Spitzer's madame and the Great Recession

The politcal influence of big economic players has worried philosophers and economists for centuries. "Inside Job," a Sony-produced documentary on the 2008 financial meltdown, may be one of the closest things we get to pointed questioning about the big economic players who were at the controls when the financial industry collapse sparked the Great Recession.

"Inside Job" also raises a key point on the eve of the 2012 presidential election: It may have been deregulation-happy Republicans who allowed the financial industry to run amok, but there's reason for alarm in President Obama employing meltdown-tainted officials in his administration and the Justice Department's unwillingness to pursue criminal charges against shameless meltdown swindlers. . . .

And Eliot Spitzer's madame describes how financial industry executives would expense her services.

Cyberwar: 'We reserve the right to respond in kind'

U.S. Marines manuever in Umm Qasr, Iraq. /Department of Defense image

A war-weary nation just got another reason to go to war.

Members of Congress are pressing the Pentagon to craft a cyberwar strategy that includes retaliating with a "land-based attack." The lawmakers should be careful what they ask for ... they just might get it.

Does the United States really need to convince anyone around the world that we're armed to the teeth and ready for action? The U.S. military is prosecuting declared wars in Iraq and Afghanistan, with more than 6,000 U.S. troops killed in action and about 45,000 wounded so far. The Pentagon is helping NATO wage war in Libya, with the cost to U.S. taxpayers already topping $600 million and the monthy U.S. bill for the ongoing hostilities pegged at about $60 million. And U.S. drone aircraft strikes against Muslim extremists in Yemen were recently extended to Somalia.

And those are just the hot spots. Thousands of U.S. troops are stationed in potential war zones around the world, including more than 30,000 soldiers manning the thin demilitarized zone between South Korea and perennially paranoid North Korea.

Cyber attacks on U.S. computer networks pose a serious threat to national security and business interests. Just ask anyone who has been a victim of identity theft on the Web.

But is spilling more of our blood and treasure an appropriate response to this challenge?

Fracking with Obama's mind

President Obama and Energy Secretary Steven Chu tour
an engineering lab at Penn State in February 2011. /whitehouse.gov image

In 2008, Barack Obama was a relatively obscure political figure. He had served in the Illinois Senate and had his first moment in the national spotlight at the 2004 Democratic Party Convention, when he was a candidate for the U.S. Senate.

The vast majority of the 66 million people who voted Obama into the Oval Office had never had an opportunity to follow his decision-making on any issue, nevermind the often epic challenges the U.S. government has faced since the election. A brewing conflict inside the Obama administration over fracking is one of the most revealing episodes of his first term, with potentially pivotal repercussions at the polls next year.

In the eco-corner of the bureaucratic boxing ring, the EPA is conducting the first comprehensive U.S. investigation of fracking by an independent agency. Congress authorized the research in 2010, and the probe is set for completion next year. On May 9, the first independent, peer-reviewed study of fracking's impact on drinking water was published by the Proceedings of the National Academy of Sciences. The Duke researchers found strong evidence of methane contamination of drinking water wells near fracking operations in Pennsylvania and New York. If the Duke research is an indication of the science to come, the EPA will have to press for new fracking regulations, including bans in sensitive areas.

The industry apparently has the White House in its corner. On May 5, Secretary of Energy Steven Chu picked seven experts to find the "best practices for safe and responsible natural gas production." Chu's advisory board began meeting this week and has 90 days to find "immediate steps that can be taken to improve the safety and environmental performance of hydraulic fracturing." The advisory board also has the next six months to develop "advice" for fracking regulators. Environmentalists claim Chu's advisory board is stacked with industry insiders, and they're probably right. Six of the seven board members have professional and financial ties to the petroleum industry. Two of the Chu panelists have had business ties with fracking industry heavy-weight Schlumberger Ltd., including panel chairman John Deutch, who has served on the Schlumberger Board of Directors.

I've heard Obama say on several occasions that he is committed to making decisions based on what's best for the American people as a whole regardless of pressure from interest groups. When it comes to energy policy in general and fracking in particular, Obama could have the green wing of the Democratic Party seeing red in November 2012.

Like most of the presidents since Richard Nixon, Obama sees the wisdom in boosting domestic energy sources and reducing U.S. reliance on foreign sources of oil. He has embraced not only environmentalist-friendly renewable energy industries, but also energy industries that are the bane of environmentalists, including coal, nuclear and fracking.

In the eyes of environmentally minded Democrats and independent voters, clean coal is an oxymoron, nuclear looks scarier than ever after Fukushima, and fracking seems like a classic case of a new industry raping Mother Nature before regulators and the public figure out what's going on.

Unless the Republicans pick a fatally flawed nominee in 2012, Obama is going to need every vote he can get to win a second term. If the Illinois Democrat decides to back fracking, he risks a significant chunk of his base staying home on Election Day.

2008 financial meltdown perps walk

It's best to have tough hands if you work in the financial industry nowadays. How else could you endure all the wrist slapping, handwashing and high-fiving that's sweeping board rooms from one end of Wall Street to the other?

