. Unfortunately, such considerations of purpose tend to be drowned out by the alluring, sweet-sounding tune of a pied piper.

Just What Did Go Wrong in Detroit?

There are two articles by Malcolm Gladwell, staff writer for The New Yorker, that need to be read, or reread, to understand why the American automobile industry is failing.

The first article, Big and Bad, January 2004, explains the rise of the SUV, a way around passenger car safety standards and gas mileage requirements, as well as the path to enormous profits that GM, Ford, and Chrysler did not reinvest into developing safer or more fuel efficient cars, or use to pay down pension obligations. We will have to await history or investigators, hopefully, to know where the money went and why loopholes were the precipitating factors in driving Detroit decision-making.

The second article, The Risk Pool, August 2006, reveals the relationship between the automobile industry and pensions and health care benefits. After World War II, the United Automobile Workers (UAW) wanted to spread the risk of pensions regionally, so that workers could move with their pensions if they went from car manufacturer to parts suppliers and back again to a different manufacturer. However, the car executives were afraid of losing control and insisted that only the car companies should pay for pensions and health care. The car manufacturers could have gone for national health insurance, something that President Truman first offered in 1945.

In 1945, when President Truman first proposed national health insurance, they [the unions] cheered. In 1947, when Ford offered its workers a pension, the union voted it down. The labor movement believed that the safest and most efficient way to provide insurance against ill health or old age was to spread the costs and risks of benefits over the biggest and most diverse group possible. Walter Reuther [head of the Union], as Nelson Lichtenstein argues in his definitive biography, believed that risk ought to be broadly collectivized. Charlie Wilson [president of GM], on the other hand, felt the way the business leaders of Toledo did: that collectivization was a threat to the free market and to the autonomy of business owners. In his view, companies themselves ought to assume the risks of providing insurance.

On the day that Rick Wagoner, president of General Motors, was asked to resign, we need to understand how these corporate executives made bad decisions that rumble through our economy and affect all of us. However, there still appears to be no accountability, not on Wall Street, not reflected in corporate salaries, not in courts of law. Perhaps I am hyper-paranoid, midway through The Shock Doctrine by Naomi Klein, a book I highly recommend. (The tag line is Information is Shock Resistant. Arm Yourself.) But these times require an informed and focused citizenry, not folks longing to shop again, but folks who want to participate in democracy.

Dick Cheney is the Axis of Evil

According to an April 6, 2009, article investigated and written by Seymour Hersh that will appear in The New Yorker, Dick Cheney disparaged Obama to Israeli officials during the transition period. Read this previewed post about the changes in Middle Eastern strategy underway in the Age of Obama.

Like a possible treaty between Israel and Syria.

And if you ever had any doubt that the Israeli invasion of Gaza at the tail end of the Bush administration was sanctioned by the outgoing Bush-Cheney madmen, here it is:

According to the former senior intelligence official, who has access to sensitive information, “Cheney began getting messages from the Israelis about pressure from Obama” when he was President-elect. Cheney, who worked closely with the Israeli leadership in the lead-up to the Gaza war, portrayed Obama to the Israelis as a “pro-Palestinian,” who would not support their efforts (and, in private, disparaged Obama, referring to him at one point as someone who would “never make it in the major leagues”). But the Obama team let it be known that it would not object to the planned resupply of “smart bombs” and other high-tech ordnance that was already flowing to Israel. “It was Jones”—retired Marine General James Jones, at the time designated to be the President’s national-security adviser—“who came up with the solution and told Obama, ‘You just can’t tell the Israelis to get out.’ ” (General Jones said that he could not verify this account; Cheney’s office declined to comment.)

So all of the gloves are off. Since when does the prior administration attack the current one just days after an election? Because Bush-Cheney have a lot at stake: everything is political in an attempt to make their decisions in the "war on terror" look benign and patriarchal, and not illegal and subject to indictment.

The Good Negro at The Public Theater

When the economy is down the revival flourishes on Broadway: Hair, West Side Story, South Pacific, Blithe Spirit, Guys and Dolls, Hedda Gabler, even Mamma Mia! With 9 to 5 about to go into preview, there isn't much serious theater left: August: Osage County, God of Carnage, 33 Variations, Impressionism, and reasons to be pretty.

And there is The Good Negro at The Public Theater. After years of subscribing to a variety of theater companies, some of which have been ruined by over-expansion into Broadway houses and therefore losing their edge, I find that The Public Theater maintains principles of drama, with just enough discomfort to work through the sophistication of the New York audience. There isn't much Iowa visiting at The Public.

The play is a revival from the Public's earlier Lab production. It was written by a talented and complex playwright, Tracey Scott Wilson, the first in a trilogy of historical plays. The next will be about the Black Panthers. This one is set in Birmingham, Alabama in 1962 and is a fictionalized version of the young and emerging leader Rev. Martin Luther King, Jr. with all of his flaws, because what makes this play so enormously interesting is Wilson's insistence that she portray icons as people trying desperately to live up to their ideals.

It isn't Rosa Parks, the perfect Negro, to start the Birmingham bus boycott that launched Rev. King's career. Instead it is the arrest of a four year old girl and her mother for using the "whites only" bathroom in a department store when the "coloreds only" was broken. The arrest of this fine and furious woman, Claudette Sullivan, played by Joniece Abbott-Pratt, sets off an opportunity for national leadership for Rev. Jimmy Lawrence, by Curtis McClarin, and his fellow preacher Henry Evans, by J. Bernard Calloway. Both men give superb performances with all of the glitter of Southern preaching. Rev. Jimmy's long-suffering wife is played by Rachel Nicks who is so beautiful and graceful that we will be seeing her in many more plays. The community organizer, a European, college educated Negro, Bill Rutherford, by Curtis McClarin, is effete, doesn't know how to sing or pray, but brings the technical knowledge of organizing to Birmingham. One thinks of Bayard Ruskin and his role in the Birmingham bus boycott.

And then there are the two FBI agents, "the old man" aka J. Edgar Hoover and his obsession to link the Civil Rights movement to Russia and to discredit its leaders through illegal wiretaps and rumors of sexual promiscuity. There is the Klan and its infiltrator, and there is violence.

The second act is too long, it gets fragmented as it tries to resolve all of the points it wants to make, but this is a worthy play, beautifully acted, with a glimpse into the courage, fear, and frailty of those men and women who withstood fire hoses, unemployment, intimidation, and multiple arrests so that their children might be free.

