By now most people who follow Goldman Sachs in the news know that it received $13 billion from the Federal Reserve to liquidate its portfolio of derivatives with AIG. Because the Fed was willing to pay Goldman par value on these derivatives, even though the market valued them at about 48 cents on the dollar, Goldman walked away with no loss whatever from the AIG collapse. This has been described as a great gift for Goldman and all the other banks who dealt with AIG and who were treated the same way. Many others have described this as a colossal rip-off of the taxpayers.

How did this come about? We know a lot more this week about these transactions because of a report that has been issued by Neil Barofsky, the Special Inspector General for the bank bailout programs. The press has described this report as particularly damning of the NY Federal Reserve which negotiated these deals with the banks, and which was led at the time by Timothy Geithner, the current Treasury Secretary. These press reports, however, have mischaracterized what happened and what went wrong. The NY Fed acted properly and entirely as one would expect under the circumstances when they negotiated these contract abrogations. To see what really went wrong, follow along on the details below.

Everything in Rev. Sun Myung Moon’s sprawling religious enterprise is about family.

His Divine Principle, the core of his religious teachings, posits that Rev. Moon and his wife Hak Ja Han Moon are humanity’s True Parents. They were placed on earth by God to rescue humanity from war and want by creating exemplary families that will through behavior and example show the way to world peace and unification. Rev. Moon claims that Jesus did not succeed in his mission to save humanity, because he did not marry. Jesus has therefore anointed Rev. Sun Myung Moon as the true Messiah. In the heavenly realm, Rev. Moon asserts that evil men like Adolf Hitler and Joseph Stalin have repented and have now declared Rev. Moon as the true Messiah. Rev. Moon’s Unification Church’s proper name is the Family Federation for World Peace and Unification.

Mr. Moon and his wife have 14 children. As you may expect, they are described on the Unification Church website as having raised exemplary families. They are accomplished religious leaders (many of them are referred to as “reverend”), business executives, community organizers, artists, and of course, peace advocates – though no mention is made of Moon Young-jin, who died of suicide in 1999.

Naturally, with so many talented children, many of them have found their way into employment in the family business. In fact, all the critical management positions in the Moon conglomerate are held by his children – an arrangement as nepotistic as it could possibly be, though conceivably justifiable since the companies are privately owned by Moon.

More after the jump.

American cowboy capitalism at its finest is on display today as Kohlberg, Kravis & Roberts (KKR), one of the country’s largest leveraged buy-out firms, is proposing to bring the Dollar General company back on to the public market. You – yes you, oh innocent investor – can buy a piece of this company for just $22 a share! Any why not? Dollar General is one of those stores where everything is on sale for $1, and cash-poor, recession plagued Americans have been flocking to stores just like these.

This is the only part of the retail sector that has been doing well. Wal-Mart, Dollar General and similar low cost vendors have been holding their heads above water while everyone else has been sinking. But before you plunk down your $22/share, come along with me on a ride through the fine print of the prospectus, to learn just what is going on here. You’ll understand better that the role the Wall Street boys want you to play is that of the sucker – the person who gets them out of a tight jam for a mistake they made.

A most revealing comment was made today by The Maestro, Alan Greenspan, speaking at a conference in Alberta on energy and the global economy:

We have been very fortunate that the stock markets moved back and are re-liquifying the whole process.

He pointed to the “wealth effect” created by a rising stock market, especially when investors cash in their capital gains.

In olden times, before Alan Greenspan spent over a decade as Federal Reserve Chairman, Fed officials worried about the growth in money supply, the level of prices in the economy, unemployment, and the strength of the dollar overseas. In fact, if you read the enabling legislation for the Fed, these are the things the Board of Governors should be concentrating on.

If Wall Street bankers are so smart, how can they be so dumb when it comes to paying out bonuses?

Don’t these people read newspapers? Don’t they watch Dylan Ratigan on CNBC or Glenn Beck on FOX News, castigating bankers for their greed and ingratitude to the taxpayers who saved their firms? Haven’t they sat through one speech too many by President Obama insisting that they stop giving million dollar and multi-million dollar bonuses? Have they no idea what it means for the average worker to struggle in an economy with 10% unemployment and another 8% underemployed?

