Sunday, April 26, 2009

Smithfield Ham and Flu

April 26, 2009, 8:00 a.m.; April 27, 2009, 6:00 a.m. (updates), 4:45 p.m. Extra! (See bold heading, "Will Iowans Take Note -- Let Alone Take Charge?" below]; April 28, 2009, 7:15 a.m. (Contents; Times' story); April 29, 2009, 7:30 a.m. (a blog entry that evolves over four days is bound to be a little disjointed and even internally inconsistent; hopefully "Wednesday Morning Thoughts" and the expanded "Contents," below will help), 7:30 p.m. (pork industry gets to President Obama, see "Lipstick on Pigs = "North American Flu"?!," and "Pigs in the Oval Office," below); April 30, 2009, 7:20 a.m. (see below, "Blockbuster: Why Healthy Hogs Harm Humans")

Swine Flu: Another Corporate Greed Externality?
Homegrown Risk to Iowans?

(brought to you by*)


Smithfield's Pork
Smithfield's Hog Lots
The Data: Do Hog Lots Cause Swine Flu?
. Mexican Health Official: Yes
. University of Iowa Researcher: Yes
Blockbuster Extra! They've Known All Along!
Where Are the Media and Experts?
Will Iowans Take Charge?
Can We Eat Ham?
Anyone Care for Some Chinese Ham?
More Sunday Stories
Conclusion: Media Owe Us Investigation
N.Y. Times acknowledges, buries, Smithfield connection
And so does the Times of London
Wednesday Morning Thoughts
. Pigs' Public Relations
. Lipstick on Pigs = "North American Flu"?!
. . Pigs in the Oval Office
. Safe to Eat?
. Risk Assessment
. Springfield's Disingenuous Defenses
. Pigs Politics Mean Investigations Unlikely
. Vegetarian Thoughts
Blockbuster: Why Healthy Hogs Harm Humans

Did Smithfield put the swine into swine flu? Some are suggesting as much.

It's hard to miss the recent media coverage of a new variety of swine flu that is being passed between humans in Mexico, the United States -- and, as of this morning, New Zealand.

Put "swine flu" into Google and you'll get 900,000 hits. The U.S. Centers for Disease Control & Prevention has a special swine flu Web page with numerous links regarding what the World Health Organization says could become a pandemic ("From December 2005 through February 2009, a total of 12 human infections with swine influenza were reported from 10 states in the United States. Since March 2009, a number of confirmed human cases of a new strain of swine influenza A (H1N1) virus infection in California, Texas, and Mexico have been identified. An investigation into these cases is ongoing").

"Influenza-Like Illness in the United States and Mexico," World Health Organization, April 24, 2009 ("Because there are human cases associated with an animal influenza virus, and because of the geographical spread of multiple community outbreaks, plus the somewhat unusual age groups affected, these events are of high concern"). "[The CDC's] Dr. Anne Schuchat . . . told reporters on Saturday [April 25] . . . that, because of the wide geographic spread of the virus so far, the outbreak is already 'beyond containment.' . . . Earlier in the day, the head of the World Health Organization said that the outbreak has the potential to develop into a pandemic." "WHO Warns of Possible Pandemic as Mexico Seeks to Contain Swine Flu; 3 new cases reported in United States, health officials say," Forbes, April 26, 2009.

Smithfield's Pork. But you'll find the mainstream media's coverage of the possible corporate cause and source of this potential pandemic to be "somewhere between slim and none at all."

Check the Cook It Simply site for herring recipes and you'll find 59 ways to serve herring. That's about how many different herring dishes I remember from a smorgasbord in Sweden some years ago.

And what herring is to the Swedes pig is to Smithfield. You could say they've really gone whole hog. Go to Smithfield's "Our Products" page and all you'll find linked (pardon the expression) besides sausages are "smoked hams," "fresh pork," "smoked pork chops," "bacon," "breakfast sausage," "smoked sausage" and "luncheon meats." [Photo credit: Smithfield.]

But if you put "swine flu" into the Smithfield search field the answer comes back, "Sorry, no recipes matching your search were found. Please try again..."

Smithfield's Hog Lots (CAFOs), Philpott and Grist. In short, Smithfield ain't talking about its Granjas Carroll de Mexico operations.

Tom Philpott is.

Put "swine flu" and "Smithfield" into Google and most of the hits lead back to his entry, Tom Philpott, "Swine Flu Outbreak Linked to Smithfield Factory Farms,", April 25, 2009.

Philpott is the Grist food editor and farms what he describes as "a sustainable-agriculture nonprofit and small farm in the Blue Ridge Mountains of North Carolina." Here is a reproduction of his swine flu article:
The outbreak of a new flu strain—a nasty mash-up of swine, avian, and human viruses—has infected 1000 people in Mexico and the U.S., killing 68. The World Health Organization warned Saturday that the outbreak could reach global pandemic levels.

Is Smithfield Foods, the world’s largest pork packer and hog producer, linked to the outbreak? Smithfield operates massive hog-raising operations Perote, Mexico, in the state of Vera Cruz, where the outbreak originated. The operations, grouped under a Smithfield subsidiary called Granjas Carrol, raise 950,000 hogs per year, according to the company Web site—a level nearly equal to Smithfield’s total U.S. hog production.

On Friday, the U.S. disease-tracking blog Biosurveillance published a timeline of the outbreak containing this nugget, dated April 6 (major tip of the hat to Paula Hay, who alerted me to the Smithfield link on the Comfood listserv and has written about it on her blog, Peak Oil Entrepreneur):
[Photo credit:] Residents [of Perote] believed the outbreak had been caused by contamination from pig breeding farms located in the area. They believed that the farms, operated by [Smithfield's] Granjas Carroll, polluted the atmosphere and local water bodies, which in turn led to the disease outbreak. According to residents, the company denied responsibility for the outbreak and attributed the cases to “flu.” However, a municipal health official stated that preliminary investigations indicated that the disease vector was a type of fly that reproduces in pig waste and that the outbreak was linked to the pig farms. It was unclear whether health officials had identified a suspected pathogen responsible for this outbreak.
From what I can tell, the possible link to Smithfield has not been reported in the U.S. press. Searches of Google News and the websites of the New York Times, Washington Post, and Wall Street Journal all came up empty. The link is being made in the Mexican media, however. “Granjas Carroll, causa de epidemia en La Gloria,” declared a headline in the Vera Cruz-based paper La Marcha. No need to translate that, except to point out that La Gloria is the village where the outbreak seems to have started. Judging from the article, Mexican authorities treat hog CAFOs with just as much if not more indulgence than their peers north of the border, to the detriment of surrounding communities and the general public health. Get this:
De acuerdo con uno de los habitantes de la comunidad, Eli Ferrer Cortés, los desechos fecales y orgánicos que produce Granjas Carroll no son tratados adecuadamente, lo que genera contaminación del agua y del viento en la region.
My rough translation: According to one community resident, the organic and fecal waste produced by Granjas Carrol isn’t adequately treated, creating water and air pollution in the region. I witnessed—and smelled—the same thing in Hardin County, Iowa, a couple of years ago, another area marked by intensive industrial hog production. The article goes on to say that area residents have long complained of “fetid odors” in the air and water, and swarms of flies hovering around waste lagoons. Like their counterparts who live in CAFO-heavy U.S. areas, they also complain of respiratory ailments. Now, with 30 percent of the area’s residents now infected with the virulent flu bug, people are demanding that state and federal authorities inspect hog operations there. So far, reports La Marcha, the response has been: nada.

The Mexico City daily La Jornada has also made the link. According to the newspaper, the Mexican health agency IMSS has acknowledged that the orginal carrier for the flu could be the “clouds of flies” that multiply in the Smithfield subsidiary’s manure lagoons.

I’ll be in touch with contacts in Mexico as this story develops —and I’ll be curious to see whether the U.S. media explores the link with Smithfield’s Mexico operation.

Can We Eat Ham? (1) (a) To remove any possible ambiguity, and in fairness to Smithfield, it should be noted that at least I am unaware of any evidence that one can contract swine flu by eating pork products, whether Smithfield's or those of any other supplier. Apparently, once contracted swine flu is then spread from human to human (some of whom may be referred to as "pigs" but are actually of the human species). If Philpott is correct, Smithfield's possible involvement comes from what it's doing in its hog lots, not in its products.

