Blackmailer in Chief? (UPDATED)

Blackmail is defined as such.

Blackmail is the crime of threatening to reveal substantially true information about a person to the public, a family member, or associates unless a demand made upon the victim is met.

Now, let's look at what Tom Lauria, a bankrutpcy attorney, has accused the White House of doing.

A leading bankruptcy attorney representing hedge funds and money managers told ABC News Saturday that Steve Rattner, the leader of the Obama administration's Auto Industry Task Force, threatened one of the firms, an investment bank, that if it
continued to oppose the administration's Chrysler bankruptcy plan, the White House would use the White House press corps to destroy its reputation.

In other words, according to Lauria, the White House demanded that his client, Perella Weinberg, go along with a restructuring plan the White House orchestrated for Chrysler or they would be smeared in the press. That sounds like blackmail.

Now, I don't know Lauria nor do I know anyone in the White House personally. The White House denies this and even the firm in question sort of denies it. (they said that this wasn't the reason they ultimately backed down. that's non denial denial) Though, the White House has already engaged in something near such a blackmail when they publicly, themselves, called out these companies in a press conference.

The implications of this are huge, and so, it should be investigated fully. Yet, most of the media has decided to conveniently not report this story at all. This story is only getting any real attention in business journals and on Fox News. Most of the MSM has nearly totally ignored the story. In other words, the specter that the president is willing to blackmail private companies in order to get what he wants is of minor concern to the press corp.

One would think that if you were a member of the press, the truth of this story would be vital. Either we have a White House totally out of control and drunk on power that's already committing criminal acts, or we have a bankruptcy attorney drunk on power committing criminal acts. Either the reputation of the White House needs to be restored, or their ruthless and criminal behavior needs to be stopped.

Furthermore, the story has even more intrigue for the press. The implication from Lauria is that the White House also has total control over the press corp (exemplified when they stood with amazement when he surprised a press briefing with his appearance). If this is true, it also means that we have an unholy alliance between a president and those that are supposed to report on him. It means that rather than acting as a watchdog they are acting as propagandists, and attack dogs if necessary. So, one would think that this makes it even more vital the truth come out. Don't hold your breath. The press is not all that interested in reporting the truth as it relates to Obama. They are only interested in reporting that which makes him look good.

UPDATE:

According to Hot Air, the story said by Lauria has now been corroborated by another source.

Slow Down on All the Economic Optimism

I will go out an a massive limb and disagree with both Ben Bernanke and Warren Buffett and say that all this happy talk about the worst being over and the end being near is a bunch of hooey. To me, the numbers tell the story and they say we are nowhere near the end.

For the last month we have seen the stock market rise by leaps and bounds due to a flurry of positive numbers. They were economic data like housing starts, consumer confidence, consumer spending, etc. I try to simplify things when looking at the economy on a macro scale. I only look at three economic indicators: employment, GDP, and inflation. That's because those three accumulate all the other numbers. Things like housing starts are important for someone like a home builder, but they tell a very small story in a larger picture. GDP is the accumulation of all the other numbers combined.

The most recent GDP, for the first quarter of 2009, decreased by 6.1% That's a startling drop. It also means that the sum total of all the supposed happy numbers was really a contraction of our economy to the tune of 6.1%. As for jobs, we have been losing north of 500,000 jobs each and every month since October. The next unemployment figure comes out this Friday and the consensus is a negative number of 631,000. I don't know anyone that expects this number to change substantially till at least the end of the summer. That means through the month of August at least we'll continue to lose north of 500,000 jobs monthly. We'll be at about 10% unemployment by then. If we are to believe the optimists, for the first time in history, an economy is bottoming out and recovering at the same time it is losing an obscene number of jobs monthly for the indefinite future. (keep in mind during the recover of 2002-2003 the job losses were much milder)

So, are people saying the worst is over as we head for ten percent unemployment? How exactly does the economy recover and grow at the same time we lose 500k in jobs monthly? All those people are NOT going to contribute positively toward the economy.

Then, there's the stress tests. The latest rumor is that between six and ten of the largest banks will fail. Each of these banks will be expected to raise even more capital in the coming six months. That means that after pumping nearly one trillion dollars in capital into the banking system anywhere from a third to a half of the banks are still UNDERCAPITALIZED. Furthermore, this leads to a few obvious questions. First, if a third to a half of these banks FAILED, how healthy can our banking system be? If the banks are expected to raise more capital, how will the loan money? If they aren't lending, doesn't that mean that we are still in a credit freeze? If we are still in a credit freeze, how is the worst over?

