Cynical Synapse

Tue, 23 Feb 2010

Kilpatrick Jobs Program About to Pay Off

Filed under: Behavior, Budget, Detroit, Government, Kwamegate, Legal, Politics, Profiteering, Rants, Society — cynicalsynapse @ 11:50 pm

Former Detroit mayor Kwame Kilpatrick

Former Detroit mayor Kwame Kilpatrick continues to garner nationwide headlines, much to the chagrin of southeast Michigan. On Monday, Detroit’s newspapers were reporting the FBI is close to charging Kilpatrick under RICO, the Federal Racketeer Influence and Corrupt Organizations Act. The on-going Federal investigation has kept many people employed in metro Detroit. The Feds have said they suspect Kilpatrick was running a criminal enterprise, which allows them to pursue charges under RICO. Their key piece of evidence is testimony from former Cobo Center contractor Karl Kado. He supposedly told investigators that he gave Kilpatrick $100,000 and gave another $290,000 to Kilpatrick’s father, Bernard, for access to Cobo Center deals.

Kilpatrick has long been suspected of corruption and the FBI investigations in Detroit has been its own little Stimulus project, providing Federal jobs for quite a few people. Kado apparently has provided sworn statements detailing payments to the Kilpatricks. The scandal includes Cobo Center directors Lou Pavledes and Glenn Barton. Kado and Paveledes’ lawyer also implicated Bernard Kilpatrick. To date, the Federal investigation has impacted the following:

  • Karl Kado—Cobo contractor; pleaded guilty to falsifying tax returns; sentencing in March 2010
  • Lou Pavledes—Cobo director; pleaded guilty to taking bribes from Kado; 14 months in prison
  • Glenn Blanton—Pavledes’ successor as Cobo director; pleaded guilty to taking bribes from Kado; 1 year in prison
  • James R. Rosendall Jr—Synagro Technologies VP; sentenced to 11 months for bribery
  • Rayford W. Jackson—Synagro’s Detroit partner; sentenced to 5 years for bribery
  • Monica Conyers—Detroit City Council member and wife of US Rep. John Conyers; cast the deciding vote in favor of Synagro’s $1.2 billion sludge contract; pleaded guilty to accepting $6,000; sentencing scheduled 10 March
  • Jerry Rivers—Detroit Police Officer, member of the mayor’s executive protection unit; pleaded guilty to bribery in connection with the sale of city land; sentencing scheduled 11 March
  • Kandia Milton—Kilpatrick’s childhood friend and a top mayoral aid; pleaded guilty to bribery in the sale of Camp Brighton; sentencing 18 March
  • DeDean Milton—Kandia’s brother; pleaded guilty to bribery in connection with 2 city land deals; sentencing 13 May
  • Sam Riddle—fomer aide to Monica Conyers and political consultant; awaiting retrial after a hung jury on charges of conspiracy and extortion; pending trial on separate charges of bribery in Southfield
  • Mary Waters—Riddle’s former live-in companion; also charged in the Southfield bribery case; trial date set for 01 June
  • William Lattimore—Southfield City Councilman; pleaded guilty to taking a bribe from Riddle in connection with a pawn shop relocation; sentencing 11 March

Judge Groner

As if that’s not enough, Kilpatrick was short $38,778 in restitution of the $79,011 that was due Friday, 19 February. One of Kilpatrick’s laywers said he didn’t know the source of the $40,000 payment that did not come from Kilpatrick himself. Michael Alan Schwartz suggested the money came from “wamrhearted people who wanted to help out.” Bill Ballenger, editor of the Inside Michigan Politics newsletter had this to say.

One can be impressed or cynical about the level of political power the man still commands. This could be peple who really care about him, and it could be people who fear his power if things get worse. And then again, it might be a further scheme to hide his own money coming in as donations from others.

Funny; that’s the same conclusion Drew and Mike came to on WRIF radio.

Judge David Groner ordered Kilpatrick to be in court at 9 AM, Friday, 26 February, for arraignment on probation violations. Groner also opened the door for prosecutors to raise concerns about other probation violations.