(b) On the other hand, one of the world's largest importers of pork products, Russia, has curtailed its importation of pork based on its scientific and epidemiological evaluations. ("Russia banned imports of all meat not treated thermally from Mexico, Texas, California and Kansas, and raw pork imports from eight other U.S. states, Central America and the Caribbean." Jonathan Lynn, "Swine flu alert prompts pork import bans," Reuters, April 27, 2009. "[I]n 2008 Russia was this nation's [the United States'] fourth-largest international customer for pork and pork variety meats, with 217,767 metric tons worth $476 million. For January and February 2009, exports to Russia were down 49% from year ago . . .." Lauren Etter, Debbie Carlson and Curt Thacker, "Pork Industry Moves to Quell Flu Fears," Wall Street Journal, April 26, 2009.)

Hog Lots and Swine Flu: The Data (2) (a) Russia's scientists notwithstanding, I have not personally searched the scientific literature on the relationships between hog lots and swine flu and for that reason know of none -- but see blockbuster Extra!, below. (b) Dr. Patricia Qunlisk, epidemiologist for the Iowa Department of Public Health, reports no known cases of swine flu in Iowa. Daniel P. Finney, "Epidemiologist: No swine flu reported in Iowa," Des Moines Register, April 26, 2009. Of course, there could be any number of explanations: [1] there never has been and never will be any connection between hog lots and human disease, [2] there can be a connection, but Iowa has just been lucky so far, [3] there can be a connection, and some Iowans are suffering from hog-related illness, but they have not yet been evaluated and diagnosed as such, [4] there can be a connection, but the risks can be radically reduced, or even eliminated, by following the practices of Iowa farmers, or (and deliberately listed last as least plausible) [5] there is a connection, Iowans have contracted disease, but the state's pork producers have sufficient political and economic power to suppress the news -- and, again, see blockbuster Extra! below.

Where Are the Media and Experts? (c) On the other hand, acknowledging that "an assertion is not a fact," and "an hypothesis is not a proof," if is correct, Mexican authorities seem to believe there is a connection between hot lots and swine flu, and the hypotheses they assert strike me as at a minimum perfectly plausible. Doesn't their hypothesis -- after all, they're there, at ground zero, dealing with over 1000 infected Mexicans -- at least deserve reporting by America's mainstream media, and investigation by our public health institutions? See, e.g., a story in which this might have been discussed where this hypothesis (indeed, any hypothesis as to source/cause) is nowhere to be found in an otherwise very reputable mainstream media report, Gautam Naik and Betsy McKay, "Science Races to Parse New Virus; Bug, a Genetic Hybrid, Contains Elements Foreign to Humans, Posing Pandemic Risk," Wall Street Journal, April 27, 2009.

Will Iowans Take Note -- Let Alone Take Charge?

In case you missed it, fellow Iowans, let me repeat what Philpott has to say about Iowa's hog lots:
I witnessed—and smelled—the same thing in Hardin County, Iowa, a couple of years ago, another area marked by intensive industrial hog production. The article goes on to say that area residents have long complained of “fetid odors” in the air and water, and swarms of flies hovering around waste lagoons. Like their counterparts who live in CAFO-heavy U.S. areas, they also complain of respiratory ailments.
So far there's no reason to believe there's anything magical about Mexico's ability to create swine flu from hog lots. Have we just been lucky so far? Do we have the potential for creating our own homegrown swine flu? Have we already done so? Or is our immunity just one more way in which Iowa, and Iowans, are special? And see, "Cautions," (2)(b), above.

Blockbuster Extra! They've Known All Along! April 27, 4:45 p.m.
Well, it now turns out, I find, that scientists have known all about this risk since at least 2005. It's just that the CAFO-profiting corporations, and their campaign-contribution-profiting politicians have preferred to do nothing about it.

Here are excerpts from the AP's story 3-1/2 years ago involving, as it happens, a University of Iowa researcher.
IOWA CITY, Iowa (AP) -- University of Iowa scientists say . . . despite the worldwide focus on the avian flu virus, research by Dr. Gregory Gray shows pigs, too, pose a threat for passing the [influenza] virus to humans.

In . . . the journal Clinical Infectious Diseases, Gray said hogs' genetic makeup make them perfect mixing vessels for producing new strains of influenza virus. . . .

If the avian flu virus or another pandemic strain enters the United States and infects swine or poultry flocks, Iowa's more than 200,000 swine and poultry workers could be at the front lines of infection, researchers said. "We're really concerned about agricultural workers and their health," said Gray . . ..

Between 2002 and 2004, researchers studied 111 Iowa farmers, 97 meat-processing workers, 65 veterinarians and 79 individuals uninvolved in the swine industry.

The survey found that farmers were the most likely to have antibodies in their bloodstream to fight off swine influenza, which researchers say indicates previous infection with the virus . . . while processors showed lower rates . . ..

"Right now, swine workers are not included in the national pandemic plan, nor are they closely monitored for influenza," Gray said. "Should pandemic influenza virus strains enter the United States and these workers not be given special attention, we think it could be a really big problem for Iowa."
"Researchers urge monitoring farmers for avian flu exposure," AgriNews, November 26, 2005.

So what was a guess on my part yesterday -- that we might have some swine flu factories right here in Iowa -- now turns out to be very close to the truth.

Anyone Care for Some Chinese Ham? From Those Wonderful Folks Who Brought You . . .
"the deaths of some 51 people . . . blamed on cough syrup tainted with Chinese-made diethylene glycol, commonly used in antifreeze. The same chemical has been found in toothpastes from China sold in the US and Canada. Earlier this year, more than 100 brands of cat and dog food were pulled from the shelves in the US after pets died from eating food contaminated with the chemical melamine, traced back to wheat gluten from China."
Laura Smith-Spark, "Chinese product scares prompt US fears," BBC News, July 10, 2007.

Meanwhile, it turns out that Smithfield is being eyed by China's largest pork producer, Cofco.
"Early last year, Smithfield began exporting pork to China through Cofco; and in July, Cofo bought 5 percent of Smithfield shares [and] announced plans to consolidate production along the U.S. model [boosting its production from 500,000] to 10-15 million hogs within five years -- 'raised in accordance with standards and practices prevailing in the United States,' Forbes reported. In other words, Cofco and Smithfield were plotting the rapid-fire CAFOization of Chinese pork production. . . . Such a deal would represent a bet by the Chinese government that U.S. regulators have no serious plans on cracking down on CAFOs for antibiotic abuse, water and air degradation, and deplorable labor practices. Let’s hope Cofco execs don’t know something we don’t."
Tom Philpott, "Chinese agribiz giant eyes Smithfield takeover,", April 24, 2009; Emily Fredrix, "Analyst: Smithfield could be ripe for sale; Analyst says Smithfield Foods could be ripe for sale, but $17 a share is too high," Associated Press/Yahoo! Finance, April 22, 2009.

Samples of Sunday Stories Later in the Day[April 26]

Lauren Etter, Debbie Carlson and Curt Thacker, "Pork Industry Moves to Quell Flu Fears," Wall Street Journal, April 26, 2009, 6:34 p.m.

Betsy McKay, David Luhnow and Jacob Goldstein, "Swine Flu is Public Health Emergency, With New U.S. Cases,"
Wall Street Journal, April 26, 2009, 6:34 p.m.

Cam Simpson, "U.S. Declares Public Health Emergency Over Swine Flu Outbreak," Wall Street Journal, April 26, 2009, 7:34 p.m.

See generally the Wall Street Journal's collection of 11 stories at "Swine Flu Complete Coverage," Wall Street Journal, April 27, 2009.

Conclusion: Media Owe Us Investigation. When some Wall Street folks proved a little too clever for their own good, fraudulently packaging and selling worthless mortgages in an effort to enhance their short-term bonuses, they ended up harming not only themselves and their company, but their entire industry, and then the entire global economy beyond.