Then, there is the issue of commercial mortgages. These have become the eight hundred pound gorilla in the room. No one wants to talk about them, but they are the next banking crisis. Commercial real estate values are busting. Defaults on commercial mortgages are exploding. It's all only natural. First, we had the subprime mortgage bust. That moved into Alt A, and eventually it even ate up Fannie/Freddie. Soon enough, we had a full residential mortgage bust. Would anyone be surprised if soon enough that turned into a commercial mortgage bust? Well, in varying degrees, most of the same lenders that got crushed by the sub prime bust, are holding onto billions in commercial mortgages. What happens when that explodes? It means that all of these same banks will realize they all have trillions more in "toxic assets" no one was counting yet. All of these same banks will again be struggling just to stay afloat. Lending will be frozen again. We'll be back in the crisis mode we were in September of last year.

All of this happy talk is nonsense, in my opinion. There's absolutely nothing that says we are anywhere near over with any of this.

From President to King While the Media Yawns

Most conservatives and even many liberals were appalled by the media's treatment of then candidate Barack Obama during the campaign. We all expected the same cheerleading treatment when he was president and so far we haven't been disappointed.

What hasn't been discussed as much are the implications of a press that stops being watchdog and becomes nothing more than a propaganda arm of the administration. One obvious side effect is that corruption and mafeasance goes on and is left unchecked. Another side effect is that the government takes on new roles and powers without any sort of scrutiny of their expansive reach. We have, unfortunately, seen all of this manifest and the media has been largely silent.

The first hundred plus days has seen the media be a cheerleader and something akin to a worshipping cult for the president. This was epitmozied by the White House press corp standing in shock and excitement when the president made a surprise visit to the daily press briefing. The press showed no such excitement when then President Bush made a similar surprise appearnance during a press briefing. So, while they have been treating the president as something near a messiah they have also overlooked some very important story.

The most recent is a startling accusation that the White House tried to strong arm Chrysler creditors into accepting a restructuring plan they didn't want by threatening to sick the White House press corp on them and smear their reputations in the media. This story neither lacks drama or intrigue and yet the press has collectively yawned over this story.

Last week, the Government Accountability Office said that the both the stimulus and TARP both are sorely lacking in oversight and both are likely to be exploited and corrupted. Now, think about that. Between the two, there is about one and a half trillion in tax dollars and an arm of the government is saying the government is failing in oversight. As such, all of this money will likely be exploited and corrupted. Again, the media seems to ignore this and the story is barely reported.

There was another report that strongly indicated that in the next couple weeks the government would turn its preferred stock in banks into common stocks. Such a move would make the federal government a major shareholder in the banks and thus be back door nationalization. Now, isn't it a story that the federal government is nationalizing the banks, especially in such a stealth way? Yet, this particular story has barely been reported outside the financial stations.

Then, Bill O'Reilly reported that an arm of GE would be a major beneficiary of the president's cap and trade legislation. GE owns both NBC and MSNBC, both very favorable networks to the Obama administration. They also do a lot of green technology programming. This is both a potential quid pro quo between one of the most powerful companies in the world and the leader of the free world. It's also a potential conflict of interest for the network. This story was ignored outside of the Fox News Channel.

Now, what has happened in the last just over one hundred days? The president has taken over the auto makers. He's taken over the banks. He's expanded government. Now, he's set his sights on nationalizing health care, centralizing education, and controlling energy. Never has a president consolidated so much power so quickly. This president is trying to accumulate so much power that he'll soon be the closest thing we've ever had to a king. The legislature will be a rubber stamp and the press a cheerleader.

How has he done it? He's done it because the press has largely ignored his unprecedented power grab. The press has of course totally ignored any story that would make the president uncomfortable. Either that, or they mocked the tea parties which were a direct challenge to his agenda. The press has largely totally ignored important stories that would challenge the image they have built of an effective and populist leader. As such, they have of course done nothing to put his enormous power grab into any context. As such, a president is turning into something resembling a king and the media is yawning over the enormous power consolidation.

Closing the Tax Haven Loophole: Rhetoric Vs. Reality

Imagine if you were an American. Imagine further if you decided to buy a condo in Spain. Imagine that you moved your money into a Spanish bank. Imagine you got a loan from a Spanish bank. Imagine, you received rent and made and kept all income in Spain. Imagine you sold that property and kept your profits in the bank while you looked for another property to buy there. Now, imagine if the U.S. federal government wanted to tax on all the money you made. That thought experiment is how ludicrous President Obama's war on tax havens is.

