Defense Contractors Suck Taxpayer Money

The Republicans complain about all the individual citizens who rely on taxpayer, government money, and there are a lot of them.  But what about the defense contractors, whom the Republicans want to protect from going off the fiscal cliff?  Lockheed Martin works almost entirely for the government, although it sells some weapons systems to other countries, and thus has some income from other sources, but not much.  Yahoo says Lockheed annual revenues are about $47 billion.  Some of its competitors, companies that also make money largely from government contracts funded by the taxpayers include Northrop Grumman with revenues of about $26 billion, Raytheon with revenues of about $24 billion, General Dynamics with revenues of about $32 billion, and Boeing which is only partially a defense contractor has total revenues of $79 billion, perhaps half of which are from defense sales to taxpayers, about $40 billion.  This amounts to an annual taxpayer expense of around $169 billion.  Although we are talking about budget overruns of about $1 trillion, this is a meaningful portion of that. 

These companies are very focused on lobbying.  They often succeed in getting Congress to authorize money for defense projects that the Pentagon wants to cancel.  When Republicans talk about preserving the military budget, many are mainly worried about keeping the money flowing to these companies, who have cleverly located factories and offices in many key congressional districts.  The service men and women stationed in Afghanistan and around the world are secondary to man of these congressmen and senators.  The servicemen are a drain on congressional resources, asking for better medical care, etc., while the defense contractors give the congressmen and senators lots of money for their campaigns, etc. 

One of the biggest concerns about the fiscal cliff is that it would mandate reducing payments to some of these welfare gluttons who suck up taxpayer money.  We'll see how clever their lobbyists are in keeping the money flowing. 

SAC Insider Trading

It looks like insider trading is the rule rather than the exception on Wall Street, most recently illustrated by the SEC case against SAC involving its head, Steven Cohen.  It probably extends to anywhere there is insider information to trade on, the entertainment industry in Los Angeles, for example.  Charlie Gasparino of Fox Business News says that insider trading is a victimless crime.  But the victims are potentially every other stock trader, who because they don't have insider information sell or buy at a price that hurts them and benefits the person with insider information, who knows that the stock is going to go up or down.  In essence, the insider is stealing money from those without inside information.  It's like selling fake Rolex watches while claiming they are genuine and charging the full retail price of a real Rolex.  You think you are buying a good stock, based on all the information available to you, but it's not a good stock and the man selling it to you knows that it's not, because he has nonpublic, inside information. 

Martha Stewart went to jail for what seemed to be a common practice among high-level business people.  Another story in the Wall Street Journal about executives who routinely made money trading in their own companies' stock illustrates that problem. 

It only reinforces the terrible impression created by Wall Street in the great subprime housing derivative fiasco that created the worst recession since the depression.  These guys are crooks.  They are mafioso in suits who will destroy America for a buck.  And it all the big shots who run the financial industry, which Warren Buffet said on the Daily Show last night is responsible for about 20% of the US GDP.  This is basically the figure presented by the government Bureau of Economic Analysis.  And Michael Lewis says that one reason the Germans got suckered into the housing mess was that they thought the derivative salesmen from Goldman Sachs and the other big American banks were honest, when in fact the salemen were lying through their teeth. 

In a Vanity Fair article, Lewis says, quoting a German banker:

“For 40 years we didn’t lose a penny on anything with a triple-A rating,” he says. “We stopped building the portfolio in subprime in 2006. I had the idea that there was something wrong with your market.” He pauses. “I was in the belief that the best supervised of all banking systems was in New York. To me the Fed and the S.E.C. were second to none. I did not believe that there would be e-mail traffic between investment bankers saying that they were selling … ” He pauses and decides he shouldn’t say “shit.” “Dirt,” he says instead. “This is by far my biggest professional disappointment. I was in a much too positive way U.S.-biased. I had a set of beliefs about U.S. values.”

The global financial system may exist to bring borrowers and lenders together, but it has become over the past few decades something else too: a tool for maximizing the number of encounters between the strong and the weak, so that one might exploit the other. Extremely smart traders inside Wall Street investment banks devise deeply unfair, diabolically complicated bets, and then send their sales forces out to scour the world for some idiot who will take the other side of those bets. During the boom years a wildly disproportionate number of those idiots were in Germany. As a reporter for Bloomberg News in Frankfurt, named Aaron Kirchfeld, put it to me, “You’d talk to a New York investment banker, and they’d say, ‘No one is going to buy this crap. Oh. Wait. The Landesbanks will!’ ” When Morgan Stanley designed extremely complicated credit-default swaps all but certain to fail so that their own proprietary traders could bet against them, the main buyers were German. When Goldman Sachs helped the New York hedge-fund manager John Paulson design a bond to bet against—a bond that Paulson hoped would fail—the buyer on the other side was a German bank called IKB. IKB, along with another famous fool at the Wall Street poker table called WestLB, is based in Düsseldorf—which is why, when you asked a smart Wall Street bond trader who was buying all this crap during the boom, he might well say, simply, “Stupid Germans in Düsseldorf.”

