Young Obama's Red Mentor
Election '08: The mainstream media have finally gotten around to revealing Barack Obama's early mentor. But they've downplayed the mystery man's communist background.
As noted in the July 29 curtain-raiser to this series, the seeds of Obama's far-left ideology were planted in his formative years as a teenager growing up in Hawaii — and they were far more radical than any biography or media profile has portrayed.
Poet-journalist Davis speaks in Hawaii in this undated photo.
A careful reading of Obama's first memoir, "Dreams From My Father," reveals that his childhood mentor up to the age of 18 — a man he refers to only as "Frank" — was none other than the late communist Frank Marshall Davis, who fled Chicago after the FBI and Congress opened investigations into his "subversive," "un-American activities."
In a belated story on the relationship, the Associated Press describes Davis as "left-leaning."
In fact, Davis was a member of the Moscow-controlled Communist Party USA, according to the 1953 report of the Commission on Subversive Activities of the Territory of Hawaii, which labeled him "a bitter opponent of capitalism." The report was introduced as evidence in the U.S. Senate Internal Security Subcommittee hearings probing the "Scope of Soviet Activity in the United States."
"Davis scholars dismiss the idea that he was anti-American," the AP reports. But one of them, ex-University of Hawaii professor Kathryn Takara, acknowledges in a Ph.D. paper on Davis (not quoted by AP) that he'd been fingered as "a Communist."
Davis wrote militant poems as a black writer in Chicago, including one in which he hails the Soviet revolution: "Smash on, victory-eating Red Army." He also attacked traditional Christianity, titling one inflammatory screed, "Christ is a Dixie N*****."
As Obama was preparing to head off to college, he sat at Davis' feet in his Waikiki bungalow for bitter nightly bull sessions. Davis plied his impressionable guest with liberal shots of whiskey and advice, including: Never trust the white establishment.
"They'll train you so good," he said, "you'll start believing what they tell you about equal opportunity and the American way and all that sh**."
In the eyes of white America, Davis warned Obama: "You may be a well-trained, well-paid n*****, but you're a n***** just the same." He also nurtured anti-white hatred in his young mulatto subject, telling him, "Black people have a reason to hate."
AP conveniently glossed over these quotes.
How much influence did Comrade Davis have on Obama? The Democrat White House hopeful refuses to talk about the relationship now. In the book, he only shares that he was "intrigued by old Frank, with his books and whiskey breath and the hint of hard-earned knowledge."
However, Obama followed in Davis' footsteps after college, working as a "community organizer" for the same socialist network in Chicago. He even considered a career in journalism like Davis.
Obama attended socialist conferences, and took a shine to other black Marxist revolutionists. Not long after Davis died in 1987, Obama came under the spell of another black nationalist-socialist, the Rev. Jeremiah Wright, who, like Davis, wore a dashiki and became a father figure.
If the relationship with Davis was as blase as the Associated Press makes it sound, why is Obama mum about it? And why did he try to hide Davis' identity in his first memoir, published in 1995?
"With the exception of my family and a handful of public figures," he wrote in the preface, "the names of most characters have been changed for the sake of privacy." But there was no need to protect Davis' privacy. He had long been dead.
More likely, the cryptic references to his communist mentor were — and still are — designed to protect Obama's background from the scrutiny it deserves.
People Vs. Pelosi
Congress: In telling House Democrats it's OK to vote for drilling, Nancy Pelosi has conceded that on the biggest election issue she's out of step with the American people. Will Republicans seize this opportunity?
Washington's Politico.com reports that House Minority Leader John Boehner, R-Ohio, has pounced after hearing that House Speaker Pelosi is privately giving permission to House Democrats with iffy re-election prospects to support drilling for more domestic oil and gas.
"My message to Democratic lawmakers is this: If you're really for increased American energy production, then prove it by putting it in writing," Boehner said as he called on his colleagues across the aisle to sign a discharge petition to force drilling legislation onto the floor. Democratic Reps. Jason Altmire of Pennsylvania and Don Cazayoux of Louisiana have both asked Pelosi to allow a vote.