Previously on Kwamegate:

Wed, 14 Oct 2009

Geithner and Banks: Something is Rotten in DC

Filed under: Bailout, Economy, Government, Politics, Profiteering — cynicalsynapse @ 11:32 pm

Ok, the concept of “something rotten in DC” is both obvious and an understatement. But, I already said Timothy Geither as Treasury Secretary was like the fox watching the hen house. Apparently, Geithner has quite the cozy relationship with CEOs of Goldman Sachs, J.P.Morgan Chase, and Citigroup, all headquartered in New York. Remember, Geithner was president of the New York Federal Reserve until he became Treasury Secretary. This relationship doesn’t include Bank of America, headquartered on the West Coast. Seems fishy to me.

So, let’s see. The guy who oversees the Troubled Asset Relief Program (TARP) is best buds with 3 of its biggest benefactors? No conflict of interest there. In at least one case, Geithner was on the phone with J.P. Morgan, took a call from Pres. Obama, and then got back on the phone with J.P. Morgan. I guess we should be happy he took the call from his boss, huh?

To make matters worse, several of Geithner’s top aides worked for Wall Street, including Goldman Sachs and Citigroup. Seeing a trend here? Geithner has close ties with Wall Street’s top banks, he takes their advice, and his top aides made millions on Wall Street.

On top of that, the Special Inspector General for the Troubled Asset Relief Program (TARP), Neil Barofsky, said AIG’s spring bonuses were “a failure of oversight by Treasury”. Geithner claims not knowing about AIG bonuses until 3 days prior to March 13th, despite 2 months on the job and having been President of the New York Fed, which knew about the AIG bonuses in November. Is this surprising? Rep. Darrell Issa (R-CA), ranking member of the House Oversight and Government Reform Committee, said:

We have a Secretary of the Treasury who failed to know what he should have known, failed to do what he should have done, and has failed to give us transparency.

As Rep. Edolphus Towns (D-NY) said, “It just doesn’t seem right that the people who caused this tragedy should be so richly rewarded.” It could happen again, in March, when AIG is due to pay out another $198 million in retention payments. We shouldn’t have to keep enduring such insults. And we’re surprised Geithner’s the man without a plan?

Fri, 01 May 2009

May Day: Disaster for Chrysler, Workers, and Families

Filed under: Bailout, Business, Cars, Economy, Life, Michigan, Profiteering — cynicalsynapse @ 8:26 pm

Around the world, May Day (the first day of May) is a legal holiday. Akin to the US Labor Day holiday, which is the first Monday in September, May Day honors average workers. The day serves to recognize oftentimes hard-won rights, benefits, and a certain lifestyle. Ironically, May Day has its origins in the US, with the labor movement in the 1880s, but is largely perceived as Communist, Marxist, or Leftist. The Cold War legacy lives on long after the spectre of Moscow’s annual military parades has faded away.

Workers arrived at Chrysler’s Warren, MI, truck assembly plant for their last day of work yesterday. Getty Images

For Chrysler employees, retirees, and their families, May Day 2009 equates to closed plants and no paychecks. Retirees have already lost benefits and now their future is up in the air, depending on the whims of the bankruptcy court in New York. Many people’s hard work to see to Chrysler’s future viability was cast to the winds by greedy hedge funds refusing to bargain. As the last piece of the deal Chrysler needed collapsed, the April 30th deadline set by an optimistic President Obama and his automakers task force came and Chrysler was forced to file for Chapter 11 bankruptcy.

Coming too late, a still-optimistic president blasted the hedge funds for wanting a bigger payoff on their 30% of the Chrysler debt even though the banks who held 70% had already settled. Since the banks and speculators are largely responsible for the current economic doldroms, Wall Street caused the auto industry collapse. The credit market still has not loosened up so people who want to buy have trouble getting loans. Since the only benefit Main Street can see from the trillion-plus given to AIG, banks, and Wall Street is bank buyouts, mergers, and huge-ass bonuses to the schmucks responsible for economic chaos in the first place! The hedge funds needed to share in the sacrifice just like everyone else. They bought into Chrysler debt at a discount in the first place. They failed to do due diligance and now they claim their fiduciary responsibility wouldn’t let them take the same deal as the banks.