If -- and that's a big "if" -- it turns out that Swiftfield's CAFOs (Concentrated Animal Feeding Operations), designed to reduce costs and increase corporate profits, end up contributing to a swine flu pandemic, the consequences may be similar. Already, as the Wall Street Journal stories reveal, the impact has gone well beyond Smithfield to the entire pork industry, public health organizations from the World Health Organization to the Iowa Department of Public Health, the travel industry (travelers' fear of crowds and destinations' hotels and restaurants, airlines' additional screening; Mexico City is virtually closed down), and the global stock markets. See, Steve Goldstein, "Futures Sink on Swine-Flu Fears," Wall Street Journal, April 27, 2009, 6:25 a.m. CT. As Goldstein reports, two hours before the New York markets even opened, "U.S. stock futures fell sharply Monday as the outbreak of deadly swine flu stoked fears that a possible recovery in the global economy could be derailed."

In short, Grist's assertions regarding Smithfield's CAFO operation in Mexico (Granjas Carroll de Mexico) is, potentially, a very, very big story (see above). Good mainstream media investigative reporting may confirm, or prove false, Mexican authorities' assertions. In either case, the world's people -- and, not incidentally, Smithfield -- deserve no less.

Update: Times' Brief Mention, April 28

By Tuesday the New York Times let a brief mention of Springfield into the sixth paragraph of a back-page story:
In Mexico, where the only related deaths have been reported, state health authorities looking for the initial source of the outbreak toured a million-pig hog farm in Perote, in Veracruz State. The plant is half-owned by Smithfield Foods, an American company and the world’s largest pork producer.

Mexico’s first known swine flu case, which was later confirmed, was from Perote, according to Health Minister José Ángel Córdova. The case involved a 5-year-old boy who recovered.
Donald G. McNeil, "W.H.O. Issues Higher Alert on Swine Flu, With Advice," New York Times, April 28, 2009.

And so did the Times of London:
The boy’s hometown, La Gloria, is also close to a pig farm that raises almost 1 million animals a year. The facility, Granjas Carroll de Mexico, is partly owned by Smithfield Foods, a Virginia-based US company and the world’s largest producer and processor of pork products. Residents of La Gloria have long complained about the clouds of flies that are drawn the so-called “manure lagoons” created by such mega-farms, known in the agriculture business as Confined Animal Feeding Operations (CAFOs). It is now known that there was a widespread outbreak of a powerful respiratory disease in the La Gloria area earlier this month, with some of the town’s residents falling ill in February. Health workers soon intervened, sealing off the town and spraying chemicals to kill the flies that were reportedly swarming through people’s homes.
Chris Ayres, "Mexico outbreak traced to 'manure lagoons' at pig farm," Times [of London] Online, April 28, 2009.

Wednesday [April 29] Morning Thoughts (Morning surveys and updates include Betsy McKay, "U.S. Confirms First Swine-Flu Death; Germany, U.K., Austria Confirm New Flu Cases," Wall Street Journal, April 29, 2009 ("U.S. health officials said swine flu has killed a 23-month-old child in Texas, the first U.S. death in the current outbreak and the first reported outside Mexico"), the BBC's "U.S. Reports First Swine Flu Death; New cases of the deadly swine flu virus have been confirmed as far afield as New Zealand and Israel, as the UN warns it cannot be contained," BBC News, April 28, 2009), and of course the Wall Street Journal's complete collection at "Swine Flu Coverage" (36 stories and features).

Pigs' Public Relations. Notwithstanding the mainstream media's seeming reluctance to be seen as taking on the pork industry by trying to uncover the cause, the source, of what's come to be called "swine flu" -- a subject one would think to be an attractive target for "investigative journalism" -- the large pig factories have been waging an embarrassingly disingenuous public relations campaign.

Lipstick on Pigs = "North American Flu"?! The pork industry is putting pressure on governments and the media to change the name from "swine flu" to something less, well, pork-related, like "North American flu" (notwithstanding the cases in New Zealand, Israel, Spain and Britain). (Similarly, the airline industry is trying to convince us there's no reason for us to stay home -- curtailing their profits along with our travel. Daniel Michaels and Susan Carey, "Airlines Could Be Affected if Passengers Curb Travel," Wall Street Journal, April 28, 2009.)

Agricultural groups . . . are successfully prodding the federal government to refer to the virus [as] H1N1.

The Agriculture Department, which used the term "swine influenza" as recently as Monday, clung to the anonymous term "H1N1 flu" in a statement Tuesday touting the safeness of U.S. pork. [NJ: The Secretary of Agriculture is former pork state Governor Tom Vilsack.] . . .

Richard Besser, acting director of [CDC said] . . . "That's [calling it "swine flu"] not helpful to pork producers. . . ."

[S]cientists say . . . viruses tend to be named after the first species in which they are discovered, and H1N1 was discovered in pigs decades ago [and] clearly had a long history in hogs before it made the leap into the human population . . ..

"The vast amount of material in it is in pigs," said [University of Minnesota's] Michael T. Osterholm . . ..

[T]he National Pork Producers Council has pestered health officials to stop calling it swine flu. "The whole industry is talking to the USDA and the White House," an industry lobbyist said. The American Farm Bureau Federation . . . [is] suggesting "hybrid influenza" . . ..

Smithfield Foods Inc. . . . prefers . . . "North American influenza." Swine flu "just has the wrong name," said [Smithfield CEO] C. Larry Pope . . ..

[During] . . . an outbreak of swine flu in 1976 . . . an industry group unsuccessfully pleaded for the name . . . "New Jersey flu."
Scott Kilman and Lauren Etter, "Pork Lobby Bristles at Swine Flu Label," Wall Street Journal, April 29, 2009.

Sadly, Pigs in the Oval Office Swine flu is perhaps the top news story today around the world. The WHO has moved the threat level toward pandemic from a 3 to 4 to 5 (on a six-point scale). The U.S. has now witnessed its first death from swine flu.

Swine flu is the name that scientists have used, consistent with past scientific naming practices, for the H1N1 virus for over 30 years -- until yesterday. We've all known the power of another kind of "pork" in Washington. Now we see the even greater power of the pork industry in actually putting words in the mouth of the President of the United States -- or, perhaps more precisely, taking the word "swine" out of his mouth. (Lest you think this was not a switch, see as late as Sunday afternoon, April 26, "Press Briefing on Swine Influenza," White House Press Office, April 26, 2009, at which the disease is consistently and repeatedly referred to as "swine flu.")

Although he led this evening's [April 29] news conference, appropriately, with the swine flu news the word "swine" (or "pigs," "hogs," "pork," "Smithfield" or "ham")was never mentioned either by him or any member of the mainstream media. (ABC's Charles Gibson, in his one-minute of commentary following the news conference spoke only of "flu.")

Now that is lobbying power! And a sad fact for all of us to contemplate.

Tomorrow we'll see the extent to which the mainstream media will be willing to mention the President's, and their, omission of capitulation this evening.

Safe to eat? But why do it? Senator Chuck Grassley, from the nation's largest pork producing state, Iowa, ceremoniously announced that he had just eaten a pork chop -- similar to former President George W. Bush's post 9/11 suggestion that the most appropriate response would be for the American people to "go shopping." In short, everything's normal; nothing to worry about. Although we've heard nothing regarding Grassley's health since, we can assume he's probably OK, and that the pork industry and health officials are probably correct to say that if we heat pork to over 160 degrees long enough it's probably safe to eat.

Risk Assessment. But why take the risk right now? It's a classic case of risk assessment (or benefit assessment) when it comes to medical information. Apparently the likelihood you'll get swine flu from eating pork is somewhere between slim and none at all. On the other hand, if you were to contract the disease there is at least some risk of death at worst and flu symptoms at best. Is there a benefit that outweighs that risk, a need to eat pork rather than other protein sources right now? No. Therefore, it's not irrational to, at a minimum, hold off on the pork right now. In fact, Russia has stopped importing pork from the U.S. and Mexico, in part for that reason, see above.

(I apply the analogous, reverse analysis to medical benefit. My doctor tells me the vitamin C I take is just ending up in the Iowa River. On the other hand, there's a widespread belief it can help reduce risk of colds during Iowa winters. There is no known harm from vitamin C consumption (within prescribed limits), and it doesn't cost very much. Given that there's some remote possibility of benefit, and no known risk of harm, I take some.)