President Obama announced Monday a plan to prevent U.S. companies using offshore banks to deferr tax payments, saying that the effort to "shelter" money creates an unfair advantage to U.S. companies and amounts to evasion.

The president also called for more transparency in bank accounts held by Americans in tax havens such as the Cayman Islands.

"The way to make American businesses competitive is not to let some citizens and businesses dodge their responsibility, while ordinary Americans pick up the slack. Unfortunately, that's exactly what we're doing," Obama said.

"If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly," he continued.

Here's what President Obama is saying. If you're a business, and your business has a subsidiary that only does business overseas. Then, that subsidiary keeps all its money overseas. He believes the U.S. government has a right to tax any and all profits with U.S. tax rates even though that money never enters the U.S. Furthermore, he demonizes all these companies by claiming they are using tax shelters.

In fact, by tax shelters, what President Obama really means is keeping money in places where their tax burden isn't nearly as onerous as it is here and not moving it into the country so that it is affected by our tax rates. What the president is attempting to do is this. He wants to take foreign subsidiaries of companies like Google. Those subsidiaries have their entire operation overseas. Furthermore, they keep all their money overseas. Yet, he wants to apply U.S. tax rates on any profits they make on these foreign subsidiaries even though neither any money or any of their operations ever touched the U.S. It's the equivalent of charging U.S. capital gains tax on the profit from the Spanish condo.

Just think about what all of this means. Our corporate tax rate is the second highest in the Western world besides Japan. As such, many, many multi nationals do everything they can to avoid paying these taxes. Rather than controlling the tax rates to attract more business activity, the president wants to criminalize what any astute business person would do when faced with an onerous tax.

If the president were to try and tax the scenario I created, he would be roundly criticized as tyrannical and violating sovereignty. That's because such a scenario would involve a sympathetic individual investor. Since he is going after multinationals, much easier to demonize, he is hailed in some circles as populist.

Someone is Being Ruthless

There have been some serious allegations made so it's time to lay everything out. Last Friday, a bankruptcy attorney named Tom Lauria charged that the Obama administration was trying to strong arm his clients into accepting a restructuring deal for Chrysler. This followed up another report in which the White House was openly trying to demonize the hedge funds that were holding out on the Chrysler restructuring deal it had orchestrated.

On Saturday, Jake Tapper, of ABC News, reported the same thing.

A leading bankruptcy attorney representing hedge funds and money managers told ABC News Saturday that Steve Rattner, the leader of the Obama administration's Auto Industry Task Force, threatened one of the firms, an investment bank, that if it continued to oppose the administration's Chrysler bankruptcy plan, the White House would use the White House press corps to destroy its reputation.

The White House and a spokesperson for the investment bank in question challenged the accuracy of the story.

Then, the White House denied the allegations.

The charge is completely untrue,” said White House deputy press secretary Bill Burton, “and there’s obviously no evidence to suggest that this happened in any way.”

Furthermore, the two creditors, Oppenheimer Funds and Perella Weinberg Partners, each denied being threatened themselves.

Someone is being ruthless and their ruthlessness is ultimately hurting the country. If Lauria is to be believed, the White House is trying the extort concessions out of creditors and they are willing to employ the White House press corps to smear them in their extortion. If he is lying, then a bankruptcy attorney is willing to smear the White House in order to strengthen the case of his clients.

If this is true, then it will become nearly impossible for any struggling company to ever get credit in the private market. Who would ever extend credit to a private company knowing full well that the White House is ready and willing to smear any creditor in a strong arming attempt to get them to accept terms the White House is orchestrating?

If it is false, then the entire corporate bankruptcy process has been turned into a sham. If lawyers are willing to smear the White House in an attempt to strengthen their own clients' positions, then just about every bankruptcy will have this sort of accusation a part of it. Soon, the public will believe the White House is micromanaging the business of every struggling business.

One way or another, the truth needs to come out and this story should be followed.

Affirmative Action in the Supreme Court

It appears that there will be discrimination in choosing the next Supreme Court nominee.

Not white. Not male. Not a career judge.

Those were just some of the criteria senators outlined Sunday as they discussed their hopes for the next Supreme Court justice.

With Justice David Souter retiring this summer, Democrats in particular said the vacancy is an opportunity for President Obama to diversify the high court -- not just by choosing a woman or minority justice, but a candidate with a resume that includes something other than years on the bench.