In Our Own Back Yard

Finally New York is easing the draconian Rockefeller Drug Laws that created the mandatory sentencing craze that made prisons into a growth industry, especially in rural areas, and brought the trend in private prisons into vogue. Yet another way to make money. The United States has the highest incarceration rates in the world: by 2007 there were 2.29 million people in county jails, prisons, and federal penitentiaries. We do better than Russia, Rwanda, and China. Think about that.

An outsider might look and consider the US involved in a massive race or class war since the breakdown of who is in prison is equally as shameful. In 2002, 93.2% of prisoners were male. About 10.4% of all black males in the United States between the ages of 25 and 29 were sentenced and in prison, compared to 2.4% of Hispanic males and 1.3% of white males. With 5% of the world's population, the US has 25% of the world's prison population. (Walmsley, Roy (2005). "World Prison Population List" (PDF).)

And how we treat people in prison deserves our attention, too, because as I've said many times before, it isn't just Guantanamo Bay and Abu Ghraib. It's here. It's called solitary confinement.

The March 30, 2009 issue of The New Yorker features an article by Dr. Atul Gawande. It's available on-line and it should be mandatory reading.

Humans are social beings. We need other people. Contact, interaction, not just instant or text messaging either, but real intimacy is a requirement of our genes. Therefore, to put people into solitary confinement in prisons for prolonged periods of time creates destroyed and desperate human beings at the end of their ordeal. "One of the paradoxes of solitary confinement is that, as starved as people become for companionship, the experience typically leaves them unfit for social interaction." So use of solitary confinement as punishment for rule violation and violence itself, just breeds a less controllable and diminished human being.

It's a form of torture: hallucinations, depression, uncontrollable violence, paranoia, and "resistance is the sole means of maintaining a sense of purpose, and so their sanity."

With the rise of the supermax prison, so, too there has been a rise in the use of solitary confinement. "America now holds at least twenty-five thousand inmates in isolation in supermax prisons. An additional fifty to eighty thousand are kept in restrictive segregation units."

Having worked as a Human Rights Commissioner in Marin County, where the infamous San Quentin Prison is located, I believe no sane person can remain sane in that atmosphere for long: that includes the inmates and the correctional officers. The noise, the smells, the unpredictability will drive you mad.

Since it costs too much to maintain these prisons, now is the time for us to demand that they be emptied and that these barbaric practices be ended. Yes, right here in America.

The Dictionary Gets It

It appears that the last major holdout in dictionary acceptance of a secondary definition of the word "marriage" is The Oxford English Dictionary. Whereas the Merriam-Webster Dictionary added a secondary definition of marriage in 2003 with little notice or threats of boycott: "the state of being united to a person of the same sex in a relationship like that of a traditional marriage."

A draft definition is floating around at Oxford.

When I see the young women at my daughter's women-only college, I realize, it's just a matter of time. Let the older generation die out, because these young women were always out, never wasted a moment of insecurity on wondering why they are who they are. Why some of these women have more self confidence at 20 than I had at 45!

That human beings want intimacy, desire closeness in which to live and nurture, why is that so hard to accept?

Intentional Mistakes

Today I attended a talk by Richard Moran, professor of sociology and criminology at Mt. Holyoke College. He analyzed the records of the death penalty convictions that were overturned by the work of The Innocence Project.

What did he find in looking at the appellate decisions in 130 cases? (As of today, The Innocence Project has exonerated 234 death row inmates.)

In 2/3 of the cases, Professor Moran found intentional law-breaking by police and/or prosecutors: destruction or suppression of evidence, suborning perjury, illegal searches and seizures, coercing confessions, beating detainees, junk science--the whole range of stuff that somehow we believe was limited to what happened to foreign detainees at Guantanamo Bay Prison or Abu Ghraib.

Professor Moran was alarmed that we speak about these cases as if they were mistakes, mere accidents. However, 2/3 of these exonerations, and remember these are appeals based solely on DNA evidence (who knows how many cases there are where there is no conclusive evidence of malfeasance), were based on intentional law breaking by individuals operating with the power of and in the name of the state.

As a former criminal defense attorney, nothing Professor Moran said today surprised me. Unlike the public and too many judges, I do not assume that the police and prosecutors are operating within the confines of criminal procedure and the Constitution. Once one has seen what happens in the criminal "justice" system, one can never be naive again.

Read "The Presence of Malice," dated August 2, 2007, by Richard Moran from The New York Times.

John Hope Franklin 1915-2009

When I was a student at The George Washington University from 1966-1970, I took a "History of Negroes in America" class from visiting professor John Hope Franklin. In addition to being the first person of color to chair an academic department at a major university, Brooklyn College, Professor Franklin worked with Thurgood Marshall to develop the case that eventually became Brown v. Board of Education. He was named professor emeritus of history at Duke University.

Today Professor Franklin died and a memory of how life in America changed in the last ninety years disappeared. We have lost a great man who honored the history of his people, filling in so that our collective memories would not fail us. With his scholarship, the civil rights movement took root and made history.

This is what I remember about this dignified and courtly man whom I didn't quite understand.

I attended every class, which was a miracle in those years. I wrote a paper called "Abraham Lincoln: The Emancimuthafuckinpater of the Slaves." I fashioned the title after the song in the then hit show "Hair." (Ironically, Hair has reappeared on Broadway for the first revival in over forty years.) The paper questioned whether Lincoln's motive in issuing the Emancipation Proclamation was to free enslaved men and women or to keep European countries out of the American Civil War.

When Professor Franklin walked passed my seat to give me back my graded paper, he sighed. He handed it back with an A- marked on it. "It's the title," he said sadly. I realized then that he didn't understand the cultural reference I was making.

I will never forget his sadness. I lost a lot of arrogance that day.

We are fortunate that Professor Franklin was so prolific.