Springfield's disingenuous defenses. Springfield is, understandably, trying to get out from under the cloud of flies and culpability that is swarming around its corporate headquarters and one-million-pig CAFO (confined animal feeding operation) in Mexico. ("'We are very comfortable that our pork is safe,' Smithfield president and chief executive Larry Pope said in an interview." Lauren Etter, "Mexico Tests Smithfield Hogs; U.S. Meat Company Says Its Pork Is Safe," Wall Street Journal, April 27, 2009.)

They are saying that no one ever got swine flu from eating Smithfield pork products, none of their Mexican workers have contracted the disease from their hogs, and none of the hogs have swine flu. I've already dealt with the first, and I frankly don't trust them with regard to the second and third.

Want a second opinion? Here's an excerpt from a column by "Dr. [Henry I.] Miller, a physician and molecular biologist, [who] is a fellow at Stanford University's Hoover Institution. He is a former flu researcher and was an official at the National Institutes of Health and the Food and Drug Administration from 1977 to 1994."

Flu viruses can be directly transmitted (via droplets from sneezing or coughing) from pigs to people, and vice versa. These cross-species infections occur most commonly when people are in close proximity to large numbers of pigs, such as in barns, livestock exhibits at fairs, and slaughterhouses. And, of course, flu is transmissible from human to human, either directly or via contaminated surfaces.

Pigs are uniquely susceptible to infection with flu viruses of mammalian and avian origin. This is of concern for a couple of reasons. First, pigs can serve as intermediaries in the transmission of flu viruses from birds to people. And when avian viruses infect pigs, they adapt and become more efficient at infecting mammals -- which makes them more easily transmitted and dangerous to humans.

Second, pigs can serve as hosts in which two (or more) influenza viruses infecting an animal simultaneously can undergo "genetic reassortment," a process in which pieces of viral RNA (the virus's genetic material, similar to DNA) are shuffled and exchanged, creating a new organism. The influenza viruses responsible for the world-wide 1957 and 1968 flu pandemics -- which killed about 70,000 and 34,000, respectively, in the U.S. -- were such viruses, containing genes from both human and avian viruses.
Henry I. Miller, "Understanding Swine Flu; The trouble starts in poor countries where too many people live in proximity to pigs and poultry," Wall Street Journal, April 29, 2009.

But none of Smithfield's defenses is really relevant even if any were true.

The question is whether the Smithfield operation, that confines pigs in very closed quarters, creates "lagoons" of waste, attracts swarms of flies, and is the geographical location where the disease seems to have begun, has something to do with the origins of swine flu.

Mexican health officials believe its origin is related to the flies in the pig manure (see above).

The Iowa researcher found that Iowa hog farmers had built up antibodies to swine flu in their bodies. That's good news and bad news. Antibodies are good; they help ward off disease; their creation is what vaccines are for (including flu vaccines). But if the farmers haven't been inoculated with a swine flu vaccine it must mean that they were exposed to the disease in some other way -- most likely as a result of being around either their hogs or the hogs' manure or the manure's flies (see above).

Pigs' politics mean investigations unlikely. The large factory CAFOs and packing houses are notoriously (a) politically powerful and, perhaps for that reason, (b) loosely regulated. There are many reasons for using this opportunity to review their practices -- however unlikely it may be that the officials who represent agricultural states, receive the industry's campaign contributions, and control the relevant committees of Congress will stop eating pork chops long enough to conduct such investigations. Those reasons include everything from unbelievable animal cruelty to the adverse impact on human health from industry practices to -- for those who enjoy eating meat -- the quality of the product.

Vegetarian thoughts. And this is also a good time to at least think about, even if not adopt, the path of vegetarians -- a growing number. Meat is related to the obesity epidemic and two of our biggest killers: cancer and heart disease. ("Now a new study of more than 500,000 Americans has . . . found that . . . the men and women who consumed the most red and processed meat were likely to die sooner, especially from one of our two leading killers, heart disease and cancer . . .." Jane E. Brody, "Paying a Price for Loving Red Meat," New York Times, April 27, 2009.)

A respect for animals is grounded for some in religious or philosophical beliefs that discourage, if not prevent, their eating cattle and hogs as much as eating their pet cat. Their notion of living in harmony with nature involves granting a "right to life" to all species, not just humans. With a growing global population, and pressure on land and water, there's an environmental benefit from vegetable protein sources that require roughly one-tenth the land per gram of protein as the land required for animal protein.

Just some things to think about as we watch the growing numbers of those infected with, and dying from, swine flu.

April 30 Blockbuster: Why Healthy Hogs Harm Humans

Sounds impossible, doesn't it? It's not.

It turns out that the corporate pork industry's confined animal feeding operations (CAFOs), and its procedures, are incubating more than just swine flu. The problem for the human species is not just buried in the hog manure lagoons with the flies. It's also in the antibiotics force-fed to healthy pigs.

The New York Times Nicholas Kristol explains it all in a "must read" column of his from last month [March]. Here are some excerpts:

We don’t add antibiotics to baby food and Cocoa Puffs so that children get fewer ear infections. That’s because we understand that the overuse of antibiotics is already creating “superbugs” resistant to medication.

Yet we continue to allow agribusiness companies to add antibiotics to animal feed so that piglets stay healthy and don’t get ear infections. Seventy percent of all antibiotics in the United States go to healthy livestock, according to a careful study by the Union of Concerned Scientists — and that’s one reason we’re seeing the rise of pathogens that defy antibiotics.

These dangerous pathogens are now even in our food supply. Five out of 90 samples of retail pork in Louisiana tested positive for MRSA — an antibiotic-resistant staph infection — according to a peer-reviewed study published in Applied and Environmental Microbiology last year. . . .

[These] results should sound an alarm bell, for MRSA already kills more than 18,000 Americans annually, more than AIDS does. . . .

[A] new strain [of MRSA] called ST398 is emerging and seems to find a reservoir in modern hog farms. Research by Peter Davies of the University of Minnesota suggests that 25 percent to 39 percent of American hogs carry MRSA. . . .

[P]igs could pass on the infection by direct contact with their handlers, through their wastes leaking into ground water (. . . antibiotic-resistant bacteria enter[] ground water from hog farms), or through their meat . . ..

Yet the central problem here isn’t pigs, it’s humans. . . . [T]he United States still bows to agribusiness interests by permitting the nontherapeutic use of antibiotics in animal feed. That’s unconscionable.

[A]ntibiotics in livestock feed were “a major component” in the rise in antibiotic resistance. . . . [M]ore antibiotics were fed to animals in North Carolina alone than were administered to the nation’s entire human population. . . .

Robert Martin, who led a Pew Commission on industrial farming that examined antibiotic use [asks], “So why give them [antibiotics] to healthy animals just so we can keep them in crowded and unsanitary conditions?”

The answer is simple: politics.

Legislation to ban the nontherapeutic use of antibiotics in agriculture has always been blocked by agribusiness interests. . . .

Louise Slaughter of New York, who is the sole microbiologist in the House of Representatives, said she planned to reintroduce the legislation this coming week.

“We’re losing the ability to treat humans,” [asserts Congress' sole microbiologist, Congresswoman Louise Slaughter, NY]. “We have misused one of the best scientific products we’ve had.” . . .

The Infectious Diseases Society of America has declared antibiotic resistance a “public health crisis” [citing the case of] a 17-year-old New Jersey girl who died from MRSA in 2006 [having] endured months in the hospital, . . . because the microbes were stronger than the drugs. . . .

So Mr. Obama and Mr. Vilsack, will you line up to curb the use of antibiotics in raising American livestock? That is evidence of an industrial farming system that is broken: for the sake of faster-growing hogs, we’re empowering microbes that endanger our food supply and threaten our lives.
Nicholas D. Kristof, "Pathogens in Our Pork," New York Times, March 14, 2009.


* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson

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Thursday, April 23, 2009

Lombardo and Mayor McCallion

April 23, 2009, 8:45 a.m.

How's Your Mayor? Compared to What?
(brought to you by*)

Things are getting a little heavy around the Lombardo mystery, so to give us all a little break I thought I'd do some research on how other cities, city councils, and mayors do it.

Is there an alternative to the management style of our City Council and Mayor?

As the Henny Youngman routine might have gone: "How's your Mayor?" "Compared to what?"

Well, compared to Hazel McCallion for instance.