The Chrysler bankruptcy iceberg has considerable behind-the-scenes impacts. Chrysler plants will remain closed during bankruptcy procedings. Those workers will be living off unemployment and they may need Medicaid assistance. They will be struggling to buy the essentials and certainly nothing else. They will not take vacations and they may end up in foreclosure. It should be apparent their indefinite layoffs are actually counterproductive to reviving our economy. Never mind the personal suffering. More significantly, however, many other businesses—besides suppliers—will lose revenue and probably cut employment. These are the restaurants, stores, and gas stations near Chrysler plants. Add to this that while a car is a necessity outside of the top metropolitan areas, it is still a discretionary expense. This means people with jobs who are uncertain about their continued employment will not buy a car, no matter how much they might want to. The net effect is fostering a continuing downward spiral. At the same time demand for social services (unemployment, housing assistance, Medicaid, welfare) rises while tax revenues decline. The one-time economic stimulis bill will not turn back the inertia of this problem.

I was emphatically opposed to the Wall Street bailout, figuring I was going to pay anyway. Wall Street has always been like the alchemists of old and things like credit default swaps just seem to prove that. A lot of financial stuff seems to be like the shell game, moving “stuff” from here to there while the value isn’t really obvious. The point is they don’t make anything tangible. But auto companies make a tangible product that you can touch and feel. What I’m frustrated by is the fact Wall Street gets over a trillion dollars, no questions asked, but automakers are begrudged just a few billion. I’m confused. We have a double standard: charlatans—Wall Street—get an unlimited amount of support and keep their contract terms while average folk—auto workers and retirees—must give up salaries, pensions, and health care. What’s up with that?

Rep. Thad McCotter (R, Livonia, MI) summed it up best in an interview with WRIF radio’s Trudi Daniels.
Why is the United States, as a whole, so cavalier and calloused to the fact that their national auto company, that their world-driving engine of progress is going bankrupt, and they don’t seem to care.
In the interview, Rep. McCotter also called into question the double standard applied to the auto industry compared to Wall Street. He also questioned the disparity of so-called bonus contracts compared to union contracts. There’s an expectation for UAW workers to give concessions, but AIG’s bonuses had to be paid because they were a contractual thing. Like me, McCotter also doesn’t understand why Wall Street gets billions in bailouts but Main Street (the automakes) hardly get any assistance. And, he speaks to the fact so-called “legacy” costs actually means retirees, an expense that transplants, at 10 years and younger, don’t have. Most importantly, McCotter frames this issue as about people, a perspective mostly missing from the debate so far.

Sat, 28 Mar 2009

Signs of Spring: Rising Gas Prices

With the appearance of consistently warmer weather, gas prices are inching up. Its as if Big Oil thinks springtime means money time. We hear a lot of different reasons. Demand is going up. Refineries are shut down for maintenance before the summer driving season. We have to switch over to summer formula. (Which really costs more to produce: summer or winter formula? Seems the price goes up with both switchovers.)

Take away the refineries being shut down argument. The vast majority of refineries are operating. What’s shut down accounts for a little over 1.1 million barrels per day. That’s about 7% of capacity.

I was a little surprised to see gas prices in Lansing jump up 20 cents between Tuesday morning and afternoon. Unfortunately, I still had a half-tank and decided to wait a day to fill up. Had I thought to look at the latest gas price predictions, I would have filled up anyway. Right now, the prices are the same in my metro Deroit neighborhood as they are in Lansing.