This is just a partial list:

• The Free Negro in North Carolina, 1790-1860, Chapel Hill: University of North Carolina Press, 1943, 1995.
• The Diary of James T. Ayers, Civil War recruiter ed., with introd., by John Franklin. Springfield; State of Illinois, 1947.
• From Slavery to Freedom: A History of African Americans, 1st ed. New York: A.A. Knopf, 1947. Last update with Alfred Moss, 8th ed. McGraw-Hill Education, 2000, ISBN 0-07-112058-0
• The Militant South, 1800-1861. Cambridge: Belknap Press of Harvard University Press, 1956; 1st Illinois pbk. Urbana: University of Illinois Press, 2002.
• Reconstruction: after the Civil War. Chicago: University of Chicago Press, 1961.
• The Emancipation Proclamation. 1st ed. Garden City, N.Y.: Doubleday, 1963; 2nd ed. Washington, DC: National Archives and Records Administration, 1993.
• Land of the Free; a history of the United States, by John W. Caughey, John Hope Franklin and Ernest R. May. Educational advisers: Richard M. Clowes and Alfred T. Clark, Jr. Rev. New York: Benziger Bros., 1966.
• The Negro in Twentieth Century America: A Reader on the Struggle for Civil Rights, by John Hope Franklin & Isidore Starr. New York: Vintage Books, 1967.
• Color and Race. Boston: Houghton Mifflin, 1968.
• The Historian and Public Policy, by John Hope Franklin. Chicago: University of Chicago, Center for Policy Study, c1974.
• Racial Equality in America, by John Hope Franklin. Chicago: University of Chicago Press, c1976.
• A Southern Odyssey: Travelers in the Antebellum North. by John Hope Franklin. Baton Rouge: Louisiana State University Press, c1976.
• Black Leaders of the Twentieth Century, edited by John Hope Franklin and August Meier. Urbana: University of Illinois Press, c1982.
• George Washington Williams: a Biography, Chicago: University of Chicago Press, 1985; Reprint, Durham, N.C.: Duke University Press, 1998.
• Race and History: Selected Essays 1938-1988, Baton Rouge: Louisiana State University Press, c1989.
• The Facts of Reconstruction: Essays in Honor of John Hope Franklin, edited by Eric Anderson & Alfred A. Moss, Jr. Baton Rouge: Louisiana State University Press, c1991.
• The Color Line: Legacy for the Twenty-first Century, John Hope Franklin. Columbia: University of Missouri Press, c1993.
• Racial Equality in America, by John Hope Franklin. Columbia: University of Missouri Press, 1993.
• My Life and an Era: the Autobiography of Buck Colbert Franklin, edited by John Hope Franklin and John Whittington Franklin. Baton Rouge: Louisiana State University Press, c1997, 2000.
• Runaway Slaves: Rebels on the Plantation, John Hope Franklin, Loren Schweninger. New York: Oxford University Press, 1999.
• Mirror to America. The Autobiography of John Hope Franklin. Farrar, Straus & Giroux, 2005, ISBN 0-374-29944-7

Goldman Sachs As Welfare Queen

My blood is boiling again, when I realize just how much money has been given to Goldman Sachs, and how connected the problem-solvers of this financial crisis--Henry Paulson, Tim Geithner, Neel Kashkari-- are to the venerable investment house.

Read this posting from Josh Marshall's talkingpointsmemo.com.

These are the figures we know about:

TARP funds: $10 billion plus
AIG securities lending unit: $4.6 billion
Maiden Lane III: $5.8 billion
AIG collateral: $2.5 billion

Total: $22.9 billion plus

So we need to ask the question again: why is Goldman pretending that it didn't have exposure to the derivatives market crash and wasn't a counterparty to the notorious credit default swaps?

"Just for good measure, it's also worth noting that Goldman is getting an additional several hundred million dollars per year in interest savings, according to Gross, thanks to an FDIC program that guarantees bonds issued by banks. Under the program, which is designed to make it easier for banks to raise capital, Goldman has sold $21 billion in bonds since November."

Too Much Stuff

There is something fundamentally wrong with a consumer-based economy. It's not sustainable. It depletes the earth's resources, creates too much garbage, and distorts human values. We end up investing in and honoring the wrong things. Look around your house and figure out what you really need. Think about how many hours of work it took to purchase all of this stuff.

So this afternoon when I listened to an NPR story about New Orleans and how four years later, the eastern portion of the city still doesn't have a Wal-Mart, I cringed. Wal-Mart was shorthand for the lack of retail stores in this once flooded area of the city. Although many homeowners have returned, able to furnish their newly renovated homes with insurance policy proceeds, others have abandoned their destroyed homes. With the levies still not rebuilt to withstand a level 4 or 5 hurricane, private investment hasn't come back to the area either. People don't have a nearby hospital, have only one supermarket, and don't have any of the conveniences they were accustomed to before August 2005.

What do we really need? Shoes that will last more than a season. Clothes that keep us covered, that reflect some style and workmanship. Shelter that we can call home. I wonder more and more during this economic crisis whether this collapse, yes, immediately caused by derivatives and the sale of credit default swaps, isn't just the beginning of the end of capitalism. As India and China grow up and want the products that Americans used to gloat over for the whole world to envy, where will we get the energy and the materials to satisfy their needs? Is turning "green" a way to try to protect ourselves from developing countries by changing the rules just as they are about to be able to afford our follies? Since when is Exxon a green company? Green is about quantity, too.

Dressed in Black

With markets rallying over Treasury Secretary Tim Geithner's resurrection as the savior of Wall Street and American banking, we mere mortals should be shivering. The Dow rose nearly 500 points, the S & P 500 increased by 7.8% yesterday. Everyone in a suit and tie was praising the formerly reviled Geithner.

But what is good for Wall Street and banks, the sale of toxic assets, is not necessarily good for you and me, even though our 401 k retirement investments might have regained some of their value yesterday. Read Paul Krugman's column in the New York Times. Remember, he won a Nobel Prize for economics.

This assumption that the American financial system is just fine, thank you, with some excesses, yes, is what allowed someone like Bernie Madoff to flourish and dewealth almost 5,000 "investors." Returns were evaluated solely in dollars, ignoring unspoken beliefs that due to his position, Madoff had access to corrupting insider information, which must have driven these "investors" when Bernie was making profits for them and the market was tanking elsewhere.

Now Lucinda Franks, formerly of the New York Times, has written quite a piece for TheDailyBeast.com, claiming that even the "legitimate brokerage" floors of Madoff's world were phony.

Madoff insisted that everything on that floor must be black. An employee with a silver picture frame was told to replace it. A strange obsession for a man who was allegedly very busy finding foolproof ways to invest in volatile and changing markets. The 17th floor was supposedly the place where the phony business was run. However, according to a former employee: the proprietary and market-making arms on the 18th and 19th floors of Madoff Securities, were designed to lure investors in, especially highly placed figures in society, and to fool the SEC into thinking that he had a large and impressive galaxy of businesses.

Employees throughout the Madoff floors were overpaid and underworked, which leads one to believe that his sons and wife, and niece, are all about to be indicted for their role in the ponzi scheme.