Mississauga, Ontario, to the west of Toronto is no small town. It's the sixth largest city in Canada.

And the citizens of Mississauga have been re-electing their mayor, Hazel McCallion, in 11 consecutive elections over the past 31 years. Asked her secret, the approachable and charming McCallion says she "never stops campaigning" and "you have to look after your people."

Not incidentally -- as our City Council confronts its ill-fated, ongoing budget process not knowing its own priorities without a consultant (see below) -- McCallion has seen to it that her city remains debt free and now has a $700 million reserve.

Clearly, Mississauga has thought through its "governance model." Standing next to a detailed miniature model of the city she explains, "That's the future; we had a plan, so we made a model."

A former professional hockey player, Hazel McCallion is now 88 years old.

Oh, and her approval rating? 92%.

Watch her interview on the CBC's "Rick Mercer Report" from February 26, 2009, and let your imagination soar to what Iowa City's future could be:

Meanwhile, the stories continue: Chris Rhatigan, "Iowa City Budget Issues Still Loom; Acting Manager Plans to Stick to Timeline," Iowa City Press-Citizen, April 23, 2009, p. A1 ("In addition to having a new leader [Dale Helling], the council will re-examine hiring a consultant to conduct a community survey on city services"); Editorial, "What Happened, I.C. Council?" The Gazette, April 23, 2009, p. A4 ("[C]ouncil members should at least publicly explain the grounds for dismissing Lombardo and the general reasoning behind their move").

And here are my earlier blog entries on Lombardo

Nicholas Johnson, "River City's Problem: Council-Manager Governance," April 18, 2009

Nicholas Johnson, "Lombardo Firing Mystery," April 21, 2009

Nicholas Johnson, "More on Lombardo and 'Public Citizens,'" April 22, 2009

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson

# # #

Wednesday, April 22, 2009

More on Lombardo and 'Public Citizens'

April 22, 2009, 10:15 a.m., 11:30 a.m. (addition of "What can the City Council disclose?" and Press-Citizen editorial)

And The Beat (-ing up of the City Council) Goes On
(brought to you by*)

[See the earlier, related, Nicholas Johnson, "River City's Problem: Council-Manager Governance," April 18, 2009; Nicholas Johnson, "Lombardo Firing Mystery," April 21, 2009; and see below for what the City Council can legally disclose should it choose to do so.]

Gary Sanders holds the highest office in the land: "Public Citizen." That doesn't mean he's always right, any more than that fellow who holds the second-highest office in the land (President) is always right. I've disagreed with both of them in this blog and elsewhere, and am about to do it again.

But Sanders is a real community asset in terms of the process he represents -- regardless of what you think of the substantive positions he may take on any given issue.

In this morning's Press-Citizen he's complaining about the job the media has done covering the City Council. He contends if it had done a better job we'd all understand why Lombardo was fired. Gary Sanders, "Lombardo deserved firing, press didn't do its job," Iowa City Press-Citizen, April 22, 2009.

(Not incidentally, a "Hat's Off" kudo to the Press-Citizen editors for their consistent willingness to run criticism of the paper on its own pages. How many of us would be willing to do the equivalent in our own lives?

And another, if you're wearing two hats, for the revelation in this morning's editorial that, "On Monday, the Press-Citizen put in a records request asking for all e-mail exchanges between Lombardo and members of the council in the past few months. We also asked for any e-mails between councilors in which they mention Lombardo. The city has 10 days from then to respond to the request, and we will report anything that helps shed light on Lombardo's firing -- whether in terms of procedure or cause." (And in this connection see, below, "What can the City Council disclose?") Editorial, "Questions About Lombardo Before City Can Move On," Iowa City Press-Citizen, April 22, 2209.)

And speaking of newspapers, they're not doing so well financially these days. They're looking for alternative business models. One involves greater involvement of the community in reporting, and commenting about, the news. The Press-Citizen already does it to some degree with its op ed page (where Sanders appears along with "letters"), the blogs it hosts on its online edition, and the comments it permits there regarding its stories.

Imagine what a difference it would make if 10% -- shucks, if even 1% -- of Iowa City's residents would take on the "Public Citizen" role. Any individual Public Citizen could pick a public body, or official, to track as closely as Sanders says he does with the City Council -- the School Board, the County Board of Supervisors, the Board of Regents; the campaign contributions and votes (and their relationship) of each of our representatives in Des Moines and Washington.

Newspapers have always needed, and to some extent relied on, news and opinion contributions from their citizen-readers. They need it now more than ever.

I am not in a position to challenge any of Sanders' factual assertions regarding Lombardo's failings and why the City Council was right to fire him. I haven't tracked the City Council very closely, certainly not as closely as Gary Sanders.

But even accepting everything he asserts as true I think he's come to the wrong conclusion.

He writes:
Anyone who needs convincing that Lombardo should have been fired should watch the council's April 13 budget priorities meeting . . .. For two hours, the council was perplexed, upset and angry that Lombardo had not come to this meeting with what they had asked him to do -- suggest recommendations on cutting the budget.

Repeatedly the councilors would say that they wanted him to . . . present them with choices and recommendations, . . .. And repeatedly, Lombardo said he wanted some kind of broad framework or parameters first. . . .

That to me was a direct work order, and Lombardo was unwilling or unable to do as they requested. In this country, that is grounds for termination.
As Sanders describes the meeting it seems to me that Lombardo was right and the Council was wrong -- and that, therefore, his effort to get the Council to do its job was not only not "grounds for termination" it was grounds for commendation.

For similar reasons I would disagree with the Press-Citizen's characterization of the meeting in this morning's editorial: "the council asked Lombardo to give them recommendations for budget cuts, and he seemed to fail to grasp why he should do that." Editorial, "Questions About Lombardo Before City Can Move On," Iowa City Press-Citizen, April 22, 2209.

As a School Board member I used to say, "Well, you may not get any pay, but at least you get a lot of grief." City Council members get both grief and pay -- not that it should make any difference. If you accept a public responsibility you have an obligation to perform, pay or not.

But the fact is that being a member of our City Council is a paid position. It carries responsibilities. And among those responsibilities -- as I have often written, including in the two earlier blog entries from this past week -- is to think about, develop, and write in precise language regarding the "governance" rules, expectations, responsibilities, and relationships by which Council members agree to live and govern. (There's a literature about this. I prefer the John Carver approach. Others don't like it. There are alternatives.)

It is not the CEO's (City Manager's) job to tell the Board (Council) members what he and the staff think the Board (Council) should establish as their priorities and measurable goals for the City (what Carver calls "ends policies"). That's what Council members get the big bucks for, and what properly can only be done by the Council. It's hard work, no doubt; but it's their hard work..

The Daily Iowan has a page-one story about the Lombardo saga this morning that quotes a county supervisor with whom Lombardo worked in a prior role as county administrator in Michigan. The guy obviously thought well of Lombardo -- but that's not my point in quoting him:
Bill Sikkel, then-vice-chairman of Allegan County, spoke positively about Lombardo.

“My style of leadership is to delegate, pick the right people, and get to work,” said Sikkel, a retired Army colonel, noting Lombardo understood that philosophy and worked well with him.

Sikkel also said the word “fired” surprised him — adding Lombardo was a “very nice man” to work with, a sentiment he said could be iterated by most of his staff.

“I was very unhappy when he left,” he said. “We were blessed to have him.”
Anna Lothson, "Firing Puzzles Some; City Manager Michael Lombardo's Sudden Firing Remains a Surprise -- Sparking Mixed Reactions," The Daily Iowan, April 22, 2009, p. A1.

So why do I quote this? Because what that county vice-chairman is saying is that the first thing he did was to "delegate." Properly done, those delegations would have been accompanied with "delegation orders" -- documents that would both require and reflect that county board's thinking, deliberations, and expression of its measurable goals, its priorities, and the tasks required to get there; the relationship between board members and their "county administrator." In short, it would reflect a process similar to the execution of a workable governance model, or statement of expectations.

Something along that line is simply indispensable. It is what Sanders' report would suggest Lombardo was, quite properly, asking for. It is what the Council was, to quote Sanders (in reaching the opposite conclusion) "unwilling or unable to do as [he] requested."