But when George Stephanopoulos over and over again asked Pelosi on ABC News' "This Week" on Sunday why she would not allow a straight up-or-down vote, the speaker bobbed and weaved.
"But if you feel you have the better arguments, why not give a straight up-or-down vote for drilling?" the former Clinton White House operative asked.
Her answer: "Because the misrepresentation is being made that this is going to reduce the price at the pump."
What Pelosi is afraid of is that a majority of the U.S. Congress believes what most Americans know — that drilling will indeed reduce pump prices.
Stephanopoulos pointed out that when Pelosi came in as speaker, she promised in writing "a full amendment process that grants the minority the right to offer its alternatives" — which she now refuses to provide.
Reminded of this, Speaker Pelosi became flustered, making a couple of false starts with her answer before remarking: "They'll have to use their imagination as to how they can get a vote . . . ."
If Congress removed the ban on drilling offshore, gave access to the massive deposits of oil in the Alaskan Arctic and allowed the oil shale of the Western states to be tapped, the global petroleum market would immediately react positively, bringing pump prices down. Crude futures prices would plunge — as they already have over mere talk of a possible softening by Congress on drilling.
That's the last thing House Speaker Pelosi, Senate Majority Leader Harry Reid, D-Nev., and likely Democratic presidential nominee Sen. Barack Obama want. (Obama now claims he'll "consider" drilling as part of an environmentalist package.)
More drilling and lower prices would mean that Big Oil is no longer the boogeyman, but rather the key to the solution. And it would mean that all the windmills, solar panels and geeky plug-in cars the Pelosi Democrats want to force down the throats of the American people would have to wait until they're economically viable.
That could spell disaster for Democrats in November.
House Republicans, led by Reps. Mike Pence of Indiana and Tom Price of Georgia, are continuing their historic protest on the House floor demanding a drilling vote, in spite of Congress being in its August recess. Former House Speaker Newt Gingrich is even set to appear Wednesday.
In an election year that was supposed to be a blowout in favor of the Democratic Party, Republicans have found a powerful populist issue that terrifies vulnerable House Democrats.
With gas consumers hurting and hostile regimes exploiting our dependence on foreign oil, John McCain and the GOP have three months to make the most of it.
over US Finance, Economy
By F. William Engdahl
When Henry Paulson agreed to leave his job as chairman of the powerful Wall Street investment bank, Goldman Sachs to go to Washington as Treasury Secretary in 2006 he demanded extraordinary powers as de facto economic czar. He got it. Paulson is also head of the President’s Working Group on Financial Markets -- the secretary of the treasury and the chairmen of the Federal Reserve Board, the Securities and Exchange Commission and the Commodity Futures Trading Commission. The Working Group is the financial world's equivalent of the Pentagon war room. Paulson, not Fed chairman Bernanke, is the person running the Administration’s crisis management. And his recent actions indicate he has lost control as the snowballing problems from the semi -government mortgage companies Freddie Mac and Fannie Mae to the collapse of the multi-trillion dollar market in Asset Backed Securities (ABS) to the real economy are compounding into the worst crisis since the 1930’s Great Depression.
”The US banking system is sound…”
In an eerie echo of President Herbert Hoover in 1932, during a Presidential campaign against Roosevelt, following the stock market crash and collapse of numerous smaller banks, Paulson recently appeared on national TV to declare “our banking system is a safe and sound one.” He added that the list of “troubled” banks “is a very manageable situation.” In fact what he did not say was that the US bank deposit insurance fund, the Federal Deposit Insurance Corporation (FDIC) has a list of problem banks that numbers 90. Not included on that list are banks such as Citigroup, until recently the largest bank in the world.