What allowed Madoff to reign, what allowed Joe Cassano to bring down AIG with his sale of $600 trillion in credit default swaps, what allowed banks to structure mortgage rates and commissions to profit from exploitation and fraud, well these aren't signs that the American financial markets are essentially healthy. Tim Geithner is no hero to me, and he shouldn't be for you either. Until we have a full investigation, full accountability, then the banking debacle will remain, like American use of torture in the "war on terror," an unexamined chapter of our history that will inevitably repeat itself.

60 Minutes

President Obama on 60 Minutes tonight made me feel less hysterical, more confident, and reassured me that while he is only human, he is the best person to have in the White House at this time. I couldn't imagine John McCain giving the interview that Obama gave tonight. Relaxed, intelligent, clear, and determined, without being combative or partisan. Here is a link to the first portion of the interview by Steve Kroft, which wasn't hardball, although Obama had the opportunity to show his stuff.

Obama really is the "decider." When asked how many decisions he has to make daily, he couldn't say. The only people who get a meeting to see him are people who are faced with really difficult decisions, ones that need his input. His biggest frustration is that too many decisions are based on bad and worse options, because of decisions that were made before he got to the White House. He wasn't any more specific than that. Here is a link to the second part of the interview.

When asked about Dick Cheney's comments that his decision to close Guantanamo and to end "enhanced interrogations" is making America less safe, Obama was unambiguous in standing firm to American ideals of justice and international law. Cheney is obviously trying to turn the issue of whether he and Bush, along with Rumsfeld, Bybee, Yoo, and Rice, committed war crimes and violated American law, into a political issue and not one of criminal liability.

Hating Bank of America

Yesterday I walked into a branch of Bank of America with my daughter's banking statement. In the summer of 2006, as we were preparing to see her go off to college, we opened a college account at the Bank. The reasons were convenience: I have an account at Bank of America, where my paycheck is direct deposited, so I could move money into her account easily without incurring wire fees. The ATM machine at her college is operated by Bank of America, so she would save the $1.50 withdrawal fee. And we were assured, that for five years, this combination of checking account with a debit card and savings account, would be free. We opened the account.

The first statement arrived and there were monthly fees on the checking account. I went to the branch, they apologized, and removed the charges. I should have known.

Bank of America has a feature: any extra cents from a charge or check gets deposited into savings. It sounds good, encouraging savings, but it makes it impossible to reconcile the monthly statement. For a young woman in charge of her own finances for the first time, this results in inattentiveness, which allows fees to reappear and overdraft inevitable. And once that account is overdrawn, the fee is $35 for each overdraft. We could only negotiate away the first set of overdraft fees, after that they stick.

That's how Bank of America makes money.

This week I noticed that there was a $3 monthly fee on her savings account. Since when are savings accounts fee-driven instead of interest bearing?

I went to the branch to inquire. According to the polite manager, the savings account had gone below $300, so they charge a fee. Yes, the Bank had informed us that there would be no fees charged, so she will remove the fees for the last three months. But the issue is for low income people, why would they want to keep their money in a bank, when they are penalized for being poor? Where is Jimmy Stewart!

This is criminal. The savings sweep mechanism prevents novice banking customers from tracking accurately the money that goes in and out of their accounts. Every overdraft is $35. One mistake our daughter made, some iTunes charges, just pennies over what she had in her account, cost $145.00!

We were told that there were no fees for five years. Yet the default billing function seems to be reinstating fees so that the customer must remain vigilant.

If banks stopped charging these excessive fees, maybe they would be encouraged to start investing money again, and not just gambling it away on derivatives with credit default swaps covering their asses.

Rolling Stone's Matt Taibbi Puts It All Together

Still reeling from the IRS bill that our family has to pay, today I received a link to Matt Taibbi's latest article for Rolling Stone. It will make your blood boil! Essentially the country, and perhaps the world, has been taken over by Goldman Sachs. And they aren't very good at it, this ruling the world thing.

Current Treasury Secretary Timothy Geithner, former Treasury Secretary Henry Paulson, and the guy who is allegedly overseeing the TARP payments, Neel Kashkari, well, they are all Goldman Sachs alum. It appears that the CEO of Goldman Sachs, Lloyd Blankfein, was in the room when the decision was made to bail out AIG. The reason: Goldman was the largest purchaser of the "financial products" devised by Joe Cassano at the AIG London office. If AIG failed, then Goldman would have no coverage for the credit default swaps they had bought.

"Goldman Sachs, it turns out, was Cassano's biggest customer, with $20 billion of exposure in Cassano's CDS [credit default swap] book. Which might explain why Goldman chief Lloyd Blankfein was in the room with ex-Goldmanite Hank Paulson that weekend of September 13th, when the federal government was supposedly bailing out AIG."

This is much more than bonuses, although surely it was greed and arrogance that propelled these insane risks. The entire banking system must be overhauled. Credit card companies have to be reined in from charging usurious fees.

Read The Big Takeover with a large martini in hand and then wonder: how the hell do we get ourselves out of this mess? It isn't by propping up the banks and insurance companies that got us here with their greed. But I don't know what to do. Do you?

Post script: The New York Times in its Deal Book blog, edited by Andrew Ross Sorkin (who will be on Bill Maher tonight), posted that Goldman disputes it had AIG exposure.

Further Post Script: Add Larry Summers to the list of Obama advisers who have a lot of hide in the financial crisis. According to Frank Rich in his NY Times column this morning, "An even dirtier secret is that a prime mover in keeping that stuff legal was Summers, who helped torpedo the regulation of derivatives while in the Clinton administration. His mentor Robert Rubin, no less, wrote in his 2003 memoir that Summers underestimated how the risk of derivatives might multiply “under extraordinary circumstances.”

"Given that Summers worked for a secretive hedge fund, D. E. Shaw, after he was pushed out of Harvard’s presidency at the bubble’s height, you have to wonder how he can now sell the administration’s plan for buying up toxic assets with the help of hedge funds. It will look like another giveaway to his own insiders’ club."

Getting Personal and Getting Really Mad

My husband and I were just audited by the IRS for the one recent year we made a decent amount of money because we sold a piece of real estate while my husband's business went down the tubes. He had a small metal fabrication shop, had a decent unionized work force from an array of nations, but like many small businesses, could not compete against the inexpensive, mass produced stuff that was coming in from China. He couldn't sell the business, just had to close it up, sell the equipment at auction (although he did sell some of it to his former employees), and walk away.

That was 2006.

We got a notice from the IRS that they wanted to see everything about his business that year.

For months now, my husband has been going back and forth between the storage locker where he kept all of the paperwork and his accountant, because we have enough reserves to know that we didn't want to deal directly with the IRS. Tempers would have flown. We hired the accountant who does our tax returns to defend his own work.

