THE SPECTER OF COMMUNISM

1. The "tea party" rebellion against big government has had its first direct political consequence. Unfortunately, it's not a good one. Noticing the anger on the right over his vote for the bailouts, "liberal" Republican Arlen Specter realized that he was about to lose his Republican primary to a pro-free-market challenger (Pat Toomey of the Club for Growth). So he switched parties.

In the short term, this could be very bad news, because it will give the Democrats a 60-vote majority in the Senate, depriving Republicans of the filibuster, their last institutional tool to stop the Democratic agenda. Do not underestimate how damaging this could be, particularly with President Obama planning to push through his plan for semi-socialization of medicine this year.

And despite what Specter is saying about how he will still be independent, the fact is that he will be utterly dependent on the Democratic leadership. Now that he is running for the Democratic nomination, he will need that party's leaders to endorse him, raise money for him, and keep out any major Democratic challengers. He has given them an enormous amount of political leverage over him.

On the other hand, Specter was hardly a reliable vote against socialism before now. And in the long term, it is good to see that the Republicans are likely to do some house-cleaning that will get rid of the worst enablers of big government. Let's hope, however, that this reform doesn't come too late to prevent a major new loss of our liberties.

"Specter to Switch Parties," Carl Hulse, New York Times, April 28 Senator Arlen Specter of Pennsylvania said on Tuesday he would switch to the Democratic party, presenting Democrats with a possible 60th vote and the power to break Senate filibusters as they try to advance the Obama administration's new agenda.

In a statement issued about noon as the Capitol was digesting the stunning turn of events, Mr. Specter said he had concluded that his party had moved too far to the right, a fact demonstrated by the migration of 200,000 Pennsylvania Republicans to the Democratic Party….

If Al Franken prevails in his ongoing court case in Minnesota and Mr. Specter begins caucusing with Democrats, Democrats would have 60 votes and the ability to deny Republicans the chance to stall legislation. Mr. Specter was one of only three Republicans to support President Obama's economic recovery legislation.

Mr. Specter faced a primary challenge from former Republican Congressman Pat Toomey and polls showed him trailing Mr. Toomey. But he had previously resisted overtures to join the Democrats….

He said he has experienced a change of heart since the response to his vote for the stimulus legislation.

"Since then, I have traveled the State, talked to Republican leaders and office-holders and my supporters and I have carefully examined public opinion," his statement said. "It has become clear to me that the stimulus vote caused a schism which makes our differences irreconcilable. On this state of the record, I am unwilling to have my twenty-nine year Senate record judged by the Pennsylvania Republican primary electorate."

Senator John McCain, Republican of Arizona and a man with his own history of breaking with his party, expressed regret and said he had no indication that Mr. Specter would change parties. But Mr. McCain said he understood the reason for Mr. Specter's shift: "It's pretty obvious the polls show him well behind his primary opponent."…

But Senator Olympia Snowe of Maine, who also supported the Obama administration's economic stimulus legislation, said Mr. Specter's decision reflected the increasingly inhospitable climate in the Republican party for moderates.

2. The Goodfellas at the Fed I've written before about the gangster tactics employed by the Treasury Department and the Federal Reserve—the outright extortion they used to foist their bailout schemes on unwilling bankers, particularly the Bank of America. Now some new details have emerged, as summarized in the Wall Street Journal editorial below.

The basic picture is that Treasury Secretary Hank Paulson, acting under orders from Federal Reserve Chairman Ben Bernanke, threatened to fire the CEO of Bank of America and his entire board of directors, unless the bank agreed to go through with a disastrous purchase of Merrill Lynch. Then Paulson ordered the CEO to withhold information about the deal from the bank's shareholders, just as Paulson himself concealed this information from the SEC.

In effect, this was a stock fraud scheme carried out under the orders of the government's top financial officials.

But this is still not the whole story. What strikes me is that Paulson's threat to fire the CEO and board of a major bank was a bluff. On what authority would he have done so? Could he have maintained the political backing needed for such a grotesque, lawless intervention? What if Bank of America's CEO had threatened to quit and then to publicly expose and denounce Paulson's scheme?

What would have happened if, in those panicked days in the Fall of 2008, just one major banker or financial industry leader had the guts to stand up to the feds and call their bluff?

"Busting Bank of America," Wall Street Journal, April 28 The cavalier use of brute government force has become routine, but the emerging story of how Hank Paulson and Ben Bernanke forced CEO Ken Lewis to blow up Bank of America is still shocking. It's a case study in the ways that panicky regulators have so often botched the bailout and made the financial crisis worse….