The statement is hardly reassuring. The California savings bank, IndyMac Bank which was declared insolvent a month ago was not on the FDIC list a week before it collapsed. The reality is the crisis created by “securitizing” millions of home mortgages into new financial instruments and selling the packages to pension funds and investors is unfolding like a snowball rolling down the Swiss Alps.
Indication of the lack of control is the statement just weeks ago by Paulson that “financial institutions must be allowed to fail.” That was two weeks before Paulson went to Congress to ask for “Congressional authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac.” As I noted in my recent piece, Financial Tsunami: The Next Big Wave is Breaking: Fannie Mae Freddie Mac and US Mortgage Debt , those two private companies insured some $6 trillion worth of home mortgages, half the entire US mortgage debt. Paulson defended the request by calling Freddie Mac and Fannie Mae “the only functioning part of the home loan market.”
That comes back to the statement about a “sound banking system”. Can we have a sound banking system where the only functioning part is literally insolvent―its debts greater than its assets?
It is well known on Wall Street that some of the largest financial institutions have huge undeclared problems with Asset Backed Securities they have valued far above their worth to make their books look better than they are. The names Citigroup, Lehman Bros., Morgan Stanley, even Paulson’s old firm, Goldman Sachs and of course the inventor of sub-prime mortgage securitization, Merrill Lynch, all hold a huge percentage of what are called Level Three assets, these being assets where no one is willing to buy but the bank declares their worth based on “fantasy.” In short the value of those core financial institutions of the US financial system is massively overvalued compared with their value were they forced to sell into the open market today. In a sobering aside, readers should not expect any serious economic remedies for the crisis from a President Barack Obama. Obama’s National Campaign Finance Chairman is Chicago real estate billionaire, Penny Pritzker, who is heir to among other things the Hyatt Hotels. It was Pritzker together with Merrill Lynch ten years ago who first developed the model for securitizing “sub-prime” real estate, the trigger for the current Financial Tsunami crisis.
Already Citigroup has been forced to go to Dubai hat in hand and ask for billions in cash. After it announced it would not need more capital. Now Citigroup just announced plans to sell some $500 billion more assets to raise funds. Is Citigroup really solvent is the question sober investors are asking. Similarly Merrill Lynch raised $6.6 billion from Kuwait Mizuho, stated it was fine and weeks later had to raise still more capital. Morgan Stanley sold a 10% share of the company to China International Corp.
The real economy contracting rapidly
Behind the reassuring statements from Paulson and others that the “worst is over” the reality of the credit collapse since August 2007 is a deepening economic contraction which I have said several times in this space will surpass the Great Depression of the 1929-1938 period. A good friend who is an unemployed homebuilder in a prosperous part of Arizona just sent me the following list of US department retail store closures. It is worth noting that over 70% of the US GDP is consumer spending and that the entire Federal Reserve strategy of Alan Greenspan after the March 2000 collapse of the stock market bubble, was to bring US interest rates to their lowest levels since the 1930’s in order to stimulate consumer spending on credit, i.e. debt, to avoid “recession.” Note the scale of the following store closings across America in recent weeks:
Ann Taylor closing 117 stores nationwide.
Eddie Bauer to close more stores after closing 27 stores in the first quarter.
Cache, a women’s retailer is closing 20 to 23 stores this year.
Lane Bryant, Fashion Bug, Catherines closing 150 stores nationwide
Talbots, J. Jill closing stores. Talbots will close all 78 of its kids and men's stores plus another 22 underperforming stores. The 22 stores will be a mix of Talbots women's and J. Jill.
Gap Inc. closing 85 stores
Foot Locker to close 140 stores
Wickes Furniture is going out of business and closing all of its stores. The 37-year-old retailer that targets middle-income customers, filed for bankruptcy protection last month.
Levitz - the furniture retailer, announced it was going out of business and closing all 76 of its stores in December. The retailer dates back to 1910.
Zales, Piercing Pagoda plans to close 82 stores by July 31 followed by closing another 23 underperforming stores.
Disney Store owner has the right to close 98 stores.