After weeks of document productions and meetings, yesterday we received a bill from the IRS for $584! That is the amount of tax and penalty we owe for taking off too much of my husband's car as a business expense.

That's five hundred and eighty four dollars! It will probably cost us close to $5,000 in accounting fees.

So, yes, I'm ranting, because today I read that 13 out of the top 23 banks that have been bailed out by TARP owe hundreds of millions of dollars in back taxes. Yes, that's hundreds of millions of dollars in back taxes. And they fraudulently signed statements before they received the billions of dollars in bailouts that they were current in their taxes. I'm not exaggerating. I'm not making this up. Read it here.

John Lewis's House Ways & Means oversight subcommittee made the following statement: The Subcommittee looked at the top 23 TARP recipients. We found that thirteen of them owed more than $220 million in unpaid Federal taxes. Two companies owe over $100 million each.

We have fraud, we have fraud, we have fraud. Where is there any accountability?

AIG Timeline Revealed--But We Are Still Enraged

ProPublica.org has published a timeline of the AIG bonus debacle.

What doesn't appear is the removal from legislation by Senator Chris Dodd's office of language that would preclude the payment of these and other bonuses in the industry that was being bailed out.

Unlike the former President, President Obama took the heat for everything last night in a town meeting in Orange County. "The Buck Stops Here."

At least that was refreshing.

Signs of the Times

This morning on WNYC there was a call to unemployed attorneys from the New York County Attorney's Office asking them to come in for training so that they can represent the City at depositions.

For free.

While I was in San Diego on Friday, 26,000 pink slips were issued to employees in the ten school districts located in the County.

26,000 newly unemployed.

Former President George W. Bush announced that he would be writing a book about his twelve toughest decisions and being "authoritarian" about what really happened.

And Ariana Huffington asks: What would the Dick Cheney interview have sounded like if "fake" journalist Jon Stewart and not "real" journalist John King on CNN's State of the Union had done the questioning?

Finally the daffodils are pushing their way up through the soil in a sign that spring is coming!

Where Has All The Money Gone?

The Troubled Asset Relief Program, TARP, signed into law in October 2008 at the urging of President Bush and with the help of Democrats who by then controlled the House of Representatives, had hardly any limits on how the money was to be used by banks once they obtained their share. The bailout of AIG had no limits on it either. As we now know, AIG has paid over $160 million in retention bonuses to employees, including the same employees who were responsible for the derivatives debacle that is bringing the company down, along with global banks.

Finally we can see where the TARP money is going. ProPublica.org has posted a list of recipients of TARP funds. As of March 11th, almost $302 billion has been invested in saving the financial institutions of the United States. AIG has gotten the most: $170 billion. Next comes Citibank and Bank of America, including Merrill Lynch, with $45 billion each.

AIG in turn paid out $50 billion of that taxpayer bailout money to US and European banks for their losses under credit default swaps, here, I've got the definition, where without regulation, reserves, or using the word "insurance," AIG secured these institutions against loss of principal and interest when they purchased all of these bundled mortgage securities.

The Wall Street Journal and Fortune's lists were slightly different. Fortune's is available on the web, although the WSJ is only available to subscribers. Notice the names: Bank of America, CitiBank, Wachovia. These are the same names of the banks receiving TARP funds although AIG also paid out taxpayer money to many European banks, too. No wonder CitiBank is claiming it's about to turn a profit again.

Is there double-dipping? And more importantly, since these bonuses paid to AIG employees were allegedly contracted for in 2007 and only paid in 2009, I have some questions to ask. Was this money intended to keep folks quiet about the soon to unravel financial debacle? Or was Edward Liddy, the CEO brought in to run AIG, serious when he said that they agreed to the bonuses because these employees were the only ones "who could understand the exotic financial instruments on AIG's books."

This morning I heard on NPR that some of the employees are no longer working for AIG and many are in the London office, which won't even help the US economy, if they want to use the bonus to buy a new Chevrolet or Cadillac!

Remember what Bethany McLean said: If it's too difficult to understand, it probably isn't making any money. McLean revealed the ENRON scandal. Maybe McLean will investigate and tell us what happened to our financial services industry. there will be no newspapers by then, and anyway, what good were newspapers or the media in informing us about these financial shenanigans.

I wish someone would pay me a bonus for screwing up the entire world.

Talking Points

Although we might not find Moody's as trustworthy as before, (since Moody's is the credit rating service that, oops, miscalculated the risk on those derivatives based on subprime mortgages that are going sour), try this set of "facts" and keep them handy for conversations with Republicans. They are from the April 2009 Harper's Index:

• Estimated amount by which the U.S. GDP increases for each additional dollar of tax cuts: $1.03
• Amount for each additional dollar of infrastructure spending and food stamps, respectively: $1.59, $1.73

So if anyone doubts the advantages of government spending over tax cuts, refer to these items.

Also found in the latest issue of Harper's is an essay by Thomas Geoghegan called Infinite Debt. (He ran for Rahm Emanuel's seat in Congress and lost.) In it he looks at the real reason for the collapse of the financial system: the loss of collective bargaining, the shift from manufacturing to financial services because of the gigantic profits reaped, and the infinite consumer debt. Notice that there are no such thing as usury laws anymore. Credit cards can charge insane amounts on trailing balances. They don't want people to pay, because then they don't make these horrendous profits. Instead of placing a 35% cap on credit card interest rates, he suggests it should be at 9%. Isn't that enough profit?

Sean Penn Plays Joe Wilson

If Dick Cheney can take to the television waves just days and now weeks into the Obama administration and scold the young President for making America "less safe" by ending torture and planning the close of Guantanamo Bay, then Sean Penn can play Joe Wilson, the former ambassador, married to the outed CIA operative Valerie Plame in a new political film.

TheDailyBeast.com writes that the screenplay is based on Plame's book Fair Game, which included all of the redactions from the CIA's censors, virtually blacking out the entire text, and an addendum that was written by an independent writer from all public sources. That's where the story is actually told. Plame said that she had to stop speaking with the screenwriters, so they had to use their imaginations to fill in some information.

Plame will be played by Naomi Watts, and directed by Doug Liman, son of Iran-Contra attorney Arthur Liman.

Jon Stewart is Doing What the SEC and New York Times Aren't

The interview Jon Stewart did with Jim Cramer, the lunatic financial commentator on CNBC, on Thursday, March 12th, did more to expose the calamity of the financial crisis than anything I've seen. The interview comes in two sections: watch the first segment so that you get how good Stewart is in the second. The second segment is the blow out.