And yet Goldman Sachs is on schedule to give out record bonuses this year totaling nearly $20 billion, or half a million dollars on average per employee. Morgan Stanley is not far behind, and the investment bankers and traders at Merrill Lynch (now wholly owned by Bank of America) and Bear Stearns (now wholly owned by JP Morgan Chase) are going to be treated royally as well. What is it about these people who are supposedly so smart in figuring out the markets but dumb as posts when it comes to judging the larger world in which they operate?

During this decade the global economic and financial dynamic that mattered most was the United States - China relationship. China sold cheap manufactured goods to American consumers desperate to maintain their standard of living in the face of a shrinking job market and declining real wages. Americans borrowed money to pay for the essentials of its lifestyle - college education, premium health care, two or more cars, etc. The Chinese were the major lenders to American consumers, financing the purchases of the goods China was selling.

What this dynamic was doing was forestalling the inevitable decline in the American standard of living that began when Deng Hsiao Ping first unleashed China's capitalist spirits. The West looked on this development greedily - 800 million new consumers ready to buy Western products! This was a great misconception, because it assumed somehow that China was going to make its way up the economic ladder by making Westerners richer. In fact the reverse began to happen. Hundreds of thousands of entrepreneurial manufacturers arose in China, with access to labor willing to work for pitiful wages and no benefits, and with no governmental regulation on working conditions or environmental degradation. The result has been an economic catastrophe for the West, which has seen its manufacturing sector whittled down, its trade deficits soar, and its debt levels skyrocket.

Over a quarter of American homeowners owe more on their mortgage than their home is worth. In some bubbly markets like California, three out of four homeowners are underwater. Should these homeowners deliberately default, rather than continue to pay on a mortgage when it may take 20 years or longer for market values to equal mortgage values?

Eighty-one percent of Americans think no, according to a survey done this summer by the University of Chicago and Northwestern University business schools. Most American homeowners think it is “immoral” to deliberately default on a mortgage when it is possible to make continuing payments. Yet the numbers of American homeowners doing just that is growing. It is estimated that four percent of all defaults on mortgages are “strategic defaults” according to a phrase used by the financial industry: the homeowner can pay the mortgage but makes a strategic decision to suffer foreclosure rather than continue to make payments on a wasting asset.

The Obama administration quietly announced today it had a "new attitude" toward one of the hallmark foreign policy initiatives of the Bush administration - a missile defense system in Central Europe.

The United States spent eight years during the Bush administration selling this project to various European countries, and finally got the Czech Republic and Poland to agree to install the defense towers in their countries. The purpose of the shield was to protect these countries from an Iranian or North Korean nuclear attack.

Ellen Tauscher, Undersecretary of Defense for Arms Control, is scheduled to meet with Polish and Czech officials today. Last night she was reported to have talked to President Obama by phone to work out the details of the "new attitude", which includes the conviction that Iran has not come anywhere near to developing a nuclear weapon and is far behind the schedule assumed by the Bush administration. Two other considerations in this policy change are said to be the fact that the missile defense system didn't work, and the entire project antagonized Russia unnecessarily.

We live in an age of sports immortals. Men like Michael Jordan, Tiger Woods, and Roger Federer, and women like Serena Williams, have not only thoroughly dominated their sport, they have set records which will last for a very long time – possibly forever. What they have in common is a rare combination of athletic grace and unwavering determination to win. These are athletes who are noted for making everything look easy, when in fact they put in hours of work each day to accomplish just this illusion.

Three of the four are still performing and gave wonderful examples this week of what makes them so extraordinary. Tiger Woods completely dominated the field in a victory at the BMW Championship, part of the playoffs for the FedEx Cup that caps off the PGA Tour. Roger Federer displayed some unusual brilliance at the US Open this week, and then in the finals failed to show anything of his normal form as he lost to a newcomer, Juan Martin del Potro. Still, people will be talking about this tournament as the one Federer lost, just as they will be discussing the mental collapse of Serena Williams in her pursuit of yet another US Open title.

Michael Jordan is retired from basketball but was in the news this week with some illuminating comments, so let’s begin with him.