Home Depot store closings 15 of them amid a slumping US economy and housing market. The move will affect 1,300 employees. It is the first time the world's largest home improvement store chain has ever closed a flagship store.
CompUSA (CLOSED).
Macy's - 9 stores closed
Movie Gallery – video rental company plans to close 400 of 3,500 Movie Gallery and Hollywood Video stores in addition to the 520 locations the video rental chain closed last fall as part of bankruptcy.
Pacific Sunwear - 153 Demo stores closing
Pep Boys - 33 stores of auto parts supplier closing
Sprint Nextel - 125 retail locations to close with 4,000 employees following 5,000 layoffs last year.
J. C. Penney, Lowe's and Office Depot are all scaling back
Ethan Allen Interiors: plans to close 12 of 300 stores to cut costs.
Wilsons the Leather Experts – closing 158 stores
Bombay Company: to close all 384 U.S.-based Bombay Company stores.
Dillard's Inc. will close another six stores this year.
For anyone familiar with American shopping malls and retailing, this represents a staggering part of the daily economic life of the nation, from furniture stores to clothing to video rentals to leather. The process has only begun and neither major party Presidential candidate has dared to mention this on the ground economic reality, because they evidently have no solutions to offer that would not jeopardize their campaign finances. Obama is tied to not only Pritzker but also to Omaha billionaire, Warren Buffett and George Soros. McCain depends on the traditional money contributions of the Republican Party which demand permanent tax reform for highest income earners and a pro-bank laissez faire treatment of millions of homeowners facing home foreclosure and asset seizure by banks.
Banks across the country have severely cut back on loans, fearful of bad debts. That has aggravated the consumer collapse documented above. Hundreds of thousands of real estate brokers, small and large bankers, furniture workers and salespeople, and construction workers are unable to find work. Jobs are being cut wholesale and those working are often on reduced hours. Car sales in June plunged by 28% for Ford, 18% for General Motors and even 21% for Toyota which will mean more layoffs in coming weeks. This will be the next wave of unemployment.
The economic reality is not reflected in official US Commerce Department or Labor Department statistics. There the data is constantly being “revised” to hide the grim reality in an election year.
My good friend, economist John Williams of California, has meticulously tracked such “data revisions” for more than 25 years and found the manipulation of reality so alarming that he founded an independent subscriber service titled “Shadow Government Statistics”, where he makes best estimate calculations of the reality not the official mythology.
By Williams’ calculations the US economy first entered recession, defined as two consecutive quarters of negative GDP growth, at the end of 2006. Ever since, the recession has deepened, dramatically so in the past 12 months. Little known is the fact that the Labor Department also publishes six different unemployment statistics from U1, U2 through to U6 being the most comprehensive. The reported “official unemployment” is the very narrowly defined U3 which stands at 5.5%. However, as Williams notes, U6 is the real measure and that officially shows 9.7% unemployed. His calculations put the figure at 13.7% actually unemployed and seeking work.
A personal account
The unemployed homebuilder from Arizona I mentioned above recently sent me the following personal note on the situation. “Here is how it looks to people like me: Real estate dealings fuelled the economy in most areas of the country for the past decade or more. We’ve been in a market downturn for three years . We have seen the cost of doing business increase for builders, along with a big drop in buyers as everyone tightens their belts, or can’t sell existing homes. Many employers have gone under ending thousands of jobs. If they have a job people are worried about losing it. Driving long distances to work is not possible with gasoline costs double that of 2006. There has been a 40% drop in most peoples’ home equity worth. Many people are “underwater” on their homes, meaning they owe more than the market price is worth today. So many under-employed don’t show up in government unemployed statistics. Self employed like me never get counted.”