Just as charitable foundations started by Steven Spielberg, Frank Lautenberg, and Elie Wiesel funded the Bernie Madoff ponzi scheme by keeping their assets "invested" for long periods of time with only 5% withrawals annually (that is the minimum amount the government requires be spent from a charitable foundation each year), our 401 k retirement funds provided the money to the financial services industry with which to gamble on things like derivatives and credit default swaps. For years, we have been told to sock away money for retirement because Social Security won't be able to sustain too many of the Baby Boomer generation, just the very poorest. Remember Bush's first defeat was his attempt to privatize the Social Security system while the market was still quite bullish. No one bought his spin on a system that would merely give more money to the private financial services industry. Americans wanted the steady returns that Social Security used to provide. In the 1980s, Americans got over 8% return on their contributions into the system. By 2008, that return was down to 3.6%. That decrease in the rate of return was incentive to push more people to risk their retirements by putting money into the stock market for faster, more substantial returns.

Stewart nabs Cramer and the entire business of financial reporting, and once again, it's a comedian doing a "fake" news show that has pounced on the fact that the financial networks are merely pretending to be educating and informing viewers. No, they are not teachers, but unscrupulous rumor mongers and cheerleaders for an amoral and corrupt system of greed. CNBC and the hawkers of easy money are part of the problem.

Teaching History So We Pay Attention Next Time

There is something so arrogant about American culture: we think we are beyond history, that history just isn't important to us. It's part of the myth of American exceptionalism that drives me mad.

Business cycles happen. They happen all of the time. They are predictable, not to the day, but to the fact that eventually a bubble of financial excess bursts. Although I am getting closer to understanding what a credit default swap actually is, which is the immediate cause of our current situation, I am learning a lot about the history of money and the business cycles that are inherent to the investment risk phenomenon. The mess we are in is not so different from the savings and loan mess, the ENRON mess, the mess that led to the outbreak of World War I, the aftermath of World War I that led to World War II.

Whether it was defaulting government bonds, or deregulated local banks that suddenly invest outside their communities, or permitting credit default swaps, what we need to pay attention to is that there is greed and excess built into every business cycle. According to George Soros, the king of the hedge fund, the Hungarian immigrant who is the source of funding for many progressive causes both here and abroad, the irrational and ignorant acts of investors often lead to market trends. We can't forget that we do make a difference. That economic theory is only theory, but reality is often based on real acts by real people with real consequences, and that those acts might not be the result of the smartest or the best decisions.

Which leads me to the conclusion that we don't teach history well in high school, college, or graduate schools. In today's New York Times, there is an article about changing how we teach students in business schools. It's got to start way before then. We are not beyond history. If we don't get that, we will be history.

More About Money

While flying cross country today, I got fully engrossed in The Ascent of Money by Niall Ferguson, still determined to know enough about what a credit default swap is to be able to explain it in less than a paragraph.

I'm not there yet, although I do understand that "they" are the reason for the collapse of the global financial markets, and perhaps, if one is as pessimistic as Barbara Ehrenreich and Bill Fletcher, Jr. in The Nation, March 23, 2009 issue, the end of capitalism.

Credit default swaps were as phony as the ENRON scheme, creating something to sell out of nothing, with no independent evaluation, no collateral, no reserves, no nothing. As I said, I'm still am not quite sure what "they" are.

ENRON like the Madoff investments, was all glitter and not much else, although as a cautionary note, by the end of 2000, just a year before it collapsed, ENRON was the fourth largest company in the US, employing 21,000 people.

However, Ferguson does explain five stages of a financial cycle, and we need to learn about these so that we don't get tricked again.

1- Displacement: Some change in economic circumstances creates new opportunities for profit, like technology innovations, energy discoveries, deregulation that permits new forms of "securities" to be devised by wicked and clever lawyers and folks with MBA degrees.

2- Euphoria or overtrading: rising expected profits lead to rapid growth of share prices, like the insanity with IPOs in the dotcom era and ENRON, and now with these risky mortgages that got bundled with more secure ones and sold, and AIG agreed to insure.

3- Mania or bubble: easy capital gains attracts first time investors, people who are not regulars in the stock market, but who are lured there, often by unscrupulous brokers, by the idea of making a quick profit.

4- Distress: insiders understand that the end is near and pull out from the market. In the months before ENRON's collapse, the insiders--Ken Lay, Skilling, et al. sold millions of dollars of ENRON stock. Bernie Madoff's wife withdraw millions from his supposed legitimate investment company just weeks before he confessed.

5-Revulsion or discredit: and it all falls down.

NEWS FLASH: Today the NAACP filed suit against Wells Fargo and HSBC banks for racial discrimination, for selling mortgages, often sub prime mortgages, that charged African Americans higher rates.

Afghanistan

I just finished "The Places In Between" by Rory Stewart, a narrative by a young Scottish man who walked across Afghanistan just after the Taliban was routed. It is a compelling book and certainly should set up a cautionary filter through which to view American plans to increase our presence there. The book was named one of the best by The New York Times in 2006.

A few months before, I read "One Thousand Splendid Suns" by Khalid Hosseini, the second novel by the author of "The Kite Runner."

We are militarily engaged in a country that is essentially tribal, has attitudes towards women and religion that are far different from what we perceive as normal. How do we relate to these people?

Just after 911, I worked with the women of a local mosque to produce an evening of Islam. One of the features of the evening--a film, a panel, and a variety of foods from Pakistan, Afghanistan, India, and Egypt--was an opportunity to put on a bur qua. Let me tell you: it was humiliating and claustrophobic.

I was heartened this morning to hear Defense Secretary Gates hesitate and change his expectations for what "success" means in Afghanistan for US troops and for our country.

This is Why We Need A Major Investigation

Let me say this straight: I like Barack Obama. I campaigned for him. I voted for him. He singlehandedly brought a new sense of hope and activism to this country. And I adore Michelle and what she is doing to restore the mean of "First Lady," if I can even use the phrase.

But the excesses of the Bush administration unless examined and repudiated with investigation, perhaps prosecution, and legislation just hand the "ring" over to the next president. Even Frodo could not resist the power of the ring.

According to Charlie Savage, reporting for the New York Times, on March 11, while signing the Omnibus Spending bill, turning it into the law of the land, with all its 9,000 earmarks, President Obama used a signing statement. Now one might recall the use of those during the Bush administration. They were notorious.