In short, as I've suggested in the prior two blog entries about Lombardo, it continues to appear to me that the conflict, leading to Lombardo's peremptory firing came down to, or was the casualty of, the Council's failure to exercise its responsibility to address issues of "governance."

What can the City Council disclose?

Some Council members, and commentators, seem to have assumed that because Lombardo's firing was a "personnel" matter the Council is, therefore, prohibited from saying anything about it.

There are essentially three categories of "public records" when it comes to access by the public and the media: (1) matters the agency must make public, (2) matters the agency may make public, and (3) matters the agency may not make public.

Personnel matters fall into the second, not the third, category in Iowa.

Section 22.7 of the Iowa Code does, indeed, begin, "The following public records shall be kept confidential . . ." and does go on, in subsection 22.7(11), to include, "personal information in confidential personnel records of public bodies including . . . cities . . .."

However, and this is an enormous "however," that opening sentence continues: "unless otherwise ordered . . . by the lawful custodian of the records . . .."

In other words, however much the City Council members may choose to tell the citizens of Iowa City about their 7-0 termination of Lombardo is entirely up to the Council; it's their call whether to keep mum or go public.

The reason we don't know what happened is because they have deliberately and expressly chosen not to tell us.

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson

# # #

Tuesday, April 21, 2009

Lombardo Firing Mystery

April 21, 2009, 6:30 a.m.

Reason for Lombardo Departure Looking More and More Like Governance Issues
(brought to you by*)

[Today's blog entry is a follow-up to Nicholas Johnson, "River City's Problem: Council-Manager Governance; The Necessity of Governance Theory and Practice," April 18, 2009, which see for text and links.]

For reasons as unknown as the Council's reasons for firing Michael Lombardo, the two page-one stories under the Press-Citizen's bold, banner, top-of-the-fold headline this morning -- "What Does Firing Mean For City?" -- are nowhere to be found on its online site.

The page-three story -- "Council OKs Opening Sidewalks" -- is there. Indeed, it is the top-listed story for the day in the online edition. So it's not like the Tuesday paper's stories haven't been posted yet.

[It's a relatively insignificant sidebar compared with Lombardo's termination, but what's this sidewalk deal about? If I want to rent an apartment or office up over a downtown merchant's store I'll have to pay. Why? It's "her property." Well, the sidewalk is "my property," as a taxpayer. Either the City holds title to the property, and taxpayers paid to pave it, or if the merchant paid to pave it the use of sidewalks is controlled by the City. Last time I talked to a City worker, cleaning up vomit and blood from in front of the bars on Sunday early morning, the City was footing that bill. Since I have to clean the snow from the walks in front of my home, I assume if the taxpayers are paying to clean up the walks in front of the merchant's business the walks must belong to the City. Moreover, if I were paying to use the merchant's apartment it would not be a business for me. When the merchant uses my sidewalk he is profiting from using my property. What are the merchants paying back to the City for their profitable use of this very valuable real estate? Or is it just a gift from grateful taxpayers? "Inquiring minds would like to know." This is not about the merits of the use itself -- "ugly clutter" to some is a "charming addition to quality of life" for others -- so you can take your pick. I'm just conceerned about basic financial fairness.]

But the stories suggest the reason for his departure is looking more and more like the result of the Council's poor handling of fundamental governance issues. Brian Morelli, "Area Officials Have Differing Views on Decision's Impact," Iowa City Press-Citizen, April 21, 2009, p. A1, and Chris Rhatigan, "Lombardo Says No Reason Given," Iowa City Press-Citizen, April 21, 2009, p. A1.

Morelli's story reveals, to no one's surprise, that there appear to be no advocates for the view that the City is actually better off as a result of the City Council's mysterious and peremtory firing of its City Manager, Michael Lombardo. Some point out how the City is worse off, trying to manage without a City Manager "major business such as the upcoming sales tax vote, flood recovery or . . . budget cuts." The best that Council members can come up with is Mayor Regenia Bailey's comment that "We have an excellent staff in place. I don't have any concern about the city's operations."

In short, the Council's actions have in fact harmed the City's welfare -- and when its timing couldn't have been worse.

Given the terms of his contract, that provide for a forfeiture of any severance pay in the event of violations of law, financial or moral terpitude, and the fact that the $80,000 severance has been paid, we need to look for other possible reasons for the termination.

Is it, perhaps, that Lombardo "doesn't play well with others"? No, that can't be the reason either; not if local leaders are to be believed.

Given the City Council's pro-business positions (see above), one would assume the Chamber of Commerce would tend to back the Council's decision -- indeed, that it might even have dictated it. But no. Chamber President Nancy Quellhorst is quoted in Rhatigan's story as saying, "I enjoyed working with him very much, and I'm disappointed to no longer have than opportunity."

Lombardo's counterpart in neighboring Coralville, City Administrator Kelly Hayworth, is quoted as saying, "I thought he was an excellent leader. We worked a lot together . . .."

Johnson County Board of Supervisors Chairman Terrence Neuzil said Lombardo was a "strong leader" and that he was "surprised he was fired." Neuzil said of his trip to Washington with Lombardo, "Where he will be missed is his ability to bring in dollars into the community. He certainly knew the D.C. game very well."

So even by a process of elimination that's why I think the problems may relate back to the Council's failure to do what should be every board, commission, committee or council's "job one" -- understanding, addressing, and articulating its basic governance principles.

What is the role of the council as a body? How does it intend to respond to the temptations to either micro-manage or rubber stamp staff decisions and actions? What does it view as acceptable, and unacceptable, relationships and behavior between and among council members? What self-imposed limits is it prepared to abide by in terms of actions by individual council members, as distinguished from actions taken by the council as a body? What does it believe to be the highest priority measurable goals for the city government, and what are their metrics?

How does the council propose to interact with the city manager? What, and how much, is it expressly delegating to the manager's discretion (and is this a negative grant -- "stop until we say 'go'" (come to us with everything first) -- or an affirmative grant -- "go unless we've said 'stop'" (i.e., articulated prohibitions))? Will it only communicate with the staff through the manager? What does it believe to be the manager's "job description"; what are his or her goals and how are they to be measured (if they are different from the council's institutional goals)?

There's a significant body of literature about board governance. I happen to prefer the John Carver model -- primarily because I've worked with it and know it best. There will always be some who don't like it. Fortunately for them there are many more to choose from. And, as I've itemized above, and "John Barleykorn" put in a comment this morning on last Saturday's blog entry [Nicholas Johnson, "River City's Problem: Council-Manager Governance; The Necessity of Governance Theory and Practice," April 18, 2009], "You don't need to have a specific model, you just need clearly defined roles and expectations."

Governance models, or "expectations," are of necessity the personal responsibility of individual board members (in this case city council members) not the CEO (in this case city manager). Their drafting cannot be delegated to a "consultant" or staff member.

My guess is that the Iowa City City Council -- with this responsibility for Council-City Manager governance models, or defined roles -- provided neither.

There are hundreds of adverse consequences from that failure by any council or board; unfortunate, costly, petulant dismissals of competent CEOs (or city managers) are only among the most serious.

And why does Lombardo think he was terminated? He hasn't a clue -- at least none provided by the Council:
Former city manager Michael Lombardo said the Iowa City Council didn't tell him why they chose to terminate his contract at a closed-door meeting Friday [April 17] afternoon.

"There wasn't any discussion. They have their reasons, and they chose not to share those reasons with me," he said.

The only reason they provided him with was that he was "not a good fit," he said.
And that for someone who came out on top in a rigorous nationwide search, was described by Council members at the time as "a very good fit," and who received, we are told, very positive performance reviews three months, and six months, into his nine-month's of service.

I don't think this story is going to evaporate -- even if it's not on the Press-Citizen's Web site.

8:11 a.m. Full texts of the stories are now available on the Press-Citizen's Web site, Rhatigan's and Morelli's.

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson

# # #

Monday, April 20, 2009

Susan Boyle as General Semantics Lesson

April 20, 2009, 6:00 p.m.

What Are General Lessons From Susan Boyle Phenomenon?
(brought to you by*)

With an estimated 100 million views of Susan Boyle's performance by this morning [April 20], up from 50 million total for 200 different videos as of Friday, as blogger Adam Ostrow put it, "Between Twitter, Facebook, and other social media sites -- not to mention mainstream media -- the performance has been impossible to miss this week." "Susan Boyle Video 'May Be Top YouTube Hit,'" Sky News, April 20, 2009.