Mr. Lewis has told investigators for New York Attorney General Andrew Cuomo that in December Mr. Paulson threatened him not to cancel a deal to buy Merrill Lynch. BofA had discovered billions of dollars in undisclosed Merrill losses, and Mr. Lewis was considering invoking his rights under a material adverse condition clause to kill the merger. But Washington decided that America's financial system couldn't withstand a Merrill failure, and that BofA had to risk its own solvency to save it. So then-Treasury Secretary Paulson, who says he was acting at the direction of Federal Reserve Chairman Bernanke, told Mr. Lewis that the feds would fire him and his board if they didn't complete the deal.

Mr. Paulson told Mr. Lewis that the government would provide cash from the Troubled Asset Relief Program (TARP) to help BofA swallow Merrill. But since the government didn't want to reveal this new federal investment until after the merger closed, Messrs. Paulson and Bernanke rejected Mr. Lewis's request to get their commitment in writing.

"We do not want a disclosable event," Mr. Lewis says Mr. Paulson told him. "We do not want a public disclosure." Imagine what would happen to a CEO who said that….

Evaluating the policy of Messrs. Bernanke and Paulson on their own terms, this transaction fundamentally increased systemic risk. In order to save a Wall Street brokerage, the feds spread the risk to one of the country's largest deposit-taking banks. If they were convinced that Merrill had to be saved, then they should have made the public case for it. And the first obligation of due diligence is to make sure that their Merrill "rescuer" of choice—BofA—had the capacity to bear the losses. Instead they transplanted the Merrill risk to BofA shareholders, the bank's depositors and the taxpayers who ensure those deposits. And then they had to bail out BofA too….

Mr. Paulson told Mr. Cuomo's investigators that he also kept former SEC Chairman Christopher Cox out of the loop while forcing BofA to rescue Merrill. Mr. Cox wasn't the only one. Mr. Paulson and Mr. Bernanke both sit on the Financial Stability Oversight Board, comprised of federal regulators who oversee TARP. Two days after Mr. Lewis told the dynamic duo that Merrill's losses were exploding and that he was looking for a way out, Mr. Bernanke chaired and Mr. Paulson attended a meeting of this board. Minutes of the meeting show no mention of BofA or Merrill….

No wonder no banker in his right mind trusts the Fed or Treasury, and no wonder nobody but Pimco and other Treasury favorites is eager to invest in the TALF, the PPIP, or any of the other programs that require trusting the government as a business partner.

3. The Pull Peddlers Jack Wakeland just sent me a few updates on the legislative battle over "cap-and-trade" global warming regulations.

The first article he sent me describes how the Democrats insisted on keeping a principled, articulate scientific opponent of the global warming scare from testifying opposite Al Gore in House hearings on the issue.

UK's Lord Christopher Monckton, a former science advisor to Prime Minister Margaret Thatcher…told Climate Depot that the Democrats rescinded his scheduled joint appearance at the House Energy and Commerce hearing on Friday. Monckton said he was informed that he would not be allowed to testify alongside Gore when his plane landed from England Thursday afternoon.

"The House Democrats don't want Gore humiliated, so they slammed the door of the Capitol in my face," Monckton told Climate Depot in an exclusive interview. "They are cowards."

The second article, linked to and excerpted below, describes the method by which the chairman of the House Energy and Commerce Committee is attempting to gather the votes to pass cap-and-trade legislation. He is offering to trade special favors for industries in the districts of congressmen whose votes he wants.

Jack describes the effect:

"In offering to give away CO2 allowances to industries in areas that will be hardest hit by the 'cap-and-trade' energy tax, Henry Waxman's office has become a beehive of activity. Congressmen are lining up outside of the new Komissar's office, hat in hand, to make pleas for electricity generators, steel producers, and oil refiners in their districts. What currency is being spent to procure tens of billions worth of 'free' allowances? Congressional votes in favor of 'cap-and-trade.'

"Instead of consulting engineering studies on the science behind it and making proposals to bankers on the economics of it, decisions about which energy-intensive industries should thrive and which should wither away are being made in the halls of Congress. Henry Waxman's office has quietly replaced the US energy market.

"In Atlas Shrugged, Francisco d'Anconia says, 'When money ceases to be the tool by which men deal with one another, then men become the tools of men.' Heavily armed adult children are setting up new rules for us to live by: their rule."

I asked whether we want our children to grow up having to "learn the rules" of a government-controlled economy. These two stories are a little preview of how those rules will work.