"In the statement — directions to executive-branch officials about how to carry out the legislation — Mr. Obama instructed them to view most of the disputed provisions as merely advisory and nonbinding, saying they were unconstitutional intrusions on his own powers. Mr. Obama’s instructions followed by two days his order to government officials that they not rely on any of President George W. Bush’s provision-bypassing signing statements without first consulting Attorney General Eric H. Holder Jr. In that order, Mr. Obama said he would continue the practice of issuing signing statements, though “with caution and restraint, based only on interpretations of the Constitution that are well founded.”

In addition to contesting the portion of the bill that would curtain the use of US troops in UN peacekeeping roles, Obama signled out a whistleblower provision, several that targeted negotiations with other countries, and three that dealt with agencies and their budget requests.

On March 9, 2009, Charlie Savage reported in the Times that Obama was limiting the use of signing statements and using them only after consulting with Attorney General Eric Holder.

According to Savage: "Since the 19th century, presidents have occasionally signed a bill while declaring that one or more provisions were unconstitutional. The practice became more frequent with the Reagan administration, but it initially drew little attention. That changed under Mr. Bush, who broke all records, using signing statements to challenge about 1,200 sections of bills over his eight years in office, about twice the number challenged by all previous presidents combined, according to data compiled by Christopher Kelley, a political science professor at Miami University in Ohio."

Link here to the May 5, 2006 New York Times editorial condemning Bush's use of signing statements.

Will It Be Senator Franken, Finally?

At times like this, we need Al Franken in the Senate. We need more laughing. According to talkingpointsmem.com, the judicial battle between the two New York Jews whose families migrated to Minnesota--Norm Coleman, the incumbent, and Al Franken, the challenger--is about to end, with the Franken legal team ending its case earlier than expected. A ruling by the court is expected by the end of the month.

I miss Al Franken on Air America. I miss his intelligent, biting, yet human critique of the right wing media shouters in Lies and the Lying Liars Who Tell Them: A Fair and Balanced Look at the Right.

Working with "Team Franken," a group of Harvard students, Franken made mush of the Fox commentators. My daughter and I listened to the book, read by Franken in his nasal midwestern accent, on one of our mother-daughter road trips through New England. It was perfect, she was looking at colleges. Our favorite chapter: when he convinces one of the Team Franken interns to pose as a prospective student at Bob Jones University, the fundamentalist Christian college, that he affectionately calls "BJU."

The humor brought to us by the Roland Burris scandal is not funny. That's why we need Al.

Greed, Greed, and More Greed

In trying to understand this world financial crisis, I'm paying more attention to financial reporting than ever before. I am reminded of Bethany McLean's statement on The Daily Show a few weeks ago. It went something like this: If you don't understand how it's making money, it probably isn't.

That's the way I feel about money generally.

Although in reading The Ascent of Money by Niall Ferguson, (you can watch the entire two-hour documentary on pbs.org for free) I did learn today that one makes money in the bond markets not by buying bonds at face value and holding onto them, waiting for the corporation to pay the stated amount of interest.

No, one makes money in the bond market by buying bonds at depressed prices, below the face value of the bond, which still pays the stated interest.

That was news to me.

This evening, before chancing upon the Chris Botti Concert on Thirteen, featuring Yo Yo Ma, John Mayer, Sting, and Josh Groban, I read Bethany McLean's piece in this month's Vanity Fair. It's called: Over the Hedge.

Wouldn't you read an article that starts off this way? It used to be that to become a billionaire, rather than a mere millionaire, you had to inherit money, or build an empire that would last for a long, long time. But in the era that has just ended, you could become a billionaire just by managing other people’s money. You didn’t have to do so for very long—and, maybe, you didn’t even have to do so very well.

She was smart enough to unravel Enron. She's unraveling the collapse of Wall Street in very accessible ways. Although the question remains whether we can be rescued from Wall Street's greed.

The Third Mind

The Guggenheim Museum is showing an intriguing exhibit called The Third Mind, which explores American artists from 1860 through 1989 contemplating Asia. It cannot be experienced in a single afternoon, because of the intensity of the exhibit and its breadth.

We started from the modern work, working backwards in time, which distorted the show, and I don't recommend doing it that way. Walk up the Guggenheim, not down.

Let's start with Human Carriage by Ann Hamilton who has put together a kinetic sculpture that starts at the sixth floor of the Museum and winds its way down to the lobby on an aluminum rail. I won't say more except you can see it on line. It runs every fifteen minutes, so listen for the sound of Tibetan bells, and then walk towards the rotunda to watch. It will make you laugh. It will slow you down.

The early works by Whistler and later O'Keeffe and Dove, well we've seen those before. It was fun to see Kerouac and Ginsberg in this different context, especially the photographs. The works by John Cage and Yoko Ono take on another meaning, as does the Rauschenberg. For me the most moving piece, by Kim Jones, a Viet Nam vet, brought the obsession of war and its aftermath clearly to view.

Most disturbing was Dream House, an installation by La Monte Young and Marian Zazeela. The room vibrates with the droning tones of Indian scales. These scales include more range of sound than do Western musical scales. A drone state is established, which has significant physical and psychological impact. After just a few moments in the room with its pink lights and optical illusions, I was stunned. One could see how effective sound and light are in preparing someone for interrogation. The ugliness of how easily we can be manipulated kept on coming to mind as I stood there. Once I was in a casino when a lightning strike blew out of the electricity. Immediately the silence and the darkness revealed the hypnotic techniques used to keep customers gambling. I never went into a casino again.

But you should try The Third Mind, which runs through April 19, 2009.

Ethical Shopping Fever

After months of frugality, I had a sudden need to shop yesterday. It was seventy degrees outside and the snow banks were rapidly melting after Monday's blizzard. Everyone was outside. Traffic was backed up for blocks coming into Huntington, NY. There wasn't a parking space close to the village center anywhere in sight. Even the "secret" lot, above the village, was pretty much full, although I found a spot there.

There was a certain amount of money in my wallet that I decided I wanted to spend. My contribution to the economy. The question was how to become a shopper again, making the money effective, not just in stretching dollars for my own benefit, but for jump starting the economy ethically. I wanted to keep the money local, let it recirculate through the community a few times before it left for other places.

Shop local.

My first stop was Messina Bros, a local jewelry store owned and operated by a gifted jeweler. Peter Messina is one of the few craftspeople who offers customers manufactured jewelry as well as hand crafted, custom designed work. In a different era, Peter designed a ring for me, made with a topaz taken from one of my father's cuff links. He has fixed jewelry for me, and remembers my name and my husband's. I started my shopping day in Peters's store looking for a gift for my daughter.