There are profound lessons from this story with implications for everything from our personal relationships to the "war on terrorism," "toxic assets," and our government's current weighing of the benefits and costs of starting yet a third war, this time in -- are you ready for this? -- Somalia. Greg Jaffe and Karen DeYoung, "Obama Team Mulls Aims Of Somali Extremists; Seeing Potential Terror Threat, Officials Debate Their Options," Washington Post, April 11, 2009, p. A1.

We'll get to those lessons in a minute. Meanwhile, if you were not among the 100 million, here's The Guardian's take on what all the fuss is about.
Is Susan Boyle ugly? Or are we? On Saturday night she stood on the stage in Britain's Got Talent; small and rather chubby, with a squashed face, unruly teeth and unkempt hair. She wore a gold lace dress . . .. Interviewed by Ant and Dec beforehand, she told them that she is unemployed, single, lives with a cat called Pebbles and has never been kissed. Susan then walked out to chatter, giggling, and a long and unpleasant wolf whistle.

Why are we so shocked when "ugly" women can do things, rather than sitting at home weeping and wishing they were somebody else? Men are allowed to be ugly and talented. . . . But a woman has to have the bright, empty beauty of a toy -- or get off the screen. We don't want to look at you. . . .

Simon Cowell, now buffed to the sheen of an ornamental pebble, asked this strange creature, this alien, how old she was. "I'm nearly 47," she said. Simon rolled his eyes until they threatened to roll out of his head, down the aisle and out into street. . . . The camera cut to the other male judge, Piers Morgan, who winced. . . . The audience's reaction was equally disgusting. They giggled with embarrassment, and when Susan said she wanted to be a professional singer, the camera spun to a young girl who . . . gave an "As if!" squeak and smirked. Amanda Holden, the female judge, . . . chose neutrality. And then Susan sang. She stood with her feet apart, like a Scottish Edith Piaf, and very slowly began to sing Les Miserables' I Dreamed A Dream. It was wonderful.

The judges were astonished. They gasped, they gaped, they clapped. They looked almost ashamed. I was briefly worried that Simon might stab himself with a pencil, and mutter, "Et tu, Piers, for we have wronged Susan in thinking that because she is a munter, she is entirely useless." How could they have misjudged her, they gesticulated. But how could they not? No makeup? Bad teeth? Funny hair? Is she insane, this sad little Scottish spinster, beloved only of Pebbles the Cat?

When Susan had finished singing, and Piers had finished gasping, he said . . . "When you stood there with that cheeky grin and said, 'I want to be like Elaine Paige', everyone was laughing at you. No one is laughing now." And it was over to Amanda Holden . . .. "I am so thrilled," said Amanda, "because I know that everybody was against you." "Everybody was against you," she said, as if Susan might have been hanged for her presumption. . . .

We see this all the time in popular culture. . . . This lust for homogeneity in female beauty means that when someone who doesn't resemble a diagram in a plastic surgeon's office steps up to the microphone, people fall about and treat us to despicable . . . gestures of amazement. . . .

But Susan Boyle will be the freakish exception that makes the rule. By raising this Susan up, we will forgive ourselves for grinding every other Susan into the dust. . . .
Tanya Gold, "It wasn't singer Susan Boyle who was ugly on Britain's Got Talent so much as our reaction to her," The Guardian, April 16, 2009.

See also, Jill Lawless, "Susan Boyle Video: Britain's Singing YouTube Sensation," Associated Press/Huffington Post, April 16, 2009 (with a link to the original video).

Of course, one of the lessons from this episode is obvious. It's just one more example of the way in which television perceives, and presents, women. There's a substantial literature on this subject: the impact of these male prejudices -- for they are almost always the judgments of men, and they certainly reflect prejudices -- upon the ways in which women are treated in the broader society. Look at some of those early TV shows from the 1950s sometime. If those portrayals of women were accurate what employer would ever offer them the same pay as a man? And, accurate or not, they certainly had their influence on employers' judgment. There simply were no (or at least very few) serious roles for women of any age, and virtually none for any beyond their late 30s in Hollywood's episodic television series and feature films -- until they became old enough to play amusing character actor roles.

Such progress as there has been in the years since is so noteworthy simply because it represents such a contrast with those early years. And as Tanya Gold writes, and as Susan Boyle's experience displayed, we still have a long way to go.

In addition to the impact on women, think of the stereotypes applied to those who wish to enter our universities, or our companies -- the law firm that will only hire from among Harvard and Yale graduates in the top 10% of their class -- or our personal company, as dates or spouses.

However significant these issues may be, for purposes of this blog entry they are but a sub-set of much larger issues.

Following World War II, those who were reflective about it, and who sought a world at peace, focused among other things on the absolute imperative that atomic weapons not be used again lest all life on earth be destroyed, and on the role of propaganda as used by Hitler. As I quoted Noam Chomsky last week as saying, "Take a look at Germany. In the 1920s, Germany was the absolute peak of Western civilization, in the arts and the sciences. It was regarded as a model of democracy and so on. I mean, ten years later, it was the depths of barbarism. . . ." Nicholas Johnson, "Can Economy Produce Americanized Hitler?" April 15, 2009.

How could this have happened? Why would a nation's population come to hate an entire sub-group of individuals? Because they'd been "carefully taught" -- as Richard Rogers and Oscar Hammerstein spelled out in their 1949 musical, "South Pacific"
You've got to be taught before it's too late,
Before you are six or seven or eight,
To hate all the people your relatives hate,
You've got to be carefully taught!

Why is it that the human species has been so seemingly successful in developing its material tools, through science, engineering and manufacturing, and yet seems to have such serious inter-personal problems -- up to and including war?

Among the directions taken by these post-War seekers of peace was the development of dozens of skills involving sophistication about language, skills and analyses that came to be called "general semantics" -- at least a part of which was an effort to apply "the language of science," or the "scientific method," to everyday life. We humans are unique amongst the other animals primarily as a result of our ability to create and manipulate symbols of many kinds. And yet, as one general semanticist put it, one of the results is that the human species seems to be the only animal species able to talk itself into difficulties that would not otherwise exist.

Why does propaganda work? What understandings and skills would we need to develop in order to combat its power? How could we use our language in ways that would create fewer problems for ourselves? To what extent is depression a consequence of the way we talk to ourselves about ourselves? (See "Verbal Cocoons" and the "IFD disease" in the book People in Quandaries, linked below.)

These are questions that have occurred, to some extent, to everyone from Rogers and Hammerstein, to Shakespeare, to Edward R. Murrow, to the creator of "Pogo," Walt Kelly.

Broadcasting's legendary Edward R. Murrow concluded his Peabody Award-winning "See It Now" episode regarding Senator Joseph McCarthy, "The actions of the junior senator from Wisconsin have caused alarm and dismay . . . and whose fault is that? Not really his; he didn't create this situation of fear; he merely exploited it, and rather successfully. Cassius was right, 'The fault, dear Brutus, is not in our stars, but in ourselves.'" "Edward R. Morrow," En*Cyclopedia, State Library of North Carolina; the quote is from Shakespeare, Julius Caesar, Act I, Scene ii.

Walt Kelly, creator of the "Pogo" comic strip, is perhaps best remembered for his comparable line on a 1971 Earth Day poster: "we have met the enemy and he is us." "Pogo (comics)," Wikipedia.

This is not the time or place to be trying to "summarize" a semester-long course, or the body of literature that is thought of as "general semantics."

But Susan Boyle did inspire me to think about general semantics once again, and what it has to teach us about, among other things, the phenomenon she created and why. If she also inspires you to find out more about general semantics then my efforts with this blog entry will have been worthwhile.

If you're interested, here are a couple of Web sites with which to begin:

Wendell Johnson, People in Quandaries, Ch. 1, "Verbal Cocoons," (1946) ("Quandaries, then, are rather like verbal cocoons in which individuals elaborately encase themselves, and from which, under circumstances common in our time, they do not tend to hatch. The peculiar structure of these cocoons appears to be determined in great measure by the structure of . . . the language which we so unconsciously acquire and so unreflectively employ.").