The Arizona homebuilder continued, “Today nobody is building. Unsold home inventories are triple that of 2003. Banks no longer give easy credit for home buyers. Many realtors I know have gone two years without selling a home. Empty storefronts are becoming common. In many areas unemployment among construction trades people is 50% or more. Tens of thousands of illegal Mexicans who did most of the manual labor have returned to Mexico to find work. What now? Well, I do handyman projects of all sorts, big or small and make about 70-90% of what it takes to survive with a family of a wife and three young children. My savings make up the rest. That can’t go on for too much longer. We went from affluent and comfortable to nervous and broke with diminished opportunities in just three years. We used to be the middle class.”
Fed-Hike Risks Fade Amid Recession Signs
By RANDALL W. FORSYTH
THE FED GETS IT.
The downside risks to U.S. economic growth haven't abated while the upside risks to inflation are lessening as oil prices close in on a bear market.
As universally expected, the Federal Open Market Committee voted 10-1 to hold its target for the federal-funds rate unchanged at 2%. But subtle changes in the FOMC's policy statement indicate a slight diminishment of confidence about future growth and the hope that inflation will moderate later this and next year.
Still, the policy-setting panel remained concerned on both counts.
At the previous FOMC meeting June 25, it said "downside risks to growth remain, they appear to have diminished somewhat." No such diminution was noted this time. That is understandable given economic data released in the past six weeks, notably the seventh straight monthly decline in nonfarm payrolls and consumer spending lagging the pace of inflation despite the boost of tax-rebate checks.
And since the last confab, oil and an array of commodity prices have fallen, some quite sharply, while the dollar has firmed, all hopeful signs that inflation will abate at the consumer level. On the former, the FOMC referred to "earlier increases in the prices of energy and other commodities." In June, the panel referred to "continued increases in prices of energy and some other commodities." In other words, those increases have not continued, with crude sliding from $140 a barrel to $120 and prices even coming down at the pump.
Let's not forget why those prices have come off the boil. Demand simply wasn't strong enough to hold prices of oil and other commodities at those peak levels, notwithstanding the conspiracy fantasies about "speculators" driving them up.
The FOMC also indicated that inflation expectations – a factor in its decision-making – may be abating. In June, it conceded inflation expectations "have increased." This time, it said "some indicators of inflation have been elevated." (Emphasis added on the shift to the past-perfect tense.)
To be sure, the FOMC emphasized "the upside risk to inflation are also of significant concern to Committee (emphasis added again.) And Dallas Fed President Richard W. Fisher dissented once more in favor of an increase in the fed-funds target. That indicates the central bank hasn't dropped its inflation-fighting guard even as economically sensitive commodities slide.
Odds of a rate hike this year are rapidly fading. According to Steven Blitz, chief economist of the Rosen Consulting Group in Berkeley, Calif., the November fed-funds futures contract placed a 70% probability of a quarter-point hike before released of the FOMC statement at 2:15 PM EDT; since then, the odds have dipped to 50/50.
In addition to the weak economic indicators, the FOMC noted, as it did in June, that "financial markets remain under considerable stress." Indeed, Blitz points out, credit spreads have begun to widen again, an indication of increased risk perceptions. Those spreads had begun to narrow after the rescue of Bear Stearns in March. The latest reversal reflects recession concerns, he adds.
Moreover, since the June FOMC meeting, the Fed has extended and expanded its various facilities to keep liquidity flowing to the financial markets. And in the intervening time, the federal government moved to shore up mortgage giants Fannie Mae (ticker: FNM) and Freddie Mac (FRE) while IndyMac became one of the largest bank failures in U.S. history. "Considerable stress" is an understatement of the financial system's condition.
With forward-looking measures of inflation such as commodities and gold declining and the dollar firming, while money and credit growth are weak, expectations of Fed interest-rate hikes were misplaced. And while unemployment is a lagging indicator of the economy, it's the one that counts to the public.
The Fed is dealing with what its former chairman, Alan Greenspan, called a once-in-a-century event. The greatest credit bubble in history is being deflated, and the central bank's first job is to contain the damage. The Bernanke Fed faces many more challenges ahead in that task.
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