That's right if you happen to be white and male you may as well not apply. On top of this anyone over 60 is likely disqualified as well. Each are disqualified for their own reasons. White males are disqualified for reasons of political correctness. Meanwhile, those over sixty are knocked out for reasons of strategy. Anyone too old isn't going to be on the bench long enough to give ideological weight.

Put it all together and the potential field for the next Supreme Court justice is rather limited. Now, maybe, I am missing something but isn't the Supreme Court far too important to allow it to be a tool for social engineering.?

The president, through political correctness and strategy, has now just eliminated about two thirds of the folks he could be choosing for the bench. It's one thing to pick a judge based on ideology. It's also makes perfect sense to think that a wide range of experience is a benefit. It is just plain looney to dismiss any white male because there aren't enough women on the Supreme Court.

Has political correctness really gotten this out of control that not only is race a consideration but affirmative action is outwardly demanded? Just imagine if someone dismissed all the groups now being considered. Of course, everyone would call them a racist. Now, we call them someone seeking diversity. Isn't qualification more important than diversity when determining the most important position in our Judiciary?

In fact, if you know anything about just how much identity politics are a part of the Democratic party's base, this comes as no surprise. The Hispanics (represented by the Congressional Hispanic Caucus), the African Americans (represented by the Congressional Black Caucas) and the feminists (represented by NOW and Planned Parenthood) all hold a great deal of weight in the party. Each not only expects but demands that they get a certain number of their folks into any Democratic administration. Here's how the Washington Post described it.

While both parties feel pressure to keep the bench diverse, Democrats have less latitude for bucking these expectations in judicial nominations than Republicans do. The core constituency that Republicans must satisfy in high court nominations is the party's social conservative base, which fundamentally cares about issues, not diversity, and has accepted white men who practice the judging it admires. By contrast, identity-oriented groups are part of the core Democratic coalition, so it's not enough for a Democrat to appoint a liberal. At least some of the time, it will have to be a liberal who also satisfies certain diversity categories.

The problem of course is that by the time the president is done appeasing all the identity politics of the Democratic base there will be very few qualified judges left.

Obama's Transparency Two Step

Throughout the campaign, Barack Obama made a point of demanding transparency not only from the government but from business. The President made this one of his first commitments right after being sworn in.

In the Presidential Memorandum on Transparency and Open Government, and the Presidential Memorandum on the Freedom of Information Act, the President instructs all members of his administration to operate under principles of openness, transparency and of engaging citizens with their government. To implement these principles and make them concrete, the Memorandum on Transparency instructs three senior officials to produce an Open Government Directive within 120 days directing specific actions to implement the principles in the Memorandum. And the Memorandum on FOIA instructs the Attorney General to in that same time period issue new guidelines to the government implementing those same principles of openness and transparency in the FOIA context.

President Obama has continued to beat the drum of transparency...at least when its convenient.

No more fine print, no more confusing terms and conditions," he told reporters Thursday after meeting with executives from the industry, including representatives from Bank of America Corp. and American Express Co. "We want clarity and transparency from here on out."

Obama demanded that credit-card issuers "eliminate some of the abuse" in the industry, citing sudden rate increases on cards and changes in fees. He also called on credit-card companies to make available "a plain vanilla' account with simple and easy to understand terms."

It seems as though in the Obama administration transparency is only important if you're not a constituency he seeks. So, while he is busy demanding more transparency from the credit card companies, he is also busy making the unions less transparent.

The Obama administration, which has boasted about its efforts to make government more transparent, is rolling back rules requiring labor unions and their leaders to report information about their finances and compensation.

The Labor Department noted in a recent disclosure that "it would not be a good use of resources" to bring enforcement actions against union officials who do not comply with conflict of interest reporting rules passed in 2007. Instead, union officials will now be allowed to file older, less detailed conflict reports.

These reports are known as the LM-30 Rule. Worse than the hypocrisy of it all is that there is a clear conflict of interest between the administration and the unions. That conflict is a former AFL-CIO attorney named Deborah Greenfield. Greenfield was an attorney for the AFL-CIO. She worked hard to reverse LM-30 Rule during the Bush administration. She also became an Obama advisor during the campaign. She worked on his transition team on labor issues. She's now a high ranking deputy in the Labor Department.



This isn't the first time that a clear and corrupt conflict between the administration and the unions has occurred. The most obvious example is the so called deal that the Obama administration to give the UAW a major ownership stake in both GM and Chrysler. The administration also stopped the D.C. voucher program. The program was opposed rather strenuously by the teacher's union. Now, we have this move. It appears that the administration's links to the unions are the real unholy alliance.