Courtesy of Glenn Beck, America’s #1 Teabag Gasbag, around 60,000 protestors marched on Capitol Hill today, and a more motley crowd you never saw. I use the word motley in the sense of incongruous or nonsensical, as evidenced by the protest signs they were carrying. Barack Obama can be many things to many people, but he cannot be a Marxist, Nazi, Socialist, Fascist, Kenyan Muslim Jew all at the same time.

You can’t have a protest if the crowd can’t agree on what it is protesting. By caricaturing Obama as the embodiment of all evil (quite a few signs depicted him as Satan), the protestors lost not only cohesion, but also coherence. So maybe the way to describe what this Teabag party had in common was “anger.” Also, they were virtually all white people, most of them baby boomers, no doubt a few of them carrying concealed weapons, and the overwhelming number of them seriously overweight. But here again, we get back to incongruity. How can anyone take your protest against socialized medicine seriously when you are marching in your motorized scooter, bought for you by Medicare?

There was a moment in the 2008 campaign when Barack Obama stood up and denounced the left wing crazies at Daily Kos and other liberal blogs. The press loved it. They called it his Sister Souljah moment, after the event in the Bill Clinton run for the presidency when he attacked an African-American activist. That was interpreted as a pivotal time in the Clinton campaign, when he showed the country he was running as a moderate and could face down the radicals in his own party.

Terrorists today claimed two more victims in the War on Terror: Senator Sam Brownback and Senator Pat Roberts, both Republicans of Kansas.

Both Senator Brownback and Senator Roberts conceded today that the terrorists incarcerated at Guantanamo Bay are so wily and fearsome that even as secure a federal penitentiary as the one at Leavenworth, Kansas is incapable of holding them. The two senators were responding to a study from the Department of Defense that recommended Leavenworth as one of the prisons appropriate for housing Guantanamo Bay inmates. As a means of preventing the Pentagon from going ahead with this plan, the two senators have put a hold on the nomination of Congressman John McHugh as Secretary of the Army.

Yesterday, courtesy of the US Securities and Exchange Commission, we got a peek at how the earnings per share scam was perpetrated at General Electric during the wonder years of their former chairman Jack Welch.

In the race to generate ever high amounts of return on equity, supposedly for the “shareholders”, corporate titans like Jack Welch manipulated profit figures so that quarter after quarter, GE produced net income that was always just a bit better than what the Wall Street analysts expected. It helped, of course, that GE had private conversations with the analysts during the quarter, giving them “guidance” on how earnings were shaping up. Sometimes that wasn’t enough, so Welch would have to dip in to the reserves set aside at his vast financial services subsidiary and top up company earnings with just the right amount to beat the analyst expectations.

In a really tough environment, like the recession of 2002, even dipping into the reserve kitty wasn’t enough. That’s when GE took the next step, according to the SEC, of committing accounting fraud.

Over 70% of Americans, according to one poll, want what's called a "public option" included in the health care reform package now before the Congress. It's reasonable to assume that these Americans are fed up with the health care they are getting from the private option (when it is available at all), and they are willing to risk all the scary consequences of government bureaucracy that the Republicans warn about when deriding publicly-provided health care.

So what's not to like about private health care from companies like Cigna and Humana and Blue Cross Blue Shield, other than the fact that fewer and fewer Americans are eligible if they have even the possibility of a chronic illness, those who are left in the system are paying skyrocketing premiums and out-of-pocket costs (averaging now at least $6,000 a year per person), and these companies will use the flimsiest pretexts to avoid paying claims?

We all like to escape from reality, through a good book, the movies, or television. But how about escaping to reality? That’s what 17 year old Mike Perham has been doing as he attempts the youngest solo circumnavigation on a sailboat. What’s it like being all alone on a sailboat facing the Atlantic, Indian, and Pacific oceans? Mike will tell you; he has all the latest satellite-connected equipment to send videos out to a growing audience, and keep up a blog on the challenges, dangers, and joys of navigating a boat by yourself around the world.

I’ve been following Mike’s journey for about half a year now. He left his home in England sailing south to Brazil, cut across the South Atlantic to reach the Cape of Good Hope, traversed the Indian Ocean stopping off eventually in Tasmania, and has just now crossed the Pacific and is ready to sail through the Panama Canal.