"To Get Votes Waxman Offers Cap-and-Trade Breaks," Susan Ferrechio, Washington Examiner, April 23 In exchange for votes to pass a controversial global warming package, Democratic leaders are offering some lawmakers generous emission "allowances" to protect their districts from the economic pain of pollution restrictions.

Rep. Gene Green, D-Texas, represents a district with several oil refineries, a huge source of greenhouse gas emissions. He also serves on the House Energy and Commerce Committee, which must approve the global warming plan backed by President Barack Obama.

Green says Rep. Henry Waxman, D-Calif., who heads the panel, is trying to entice him into voting for the bill by giving some refineries favorable treatment in the administration's "cap and trade" system, which is expected to generate hundreds of billions of dollars over the coming years. Under the plan, companies would pay for the right to emit carbon dioxide, but Green and other lawmakers are angling to get a free pass for refineries in their districts.

"We've been talking," Green said, referring to a meeting he had with Waxman on Tuesday night. "To put together a bill that passes, they have to get our votes, and I'm not going to vote for a bill without refinery allowances."…

Democrats so far have been unable to get enough support from their own members to pass the bill out of a small global warming subcommittee because most Republicans and many Democrats say the plan will raise energy rates, destroy jobs and increase prices on manufactured goods.

Republicans said Waxman and subcommittee chairman Ed Markey, D-Mass., are calling Democrats into their offices and offering allowances, also called credits, in exchange for votes.

4. The Muslim Civil War In the absence of US leadership in opposing Iran, the nations of the Middle East have been left to shift for themselves. The Iranians, sensing this opportunity, are now trying to plot an Islamist takeover in Egypt, backing a Hezbollah terrorist organization there.

The article below is written by an author who seems to be something of a mouthpiece for the Egyptian regime. But that in itself is significant: that the Egyptians so fear the Iranian threat that they are willing to denounce it in American newspapers.

The conflict in the Middle East has never been just about us or just about Israel. It is also, and perhaps first of all, a civil war within the Muslim world. But when America chooses to stay out of those events, this means that we give up our ability to influence who wins.

"Iran's New Target: Egypt," Abdel Monem Said Aly, Wall Street Journal, April 28 On April 8, Egypt announced it had uncovered a Hezbollah cell operating inside its borders. This startling pronouncement offers a rare insight into the way Iran and its proxies are manipulating Middle East politics.

According to Egyptian authorities, the cell was tasked with planning attacks against tourist sites in Sinai, conducting surveillance on strategic targets including the Suez Canal, and funneling arms and money to Hamas. Hezbollah's leader, Hassan Nasrallah, has admitted that the ringleader of the cell was indeed a member of his organization to provide "logistical support to help the Palestinian brothers in transporting ammunition and individuals."

These latest actions by an emboldened Hezbollah have been spurred on by Iran, which is seeking to further its quest for power in the Arab Middle East.

5. "The Internet Is God's Present to China" The great under-appreciated drama of the current era is the struggle for liberty in China. The article linked to below—and I suggest following the link to read the whole thing—is a moving tribute to the modern technological advantage the pro-liberty side has in that struggle. Written by a Chinese dissident under house arrest, it describes how the Internet has made possible an "awakening of ideas" in China and the "spontaneous organization" of dissent.

"The Internet Is God's Present to China," Liu Xiaobo, London Times, April 28 The internet has brought about the awakening of ideas among the Chinese. This worries the Government, which has placed great importance on blocking the internet to exert ideological control.

In October 1999 I finished three years of jail and returned home. There was a computer there and it seemed that every visiting friend was telling me to use it. I tried a few times but felt that I could not write anything while facing a machine and insisted on writing with a fountain pen. Slowly, under the patient persuasion and guidance of my friends, I got familiar with it and cannot leave it now. As someone who writes for a living, and as someone who participated in the 1989 democracy movement, my gratitude towards the internet cannot be easily expressed….

The internet has made it easier to obtain information, contact the outside world and submit articles to overseas media. It is like a super-engine that makes my writing spring out of a well. The internet is an information channel that the Chinese dictators cannot fully censor, allowing people to speak and communicate, and it offers a platform for spontaneous organisation….

The ease, openness and freedom of the internet has caused public opinion to become very lively in recent years…. The internet has the extraordinary ability to create stars. Not only can it produce entertainment stars, it can also create "truth-speaking heroes."…

Chinese Christians say that although the Chinese lack any sense of religion, their God will not forsake the suffering Chinese people. The internet is God's present to China. It is the best tool for the Chinese people in their project to cast off slavery and strive for freedom.