Last month, JPMorgan Chase became the latest financial firm to squirm out of swindling clients at a cost that amounts to only a tiny fraction of its annual profits. In addition to paying a $154 million fine for a hedge fund scheme, the bank's Wall Street division is admitting bid-rigging from 1997 to 2006 and paying a $211 million settlement with municipalities in 25 states.

JPMorgan reported a $17.37 billion profit last year.

"School districts, nonprofits and municipalities in this case were all defrauded by Wall Street," California AG Kamala Harris, one of 25 attorneys general involved in the bid-rigging case, said of the settlement deal. "This settlement brings a measure of restitution, justice and closure to the victims."

JPMorgan is the third bank to cut a bid-rigging deal in recent months. UBS paid $160 million in June and Bank of America paid $137 million in September.

And JPMorgan was fined $154 million in June for a 2007 hedge fund scheme, with victims including a not-for-profit Lutheran insurer and a manager of General Motors pensions.

JPMorgan's fine and settlement are relatively small measures that combine wrist slapping, handwashing and banker high-fiving as essential ingredients. The bid-rigging settlement amounts to 1.2 percent of the bank's profit last year, and the firm is shamelessly bidding for absolution by blaming the scheming on a mid-level executive who pleaded guilty in the scams.

Investigations linked to the 2008 financial industry meltdown that severely damaged the U.S. and global economy are bearing fruit. But most shoppers would pass on this rotten harvest.

Financial industry fines and settlements for fraud perpetrated in the leadup to the 2008 meltdown will likely amount to a few billion dollars. In contrast, the national and world economy remains hobbled with losses, debts and financial needs measured in trillions of dollars. The U.S. housing market -- the 2008 meltdown flashpoint and backbone of middle class wealth -- remains in shambles and poses a seemingly insurmountable obstacle to economic recovery.

The value of a survival-of-the-fittest approach to a healthy marketplace is ingrained in American business mythology. Weak and flawed businesses presumably fail, their assets are redistributed and stronger businesses step forward to serve the market. Wall Street is apparently immune from this kind of evolutionary pressure: The same institutions and individuals who brought down the economy remain in place, waiting to collect their next bonus check.

PBS Frontline has produced several excellent documentaries on the financial meltdown, and they're well worth your time:
The Warning
The Card Game
Breaking the Bank
Inside the Meltdown

Maybe I was wrong about needing tough hands on Wall Street. A hard heart seems more useful.

Fracking like there's no tomorrow

 

The world is running out of cost-effective and safe sources of fossil fuels. It's hard to imagine a more important challenge for every man, woman and child on the planet.

Cheap energy, mainly in the form of coal, oil and natural gas, powered the Industrial Revolution in general and U.S. economy in particular. In a live-by-the-sword, die-by-the-sword twist, the United States' reliance on fossil fuels bears unsustainable costs and unthinkable risks in the 21st century.

The unsustainable costs include environmental damage from coal-fired power plants. Coal, which fuels the majority of the U.S. electricity supply, remains a widespread energy source in industrial countries around the world. But coal's environmental costs such as acid rain, greenhouse gas emissions and mining impacts are barely bearable now. A new spike in air pollution is highly likely if China and India follow in the U.S. economy's coal footsteps.

There are sure signs that the petroleum industry is taking greater risks in its quest for new sources of oil and natural gas. The 2010 Deepwater Horizon rig explosion in the Gulf of Mexico was a nightmare risk that became a reality. The industry continues to lobby to drill for oil in the Arctic National Wildlife Refuge, one of the most environmentally fragile federally protected wilderness areas in the United States. And oil companies want to drill off the coasts of California and Florida, two of the most productive fisheries in U.S. waters.

Fracking seems like a desperate measure for desperate times. This trailer from the award-winning documentary "Gasland" highlights most of the fracking danger signs ...

Clean water is becoming one of the world's most precious commodities. The fracking process is water intensive and has been linked to water aquifer contamination in several states. The contamination includes known carcinogens such as benzene and formaldehide.

Fracking could not stand up to scrutiny under the federal Clean Water Act, so Congress and President George W. Bush exempted fracking from the nation's most important water protection law in 2005.

Don't expect to hear the word fracking or acknowledgment of environmental risks in the rhetoric of the American Petroleum Institute. In the American Petroleum Institute video above, we're supposed to be impressed that fracking could secure 100 years worth of natural gas. But what happens after that 100 years is up? And we'll be living with the legacy of tainted water for centuries.

Fracking waste lagoon in Pennsylvania /Flickr image

Fukushima fallout lands on Pilgrim nuclear plant

PLYMOUTH - I live about a mile from the Pilgrim Nuclear Power Station. Other than the occasional sound of gunfire during anti-terrorism exercises and garbled test messages from the plant's public address system that sound like the teacher's voice on a Charlie Brown TV special, Pilgrim has been a good neighbor for the past five years.

But I wouldn't want to live here for the next 20 years, which is the duration of the operating license extension sought by Pilgrim's owner, Entergy.