He told me that if it weren't for the custom work, which is considerable and he's backed up, that he wouldn't be able to keep the shop open. He gave me a fabulous deal on a pair of gold stud earrings, placed them in a navy suede case, and even asked if I wanted the box gift wrapped.

Then I met Ginger at Fox's. Maybe we could get some fashion discards, which is what Fox's sells in a series of shops in New York, New Jersey, Georgia, and Florida. Fox's is like Loehmann's, or like what Loehmann's used to be: overstocked current fashions sold at discounted prices, sometimes with labels in, sometimes with them cut off. Locally owned and home grown. Great deals, usually, but not for us today. The clothing was mostly for women much younger than we are, and mostly made in China. Although I adore the manager, Shari, I couldn't see paying $30 for a cheaply made blouse with a high priced label sewn in. That purchase would do nothing to recreate the world into something more sustainable, more ethical.

So Ginger and I drove to Cold Spring Harbor where Sumati Vij owns an amazing shop called Global Treasures. Ginger discovered the shop several years ago; Sumati has been there for four years. Ginger bought me a scarf there, knowing that I wouldn't like it, just so that I would go back to the shop to exchange it and fall in love myself. This was the first time we came together. (Neither Ginger nor I ordinarily shop together. We like to go to theater and film together, and eat!)

Sumati negotiates for hand woven, hand embroidered, hand crafted artifacts from around South Asian, Africa, and Southeast Asia. The work that she brings into the country is extraordinary. Much of it will no longer be available in another five years as machine embroidery becomes more common. Ginger bought a jacket totally covered in embroidered paisleys that took six months to complete. It fit her beautifully and has a rainbow of pastel colors to get her through the spring. It wasn't the first jacket she tried on. Between the two of us, we tried on every embroidered jacket she had in the shop.

I focused on scarves and ended up buying two: one is hand woven from yak wool, soft and intricately patterned. But the treasure was the embroidered silk shawl that was made in the city of the Dalai Lama's exile: Dharamsala in the Indian state of Himachal.

We spent over an hour with Sumativ who told us that for the first time in four years, she was late with her rent. She offered to host events in the shop, which is filled with global treasures, mostly crafted by women, to support local charities while introducing women to her location. We agreed to pass on the suggestion to some local women's groups.

We said goodbye and later met up again at my house with our spouses for dinner and a movie. My husband smoked a duck and roasted brussel sprouts. I made a salad with spring asparagus and toasted pinoli nuts. And Stu and Ginger brought dessert. We watched a disappointing film, Two Lovers, with Gwyeneth Paltrow and Joaquin Phoenix, purchased "on demand."

Creating Community in the Time of Crisis

Eight out of ten Americans feel extraordinary stress during this time of financial crisis and uncertainty. Extended periods of stress have physical consequences: depression, illness, and isolation. Losing a job, a home, status--especially in American culture--carry shame and stigma. "What did I do wrong?" "Why was I dispensable?"

Shame and stigma too often result in withdrawal and isolation at exactly the moment when we need each other, we need community.

So how do we create community in this time of crisis?

Krista Tippett is the host of American Public Media's Saturday morning show, Speaking of Faith. She began this non-denominational show after 911 and it went weekly. Now she is doing a series on the moral and ethical consequences of the economic crisis. The series is called Repossessing Virtue.

This morning she continued her interviews with prior guests--spiritual leaders, poets, neurologists, philosophers--to explore how we are reacting to this insecurity and how we might take this challenge to convert our lives. Take a moment to explore the website dedicated to this venture. I only heard half of the program: Praghu Guptara, Sharon Salzberg, Martin Mary, and Esther Sternberg. By building community, by helping others, by changing our expectations of wealth and success we can transform this time from one of individual isolation into community building. These very wise guests have a lot to offer us.

Crisis, change and the feeling of uncontrollability are the products of the global financial crisis--eight months ago over 100,000 million people were thrown into poverty. Many more have joined them by now. With unemployment rising and the spectre of GM going under, we must consciously build connections to others, we must consciously take control over the details of our lives.

We have no control over the world financial markets. According to Niall Ferguson, professor of history at Harvard University, and the author of The Ascent of Money, in 2006 "the measured economic output of the entire world was around $47 trillion. The total market capitalization of the world's stock markets was $51 trillion, 10% larger. The total value of dometic and international bonds was $68 trillion, 50% larger. The amount of derivatives was $473 trillion, more than ten times larger." That's an awful lot of credit for not that much output. Where did all of the money go?

Derivatives--contracts derived from securities, such as interest rate swaps or credit default swaps, have grown so fast, that the value of all derivatives by the end of 2007, was just under $600 trillion. Here is an interview with Ferguson that explains some of these concepts. Thanks, Naneen!

We became greedy gamblers, living on credit collateralized with ahistoric beliefs that business isn't cyclical and nothing much else. Many of these transactions, too, were "off books" so we didn't see how many corporations were using them as another way to make money. We might not have control over what Citigroup or Bank of America do, but we have control over how we interact with people daily, how we approach our homes, families, and children. Whether we act intentionally in everything we do.

How do we interact with those who are suffering, especially when we are, too. American culture has always avoided suffering. Now we have to accept the consequences of our actions and form communities, not to ride out the storm, but to change our way of living to sustainable, respectful, and geared more towards the collective and less to the individual.

Under the Mattress

With all of this talk about bailouts and renegotiating home mortgages with further enticements to the same banks that wrote the bad mortgages in the first place, I decided to check out stock performance this morning. It was easier to check bank stock performance than to look at my own retirement portfolio, which at last peek, was down 38%. I'm performing better than the banks.

Citigroup stock is down 71.10% in the last thirty days, 95.4% over the last year.

Who is still running the bank? Vikram S. Pandit hasn't lost his job.

Bank of America, which is advertising again during prime time, assuring people that their money is safe, closed down 34% in the last thirty days. But don't take any solace in that, over the last year, the stock is down 91.56%.

Those are America's biggest banks.

General Motors might file for bankruptcy. Imagine that! What was once the largest corporation in the world, making the most brands of cars, is leaking money, begging for another $16 billion to keep it running. I'm from the generation where a Chevy Impala convertible was hot. My first boyfriend had a burgundy Corvette that was his pride and joy.

How did this happen? Down 34.97% for the month; 91.9% for the year, GM might displace one out of ten workers from their jobs, including suppliers and dealers and subcontractors.

When things get too big, when we don't understand how they operate, they don't. No matter whether you have gone to Harvard Business School or Wharton or Yale. There's a lesson here for how to save America. Go small. Go sustainable.