Conventional thought has it that gas prices will continue to rise into the so-called summer driving season. I’m not convinced folks will want to do that much extra driving this summer, with the economy being what it is. But, we’ll still be told the increased prices are due to supply and demand. While I understand that formula, it’s just hard to accept when oil companies represent 7 of the highest 10 profit makers. Another reason why I’d like to see an end to oil company tax subsidies and loopholes. Seems many of the speculators who had a hand in last year’s outrageous gas prices must have lost their shirts in Wall Street’s implosion, or maybe they were Bernie Madoff customers. Let’s hope the oil market continues its cautious behavior. If you want to sign the MoveOn.org petition linked to on Utah Amicus, fine. If not, how about sending your US Senators and Representative a message telling them to end corporate welfare to companies obviously not in need of such entitlements.

Thu, 12 Mar 2009

A “Must Read” article – “The Looting of America’s Coffers”

Filed under: Bailout, Blogroll, Economy, Politics, Profiteering — cynicalsynapse @ 8:25 pm

My friend, the Old Man, over at the Common Peoples Source for News, made me aware of David Leonhardt’s New York Times article about economist George Akerlof, a Nobel Prize winner, and Paul Romer. They wrote a research paper that was published sixteen years ago. The paper was about how the financial crisis in the 1980’s was the result of private investors taking advantage of the government. Striking resemblance to today, eh?

read more | digg story

Fri, 13 Feb 2009

The Man Without a Plan

Filed under: Bailout, Business, Economy, Profiteering — cynicalsynapse @ 6:07 pm

Treasury Secretary Timothy Geithner’s speech on TARP yesterday was long on platitudes and short on details. With no specifics regarding the Troubled Asset Relief Program (TARP)—other than a new term, the Financial Stability Plan—financial stocks—especially banks—tumbled. The lack of detail, and the concept of a “stress test” for banks in Geithner’s non-plan led to the Dow plummeting more than 380 points.

Former Secrectary Henry Paulson didn’t have a plan, either, and ordinary folks have little patience for good money after bad. As it turns out, the former Goldman-Sachs CEO shorted taxpayers by a third. Besides not getting our money’s worth for the first $350 billion of the financial bailout, since there’s been no loosening of consumer credit, nobody knows where the $350 billion went.

While neither Geithner’s speech nor Treasury’s “fact sheet” had anything of consequence, the stock market fell more than 380 points. Duh! As Simon Johnson said about Geithner’s remarks, “This is not a plan.” The end result is Geithner’s big speech was a failure!

So, we still have no tangible plan, even with Geithner’s statement. The expenditure of TARP funds is no less transparent, despite claims to the contrary. Oh, and disregard the bonus and big salary stories, too—”it’s unfair,” JPMorgan Chase CEO Jamie Dimon said. Wah! If your company is loosing money, there should be no bonuses, period. If your company is loosing money, salaries in excess of a $1,000,000 are simply unacceptable.

Tue, 27 Jan 2009

Rich Man, Poor Man, Liar Woman, Thief

Filed under: Bailout, Economy, Life, Politics, Profiteering — cynicalsynapse @ 10:07 pm

Most of us have heard that little limeric based on a British counting game. With a slight modification, it seems to fit some of the top news.

Rich Man

That would be financial whiz John Thain, former CEO of Merrill Lynch. This is the man who spent $1.2 million to renovate his office in late 2007. What could have been so drastically dysfunctional about his predecessor’s decor to justify that kind of expense? I realize the rich and powerful have their little quirks and can afford their little extravagances, but that money came from the bottom line. At the time, that was shareholder money. Now it’s taxpayer money.

John Thain alleges the economic times were better when he redecorated, but the fact remains he was at the helm of Merrill as the company sank further into the morass. When he was hired, Merrill already knew it had problems. He as much as says so when he blames Merrill’s losses on positions the company held before he took over in 2007. He claims Bank of America had “complete access to everything” but they must not think so, since they canned him last week.

Before Bank of America closed its purchase of Merrill Lynch, Thain accelerated bonuses to the tune of millions. His excuse? “If you dont pay your best people, you will destroy your franchise. Those best people can get jobs other places, they will leave.” Hello! Last time I checked, the entire financial industry was in ruins, so let them try to get jobs other places. And, truth be told, those so-called “best people” are responsible for this debacle!