The odds of a natural disaster of Fukushima-like proportions at Pilgrim are admittedly Lottery-esque. A few of the doomsday scenarios, such as a strong hurricane striking Plymouth this summer or fall, carry odds in the range of 1-in-several thousand. The chances of other potential catastrophes are 1-in-several million. But if you played the Lottery every day for 20 years, wouldn't you expect to hit big at least once?

Like most of the commercial-scale nuclear reactors in the world, the reactors at Fukushima and Pilgrim are boiling water reactors. In the Science Photo Library image above, the reactor vessel is housed inside a containment building, left, and generates steam to spin turbine-driven generators in the powerhouse side of the plant, right. The yellow components inside the reactor vessel represent the radioactive fuel rods, which heat water to a boil and produce steam to run the generators. Water in the reactor vessel is an essential part of the cooling system for the fuel rods.

Keeping the fuel rods immersed in water prevents them from becoming so hot that they melt or catch fire. Meltdown events increase pressure in reactor vessels as radioactive material is released from the fuel rods. The more fuel that melts, the bigger the radioactive mess and the higher the risk of a Hindenberg-like hydrogen gas explosion.

Hydrogen gas from melting fuel rods triggered the most destructive explosions at the Fukushima reactor containment buildings.

I've followed the nuclear industry since the Three Mile Island incident in 1979. My introduction to the field was the Carter administration's investigative report on the damage to reactor No. 2 at Three Mile Island, which is located 10 miles from the Pennsylvania capital, Harrisburg. It was easy and appropriate to blame human error for the series of events that led to the top of reactor No. 2 melting, which released radioactive gases and material into the reactor vessel and the reactor's massive, reinforced-concrete containment building. There was a potentially explosive buildup of hydrogen gas in the reactor vessel, which engineers were able to control. After the Three Mile Island incident, there was a lot of speculation about the potential for destruction from a hydrogen explosion at a boiling water reactor. After the Fukushima disaster, it's clear that hydrogen blasts can reduce reinforced-concrete containment buildings to dust and twisted metal, and crack reactor vessels.

If there's no electricity, a nuclear plant can't pump water into the reactor vessel, which is a recipe for disaster.

The reactor at Pilgrim is based on the same General Electric design as the reactors at Fukushima. The loss of electricity played a key role in the Fukushima reactors overheating and hurtling out of control. I fear three potential natural disaster risks at Pilgrim: earthquake, tsunami and hurricane.

In March, an msnbc.com investigative report ranked Pilgrim No. 2 out of 104 nuclear power plants in the United States on the possibility that it could be damaged during an earthquake. The annual odds of such an event were calculated at 1 in 14,493.

There is a history of tsunami activity in the Atlantic Ocean. The possibility of a mega tsunami hitting the U.S. East Coast resulting from the collapse of the western flank of the Cumbre Vieja volcano on La Palma, Canary Islands, is well documented. Cumbre Vieja last erupted in 1971. The Maine Geological Survey describes Cumbre Vieja as "a possible ticking time bomb for large tsunami creation in the Atlantic Ocean."

There is also a lengthy history of hurricane activity in New England. Although Hurricane Earl, the last Level 4 storm to threaten the region, was a near miss in 2010, the apparent global trend toward more powerful tornadoes and hurricanes should raise alarm about Pilgrim.

Fukushima: Epic tragedy simmers on back burner

Smoke rises from Reactor 3 at the crippled Fukushima nuclear power plant in March 2011. A hydrogen explosion inside the reactor building reduced the steel-reinforced concrete structure to rubble, burying not only the reactor but also hundreds of highly radioactive spent nuclear fuel rods. /AFP photo


The earthquake-driven tsunami that crippled the Fukushima nuclear power plant on March 11 is an epic tragedy for the Japanese people. It is also a crippling blow to global public perception of nuclear power.

Unlike Three Mile Island in 1979 and Chernobyl in 1986, which have been dismissed largely as human error, Fukushima in 2011 shows how a nuclear plant can become an environmental nightmare when it's knocked out in a natural disaster.

While the siting of the Fukushima plant on the shoreline of a seismically active oceanfront seems reckless in retrospect, several plants around the world face risks of comparable degree. Other plants in Japan and the United States are located in areas at risk of catastrophic seismic or severe weather events. Earthquake risk has been a longstanding criticism of the El Diablo Canyon plant in Southern California. I always thought it was reckless to build a nuclear plant in a place named for the devil.

The unfolding story in Fukushima is a Bullwork poster child. Like most disasters in the Media Age, the media and public's attention span for the disaster is waning. At the same time, the powerful interests behind the industry are marshaling their forces to build an it-could-have-been-worse defense.

Bullwork is never done

Some of the best stories are never told. Other stories are lost in the flood of information inundating the U.S. media and the Internet.

I’ve held many jobs, from dishwasher to fundraising office director. For the past 15 years, I’ve worked as a journalist in New England. There are important stories that are not being told by imploding U.S. newsrooms. There are important stories that are being lost in an information flood where quantity is drowning quality. There are important stories that are being suppressed by powerful interests.

This space is dedicated to important stories that need to be told.