A case of financial espionage raises questions about Wall Street’s proprietary trading practices and exactly what role they play in the market. The perpetrator of the espionage, Sergei Aleynikov, is a former computer programmer and equity specialist at Goldman Sachs. He is alleged to have downloaded secret software at Goldman that is used to direct large volume, rapid-fire trades to exchanges and commodity markets, often just before the close of regular trading.

At a bail hearing for Aleynikov, now in custody in New York, U.S. Assistant District Attorney Joseph Facciponti said Goldman Sachs stands to lose millions of dollars from its proprietary trading based on the stolen software. Moreover, if others in the market obtain access to these trading secrets, “there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” according to Facciponti.

Listening to Gov. Sarah Palin today announce her resignation, I couldn’t help but be impressed with her selflessness in saving Alaska from the trauma of her continuing in office. Now that she has decided not to run for reelection, she has also decided to hand over the keys to the governor’s office to Lt. Gov. Sean Parnell, because, as she described it, she is not the usual sort of politician. She believes she can fight for Alaskans with more success from the outside than the inside as a lame-duck governor, flopping around in her office in Juneau with no power, subject to the terrible mean-spirited partisanship that characterizes modern political discourse.

- With the total number of cases in the USA estimated to have passed a ballpark one million we can be re-assured that in its present makeup the swine flu has a very low fatality rate.

The UK is seeing numbers rise above 4,500, but the methodology of diagnosis and reporting is fluid across England and Scotland.

Sunshine, especially its ultra-violet properties, usually prevent the spread of influenza in summer as people are outside. However, it is obvious that the virus is continuing to spread. WHO's latest confirmed figure globally is approaching 60,000 as at June 26.

Sean Paul is back! And he’s jet lagged. Which means for the next two weeks he’s going to be awake at 3:00 a.m. with nothing to do but catch up on late night American TV. Imagine what he’s missed in just one year – the shock could be overwhelming. As a public service for Sean Paul and other insomniacs, I am providing you with a quick introduction to late night TV, American style – but be warned! Late night television is inhabited by people who want your money, and what could be more American than that?

Buy! Buy! Buy! (But first look at these Boobies!)

There was a time when late night TV would entertain you with old movies or reruns of sitcoms. That’s all gone now; everyone has sold out to the infomercial, that peculiar blend of cheesy production values and gripping personal stories of desperate people who discovered the secret to wealth and who are so civic-minded that they want to share this secret with you for $39.95 (plus shipping and handling).

Sean Paul will be unable to avoid a namesake of his, the ubiquitous Jeff Paul and his $hortcuts to Internet Millions. In this half hour infomercial you don’t meet Jeff Paul right away, because first you want to feast your eyes on Carmen and Stacey, two beautiful girls who are our hosts for half an hour at a fabulous resort somewhere in Southern California.

You’ve seen Carmen and Stacey before, on other infomercials or other TV shows. For a while Stacey was Chuck Woolery’s sidekick on the game show Lingo, but she was let go, apparently for being a little too flirtatious with Chuck. Because Carmen and Stacey are at a luxurious resort, swanking it up around the swimming pool, they get to wear skimpy outfits that reveal their alluring boobies, which are collectively the four assets the two of them bring to this enterprise. Well, that’s not really fair – Stacey also has something indispensable in selling TV products to gullible Americans: a British accent! Never mind that she sounds like she is from somewhere down in the Antipodes; Americans think all Australians or New Zealanders sound just like Queen Elizabeth and must be as dignified.

Did you see that article back in February that predicted this Iranian revolution? No? Neither did I. As far as anyone can tell this revolution was unexpected. When millions of people in Iran take to the streets to shout “death to the dictator” – meaning President Ahmadinejad – and when hundreds of demonstrators are injured with many killed by roving militias, something of great significance is occurring. Too bad the world was unprepared for this.

In the United States it is easy to blame the press. After all, this trouble in Iran was brewing right during the middle of American Idol, when the US takes time out to vote for the least objectionable amateur singer. The UK was equally preoccupied this year what with all the fuss over Susan Boyle. It was only a week before the election in Iran than most people who follow the news in the US or Europe even heard about Moussavi vs. Ahmadinejad. But you had to search for the news – the main stream press coverage was spotty or non-existent.