Zionism Is Racism

The recent dust up between Israel and Gaza reminds us that Israel is a racist state.  Although it allows some role for non-Jews in Israeli politics, for all practical purposes it is a Jewish state that discriminates against non-Jews, sometimes in small ways, sometimes in huge ways.  Israel may argue that its isolation of Gaza, for example, is necessary for security reasons, but the origin of the security problem is racism. 

Israel is justified in protecting itself from attack by Palestinians and other Arabs, but it should work seriously to reduce the oppression that produces those attacks.  The problem is that the Palestinian Arabs were in Palestine first.  After World War II, the British protectorate ended and the United Nations turned Palestine over to the Jews despite fierce opposition from those living there, mostly Arab Muslims. 

In some respects, it is not unlike what the United States did to the Indians when Europeans came to North America.  However, North America was mostly empty land, occupied by a relatively small population of Indians.  Palestine, on the other hand, was pretty much completely occupied by Arabs, who had to be displaced by the Jews to Jordan, the West Bank, and other neighboring countries.  The Jews have shown zero interest in granting the Palestinians land of their own, while the Palestinians, mainly from force of superior Israeli arms, have largely acquiesced in Israel's occupation of the majority of historical Palestine, although Jews were largely absent from Palestine for 2,000 years.  The Jews lost Palestine shortly after Jesus's time, apparently moving mainly to Europe in the diaspora, although the virtual absence of non-European Jews in Israel makes one wonder whether there is not a form of Israeli racism against non-Europeans.  Palestine was not a Jewish homeland in the 500s, the 1000s or the 1700s.  Jews did begin to return in the 1800s, but before the UN's creation of the state of Israel, they were a relatively small part of the population. 

A Huffington Post article discusses the racism in Israel directed by the European Ashkenazi Jews against the Middle Easrern Sephartic Jews.  It says that for many years Middle Eastern Jews Have lived as stigmatized citizens of Israel.   Although the populations of the two groups are about equal in Israel, the Ashkenazi rule the country.  Furthermore, many Sephartic Jews also come from Europe, but from Spain and Portugal, rather than Germany or Poland.

So, Palestinians have deep-seated, legitimate grievances that Israel refuses to acknowledge, and thanks to the enormous wealth and political influence of US Jews, the US has similarly refused to acknowledge the plight of the Palestinians.  It sometimes pays lip service to Palestinian claims, but meanwhile supplies Israel with hundreds of millions of dollars of military aid with which to kill Arabs. 

We Need Another George Marshall

An email from the George Marshall Foundation says:

In his new book The Generals: American Military Command from World War II to Today, Tom Ricks says that accountability among our highest military leaders has gone missing. Generals are rarely fired today for poor performance, and he thinks the new standards for evaluating generalships have changed in a disturbing fashion. "During World War II, top officials expected some generals to fail in combat, and were prepared to remove them when they did. The personalities of these generals mattered enormously, and the Army's chief of staff, George C. Marshall, worked hard to find the right men for the jobs at hand," he writes. But not so today, he says.

 

Gen. Petraeus personal failures are a devastating blow to the American military.   The general officer/flag officer corps is hollow.  The military usually varies between peacetime generals and wartime generals.  In the past, when a war started, the peacetime generals who were good at pushing paper and politicking failed and were removed, replaced by generals who could fight wars.  Today because of the new structure of the military, that has not happened. The paper-pushing generals have gone on the lead troops in war, with poor results, documented by Tom Ricks. 

The American military suffered a similar decline after World War I.  Marshall was able to assemble a group of war-fighting generals, such as Eisenhower, Bradley and Patton, who were ready to step in and replace the peace-time generals when World War II came.  Petraeus appeared to be a possibility to fill the George Marshall role, but not now. 

Colin Powell has been the closest to following in Marshall's footsteps, including by serving as Secretary of State, but while he was able to serve President George H.W. Bush well during the first Iraq war, he was shabbily treated by George W. Bush during Iraq war II, especially by being sent to present a false report on Iraqi weapons of mass destruction to the United Nations, as well as by Bush's ignoring Powell's advice on how to fight the second Iraq war. 

Powell and Gen. Schwarzkopf worked well together to fight the first Iraq war in a workmanlike way, but the bloodthirsty Republicans wanted to kill Saddam Hussein, and were upset that Bush I, Powell, and Schwarzkopf had not done so.  They got their bloodthirsty wish from Bush II, Rumsfeld, Tommy Franks, and company, but ended up strengthening the anti-American regime of the Iranian mullahs. 

Bush II not only failed to win the second Iraq war, he also destroyed the general officer/flag officer corps, leaving the US military in dire shape.