Poor Man

All of us ordinary folk fit in here. With the ever-expanding wave of layoffs, those with jobs are fortunate, and those without are growing in number. Even so, those who created this mess are still in charge and doing what they were doing before. Pardon me, but those are the guys who should be looking for new jobs, not the layed off newspaper carriers or factory workers.

Liar Woman

Can you say “Secretary of State”? Hillary Rodham Clinton is such an obvious opportunist! I can’t believe New Yorkers elected her to a Senate seat, let alone she was an apparently serious contender for the Presidency! If she’s such a high caliber person, how could she have such a drastically different memory of her trip to Bosnia than the actual situation? During the campaign, this was supposed to be one of the things that set her apart from her competitors like, oh, say Barrack Obama. It set her apart for me because it was such a blatant falsehood!

There are others. Anderson Cooper notes Hillary seems to thrive on a facade of mistruths even if her intentions are good. I have absolutely no doubt that President George W. Bush’s intentions were nothing but good and what he considered were in the best interests of the US. But many of the same group who would point the blamethrower at him would also claim Hillary is the answer. I don’t mean to imply that President Bush was a liar. Rather, the point is, as the saying goes, the road to hell is paved with good intentions. In Ms. Clinton’s case, I don’t believe those good intentions have any moral backing.

Thief

If you didn’t already know this label was proudly worn by Timothy Geithner, you’ve probably not been paying any attention to the news. Besides being President of the New York Federal Reserve when the financial meltdown occurred, he has his own personal tax issues. Excuse me, but this is the guy President Obama nominated, and the Senate confirmed, to oversee the resuscitation of the US economy? Beginning with the next $350 billion in the Wall Street bailout? Something’s wrong here.

I have to admit, I’m impressed by some of President Obama’s early actions. Although not empirically validated, it seems like he’s been diligent in addressing some of his campaign promises. In my mind, that’s a significant departure from past practices. But it also begins to feel a little like it’s part of one of those “_-a-day” calendars—don’t peak at tomorrow to see what campaign promise will be kept next. But with a liar to fix the US image abroad and a taxt cheat to repair the economy, are our eggs in the wrong basket?

Fri, 31 Oct 2008

Lower Oil Prices Make Arrogant Chavez Antsy

Filed under: Economy, Gas Prices, Hugo Chavez, Oil, Profiteering — cynicalsynapse @ 8:02 am

Personally, I’m lovin’ it, But Venezuela’s President Hugo Chavez must be beside himself. This is the man who, last week, said he wanted to jail his main opponent.

Chavez has also asked OPEC, of which Venezuela is a founding member, to cut production. Seems poor Hugo’s not too happy with the falling demand and lower prices. And no wonder, since oil accounts for as much as 40% of Venezuela’s economy. He thinks he’s convinced the Russians to cut production with OPEC. In fact, the Russians are using Chavez. What started as business now has the added benefit of looking like saber-rattling as Russia’s reactions to US criticisms of actions in Georgia.

With gas prices averaging about $2.30 in my neighborhood, I’m not feeling the least bit sorry for Chavez. And I still won’t buy from Citgo.

Update:

This morning, I paid $2.259 for regular unleaded. This evening, I paid $2.219 and the station around the corner from my house was down to $2.159 for cash (and $2.199 for credit, which bugs the crap out of me, so I tend not to go there). So, poor Hugo must really be feeling the pinch. I feel so bad for him. Not!

Sun, 26 Oct 2008

Foreclosures Looming for Transit Systems

Filed under: Business, Economy, Legal, Politics, Profiteering, Transit — cynicalsynapse @ 9:35 am

It’s bad enough that AIG failed, but now 36 transit systems may be at risk for billions of dollars. Apparently, years-old financing deals with banks, backed by AIG, are now subject to default because of AIG’s tenuous status. The problem, which could affect millions of subway and bus riders, was brought to light by the Washington Post.