Canberra | June 17

Agonist Exclusive - Over the next 48 hours Australia is moving into a new national pandemic level, "protect".
Following consultation with state and territory health officials and WHO, the consensus is that many Australians will contract the virus over the winter months. The new "protect" level is a solution on how to deal with a mild pandemic

Officials are hoping that the majority of cases will only have a mild influenza illness. Therefore the Australian health authorities have requested that anti-virals such as Tamiflu and Relenza are not to be prescribed to those with the illness, in order to maintain the stockpile of anti-virals. The stockpile is only to be used if a second more serious wave of infections occurs.

During 1979, a sequence of events dating back to 1963 finally came to a conclusion. The Ayatollah Ruhollah Khomeini; a Nelson Mandela like figure for the millions of Iranians who welcomed him back to Iran in February that year; oversaw the establishment of an Islamic Republican Government.

Spurned earlier by Iraq, and in ongoing conflict with the West, the new Iran and the Ayatollah changed the face of Islam, creating a third political "force" extending from Africa through to Indonesia, as "neither east nor west", and separate to nations aligned to the USA and former USSR.

The invasion of the USA embassy and subsequent prolonged hostage drama, war with Iraq, and ongoing attempts to overthrow middle-eastern state monarchies with Islamic republics, alienated Iran from most of the developed world.

“I feel like I went to sleep in one country and woke up in another." So said a Western reporter about the riots that have swept Iran following the disputed election for President between Mahmud Ahmadinejad and Mir-Hussein Mousavi. Following weeks of increasingly animated, large demonstrations in favor of Mousavi as a reform candidate, and despite polls just before the voting that showed Mousavi with a lead, Ahmadinejad emerged with a “landslide victory” from the Ministry of Interior’s election commission, which counts the votes and which conveniently reports to Ahmadinejad.

The crudity with which the voting has been conducted defies common sense. Ministry of Interior officials who were suspected of favoring Mousavi have been purged in the weeks leading up to the election. The election results are reporting districts with curiously even numbers of votes in favor of Ahmadinejad, such as 1,000 here, or 5,000 there. Districts where reform candidates reside went suspiciously in favor of Ahmadinejad. Mousavi himself has disappeared – some fear he is under house arrest – and internet social sites like Twitter and Facebook have been shut down, as has Mousavi’s website.

Well hooray! Ten US banks have been given permission to repay their TARP loans from the federal government - $68 billion worth. This governmental Seal of Approval may mean these banks are healthy and safe and ready to do business, but what it certainly means is that the executives running these banks want to escape any government control over how much they pay themselves.

What’s in it for us the taxpayers? Not much. The government still needs to borrow trillions and trillions of dollars, which means interest rates aren’t going down. No fundamental reforms have been imposed on the banking industry – just some tweaking around credit card rules – so you still will have a very hard time getting credit. You’ll also earn about 0% interest on your bank deposits, but pay 30% or more for credit depending on your financial condition. This is certainly not going to get the consumer spending or the economy moving, so what is it going to take to enact real change to our financial system?

Our own Zuma has come across a potent set of proposals for real reform from the author William Greider. You’ll want to check out both Zuma’s report on the Diaries page, as well as Greider’s article on Alternet (printed originally in The Nation). The gist of these reforms is radical in today’s political climate – it is nothing less than a legal cap on interest rates. No bank or finance company would be able to charge you more than this cap – to do otherwise would be considered usury. What would our economy look like if we had laws against usury?

June 11

Agonist Exclusive - After years of international concern about an avian flu H5N1 pandemic; the world is awaiting the 6pm Geneva time WHO press conference, at the WHO boardroom where it is expected that the Director-General Dr. Margaret Chan will announce that the world is officially dealing with the novel H1N1 influenza (swine flu) at pandemic level. Scotland's Health Secretary Nicola Sturgeon told Scottish lawmakers "A move to level 6 is not a verdict on the severity of the virus," she said. "It simply means that the extent of global spread now fulfills the definition of a pandemic." WHO considers a disease pandemic when transmission between humans becomes widespread in at least two regions of the world.

Emerging in Mexico and California in March 2009, the novel H1N1 influenza, commonly known as swine flu, has achieved what many feared Avian Flu would do since November 2003, spread rapidly 'around the world in 80 days', with sustained transmission on several continents, especially in Australia.

...And we have a pandemic! ~ h/t raja