6. "The One-Trick Pony's One-Trick Pony" In these trying times, we have to look for good news where we can find it. So I was happy to discover (somewhat belatedly) the article below describing the recent troubles of Frank Gehry. An architect who has become famous for his purposely jumbled, nihilistic "deconstructivist" designs, Gehry is now being sued for negligence by one of his most important clients. Read the whole article for more stories about Gehry's professional incompetence.

More important, however, is that some people are beginning to get wise to Gehry's artistic fraud. The whole things reads like one of those scenes in The Fountainhead where Ayn Rand presents a savage parody of Modernist artists. See particularly the first paragraph excerpted below. Remember the scene in which Lois Cooke tells Peter Keating, "Let us be gods. Let us be ugly." Apparently Gehry's version is "Let us be great. Let us be stupid."

This article is a few months old, but I found it via Objectivist blogger Not PC (who is actually New Zealand architect Peter Cresswell). I was alerted to it because Cresswell quotes something I said about Gehry: "For a man feted as the greatest living architect, Gehry's style is surprisingly one-note. Almost all of his buildings look like giant piles of crumpled tin foil." To my delight, it seems that The Economist has noticed this as well, describing Gehry as "the one-trick pony's one-trick pony."

"Frank Gehry's Really Bad Year," Nancy MacDonald, MacLean's, September 17, 2008 There's a telling scene in the recent documentary, Sketches of Gehry, where the renowned Canadian architect, typically rumpled, sits chewing the nails of his meaty fingers and Scotch-taping pieces of silver cardboard at random. Bend, cut, tape. He giggles. It's just like kindergarten—even in mood, which veers violently from fun to frustration. "It needs to be crankier," says Gehry, suddenly irritated by a blank wall. His partner folds a piece of cardboard into a paper fan, halves it with a pair of scissors, and places it against the once-blank wall. "This is so stupid-looking," says Gehry. "It's great."

Either the guy's a genius, or he has us all fooled. A decade ago, with the opening of his titanium masterpiece, the Guggenheim Museum Bilbao in Spain, Gehry helped usher in a whole new cultural era where architects took their place beside celebrities…. What a difference a few years make.

On Aug. 21, the New York Times reported that the architect had been removed from the Theater for a New Audience in Brooklyn… [T]ongues are also wagging in Boston, site of another highbrow tiff. In November, the Massachusetts Institute of Technology filed a negligence suit against Gehry (and a contractor, Skanska USA Building Inc.). Gehry designed the university's Stata Center: a US$300-million series of banana-yellow, white and orange cubes and cones that house MIT's computer science and artificial intelligence labs, and office space. Celebrated as one of the boldest architectural projects of its era, Gehry said its sloping floors and dissonant angles looked as if "a party of drunken robots got together to celebrate." The party's now moved to the courthouse.

Gehry says that construction problems are inevitable in the design of complex buildings. For its part, MIT alleges that, within months of its 2004 completion, the Stata Center essentially started to come apart. Seeking unspecified damages, the university charges that "design and construction failures" caused leaks to spring, masonry to crack, mould to grow, and drainage to back up. John Silber, former president of nearby Boston University, pronounced the building a "disaster." Gehry considers himself "an artist, a sculptor," Silber told the Boston Globe. "The trouble is, you don't live in a sculpture, and users have to live in this building."…

In Seattle, meanwhile, insulting Gehry's Experience Music Project has become a "civic sport," says local writer Erica Barnett. Politicians were sure the Technicolor music museum, funded by Microsoft co-founder Paul Allen, would put Seattle on the proverbial "map." Plagued by continued declining attendance—roughly half the projected 800,000 annual visitors—the city instead landed itself a white elephant. Less than two years after it opened, Forbes magazine named it one of the world's "10 ugliest buildings."…

There's a "culture of affirmation that surrounds Gehry," says the well-known art critic and Princeton professor Hal Foster. "The same buildings that leak, burn and moulder would cost any other architect their job and reputation," says one Manhattan-based critic, who asked to remain anonymous. Yet "major newspapers, art critics and museums" continue to "hold Gehry up," he says….

The climate, however, appears to be shifting. This summer, The Economist dubbed Gehry "the one-trick pony's one-trick pony," who "merely plonks down the same lump of product time and again across the globe." His notoriously costly and resource-heavy designs seem increasingly vulgar, given heightened environmental concerns and the softening economy. Indeed, the focus of the profession has turned to green or sustainable design, says Jeffrey Ochsner, professor of architecture at the University of Washington.