It seems the transit agencies engaged in a once-common practice of selling railcars and other assets to banks who then leased them back. In the case of 3 dozen agencies, the deals were guaranteed by AIG who, as we know, can’t guarantee anything anymore. Never mind the $122 billion, and growing, taxpayer bailout of AIG, which doesn’t affect the transit financing deal. Apparently, while AIG still guarantees the lease payments by the transit agencies, AIG’s collapse permits the banks to demand immediate payment. The whole arrangement seems not unlike the subprime lending scandal. It’s a financial shell game with inherent risk. That must be why they stopped the practice.

The Treasury Department is looking into whether the $700 billion financial bailout could be used to fend this latest crisis off. And how could we have such a crisis when taxpayers ponyed up $85 billion in loans to AIG and gained a 79.9% stake in the company? Couldn’t that majority shareholder assume the guarantee on the transit leases? Just doesn’t seem like such a big leap to me. This is another of those “pay me now or pay me later” scenarios.

Affected transit systems include:

  • Southern California Regional Rail Authority (Metrolink) – Los Angeles
  • San Francisco Bay Area Rapid Transit District (BART)
  • San Mateo County Transit District (Caltrain) – San Carlos
  • San Joaquin Regional Rail Commission (ACE) – Stockton
  • Los Angeles County Metropolitan Transportation Authority
  • North County Transit District (Coaster)
  • San Francisco Municipal Transportation Agency (MUNI)
  • Regional Transportation District – Denver
  • Connecticut DOT/Shoreline East Commuter Service – New Haven
  • Washington Metropolitan Area Transit Authority (WMATA) – D.C.
  • South Florida Regional Transportation Authority (Tri-Rail)
  • Miami-Dade Transit
  • Metropolitan Atlanta Rapid Transit Agency (MARTA)
  • Northern Indiana Commuter Transportation District
  • METRA – Chicago
  • Chicago Transit Authority
  • Massachusetts Bay Transportation Authority
  • MARC Train Service – Baltimore
  • Maryland Transit Administration
  • Port Authority Trans-Hudson (PATH)
  • Port Authority Transit Corporation (PATCO)
  • New Jersey Transit Corporation
  • Metropolitan Transportation Authority – New York
  • MTA New York City Transit – Brooklyn
  • New York City Department of Transportation
  • MTA Metro-North Railroad – New York
  • MTA Staten Island Railway
  • Greater Cleveland Regional Transit Authority
  • Tri-County Metropolitan Transportation District of Oregon (Tri-Met)
  • Southeastern Pennsylvania Transportation Authority (SEPTA)
  • Port Authority of Allegheny County – Pittsburgh
  • Trinity Railway Express (DART) – Irving
  • Metropolitan Transit Authority of Harris County – Houston
  • Virginia Railway Express (VRE)
  • Sound Transit – Seattle
  • King County Department of Transportation/Metro Transit – Seattle

Hmmm. Maybe AIG execs spent $520 million on lavish retreats to strategize a solution to this latest impending fiasco the financial charlatans have wrought for us. Naw! I think maybe ACNN is right on the mark about why AIG execs are spending taxpayer money on parties.

Fri, 24 Oct 2008

Top 10 Culprits of the Collapse—The Final Four

Filed under: Behavior, Business, Economy, Life, Politics, Profiteering, Rants — cynicalsynapse @ 7:54 pm

Top 10 of the Collapse

Here are the final four of Anderson Cooper’s Top 10 Culprits of the Collapse:

4. Angelo Mozillo—Former CEO, Countrywide Financial

3. James Cayne—Former CEO, Bear Sterns

2. Franklin Raines—Former CEO, Fannie Mae

1. You, the consumer!

So, it seems Anderson Cooper and CNN have more or less substantiated my opinion. Greedy businesses played the numbers game in a shady Enron-esque manner, which was facilitated by deregulation by Congress and poor oversight by government watchdogs. Add in consumerism in the form of more-house-than-I-should-be-able-to-afford and a desire for toys like boats, ATVs, snowmobiles, etc., and it’s no surprise.

Actually, what’s truly amazing is the house of cards lasted as long as it did before all the bubbles started to burst. Hang on, because there may still be more bursting yet. It’s not over until the the weight-challenged female vocalizes in melodic tones.

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