Steve Stockdale, "General Semantics on the Internet," ETC.: A Review of General Semantics, March 22, 2000, and here on Steve Stockdale's "This Is Not That" Web site.

S.I. Hayakawa and Alan R. Hayakawa, Language in Thought and Action (5th ed. 1991).

Samples of some of Nicholas Johnson's writing about general semantics:

Nicholas Johnson, "Searching for the Right Word: The Semantics of Heterosexual Relationships," ETC.: A Review of General Semantics, Vol. 36, No. 1, pp. 6-15, Spring (March) 1979.

Nicholas Johnson, "General Semantics: The Next Generation,"
Alfred Korzybski Memorial Lecture, Institute of General Semantics, November 3, 1995, Institute of General Semantics, General Semantics Bulletin, No. 63, pp. 22-44, 1996.

Nicholas Johnson, "Governing America: 'What do you mean?' and 'How do you know?'"
Address to a National Issues Forum Co-sponsored by the Grant Wood Area Education Agency, Herbert Hoover Presidential Library, and the Kettering Foundation, Herbert Hoover Presidential Library Auditorium, West Branch, Iowa, April 3, 1997.

Nicholas Johnson, "Professor Yin Says 'No' to Bug Burgers,", September 16, 2006.

Nicholas Johnson, "General Semantics, Terrorism and War," Keynote Address, "The World in Quandaries: Celebrating Two 60th Anniversaries (People in Quandaries and the New York Society for General Semantics, and the 8th anniversary of the Media Ecology Association), Fordham University, New York City, September 8, 2006 (including: General Semantics: The Ultimate Interdisciplinary Tools; General Semantics as Verbal Peace Movement; War: From WWII, to Viet Nam, to Iraq; War: Military Control of Civilians and the Powell Doctrine; "War" on "Terrorism"; What We Can Do), ETC.: A Review of General Semantics, Vol. 64, No. 1, pp. 45-64, January 2007.

And, without links . . .

Nicholas Johnson, "Freedom, Fun and Fundamentals: Defining Digital Progress in a Democratic Society," ETC.: A Review of General Semantics, International Society for General Semantics, Vol. 51, No. 2, Summer (June 22), 1994, pp. 189-208.

Nicholas Johnson, "The Semantics of Computer Communications," ETC.: A Review of General Semantics, Vol. 45, No. 3, pp. 250-54, Fall 1988.

Nicholas Johnson Commentary on Iraq War and Terrorism Involves Application of General Semantics Principles Without Expressly Discussing Them

"Perspective on Military Murder and the Mission at Hand," (Iowa City Press-Citizen, July 2, 2006

"The Politics of Domestic Spying," (Guest Opinion, Daily Iowan, January 19, 2006)

"Lessons from Abu Ghraib" (Guest Opinion, Daily Iowan, May 11, 2004)

"War in Iraq: The Military Objections" (advanced text for presentation at the University of Iowa College of Law's "International Law Talks: War with Iraq," February 27, 2003)

"Ten Questions for Bush Before War" (Guest Opinion, Daily Iowan, February 4, 2003)

"Capitalists Can Help U.S. Avert War with Iraq" (op ed, Iowa City Press-Citizen, Sunday Insight, October 6, 2002

"Tell the Rest of the Story" (op ed, Iowa City Gazette, October 2, 2002)

"Between Iraq and a Hard Place" (op ed, Omaha World-Herald, August 13, 2002)

"Search for Better Response Than War: Don't Reward the Terrorists, But Understand Their Interests" (op ed, Des Moines Sunday Register, June 30, 2002)

"Rethinking Terrorism" (text of presentation at National Lawyers Guild Conference, University of Iowa, Iowa City, Iowa March 2, 2002)

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
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Saturday, April 18, 2009

River City's Problem: Council-Manager Governance

April 18, 2009, 1:00 p.m.

The Necessity of Governance Theory and Practice
(brought to you by*)

[And see the follow up to this blog entry at Nicholas Johnson, "Lombardo Firing Mystery," April 21, 2009.]

The Iowa City City Council has peremptorily fired its city manager -- the one it said last April, after its nine-month search, was "an absolute great fit for Iowa City . . . [who] had all the qualities we were looking for." Gregg Hennigan, "Council Fires I.C. manager; Mayor: It's a Personnel Matter," The Gazette, April 18, 2009, p. A1 (quoting Council Member Mike O'Donnell). I hadn't noticed that he'd gained any weight over the last 11 months, but apparently he no longer "fits." Lee Hermiston and Brian Morelli, "City Council Fires Lombardo; Ex-City Manager Says Fit Wasn't Right," Iowa City Press-Citizen, April 18, 2009, p. A1.

The Press-Citizen's Editorial Board, which tracks the City Council's personalities and actions much closer than I do, editorializes this morning, "in recent weeks, we've seen Lombardo and the Iowa City Council publicly debate who is responsible for setting priorities, who is responsible for implementing those priorities and where does the buck actually stop." Editorial, "City Left With No Manager at a Very Bad Time," Iowa City Press-Citizen, April 18, 2009, p. A12.

That language is a description of a "governance" problem.

A letter writer (who must have written before the firing) even uses the word. "What I expect from local government is a prioritization of needs . . .. Please, then, keep funding the library -- perhaps even go check out some books on governance." Steve Radosevich, "Council's Skills Leave a Lot to be Desired," Iowa City Press-Citizen, April 18, 2009, p. A12.

This is something with which I've offered to help the City Council in the past -- for free, of course. No interest was expressed.

Two years ago I sensed a similar problem with the Iowa Board of Regents, and offered them the blog entry, Nicholas Johnson, "An Open Letter to Regents on 'Governance,'" April 17, 2007 -- much of which would be directly applicable to the City Council-City Manager relationship.

Earlier, as a member of the Iowa City Community School District Board I worked with my fellow board members in actually implementing the approach of one of our nation's leading governance gurus, John Carver. The history of that effort is available on the Web page, Nicholas Johnson, "Board Governance Theory and Practice," April 28, 2000. That site also contains a link to a summary article of his that lays out the basic principles for those who would prefer not to read through his books.

You may have seen this poster about "Meetings," with the caption: "None of us is as dumb as all of us." [Credit: Despair, Inc.]

As John Carver says, "boards are incompetent groups of competent individuals." Or you may have heard the definition of a camel, as "a horse built by a committee."

Carver has successfully applied his principles to everything from the nation's largest Fortune 500 corporate boards to some of its smallest non-profits and school boards. His approach works with any institution governed by a group rather than a single administrator.

Carver contends that most boards -- or in this case city councils -- find themselves somewhere along a continuum from "rubber stamping" at one end to "micro-managing" on the other end (when they shouldn't be anywhere on that continuum), and that most instruction for boards only teaches them how to do the wrong things better.

Most of us enter into our roles as members of corporate or non-profit boards, multi-member public bodies (such as school boards or regulatory commissions) with some notion of substance (such as "education" in the case of a school board or the Board of Regents, or a city government's functions in the case of a city council) but little to no thought about governance process.

It's something the group has to perceive as an individual and group benefit, something each member wants to do. Otherwise it won't work. Carver has walked away from what would otherwise have been very lucrative work sessions once it became obvious that there was not that kind of commitment on the part of every member of the group. (Speaking of which, there's no need to hire Carver; the school board went through the process all on its own, relying on the books.)

Thinking through what that process should be, understanding and implementing a "governance" model (there are others besides Carver's), are among the most difficult jobs a city council member will ever undertake -- and given their responsibilities that's saying a lot. It takes individual study, research, hours of analytical thought and hopefully writing, the kind that causes little drops of blood to form on your forehead and drop onto the keyboard, before you are even ready to begin the group's discussion, agreement, and drafting that can produce your own specific application of basic governance principles. Although the process can be facilitated by an outsider, the end product is not something that can be delegated to a consultant or to staff. It has to be done by each individual council member.

No wonder most city councils and boards of all kinds aren't enthusiastic about undertaking such a task.

But there's a word for those who do. They are called "successful."

And their city managers tend to stay on the job for more than 11 months.

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson

# # #

Friday, April 17, 2009

This One's a 'Must Read'

April 17, 2009, 8:20 a.m.

What You've Always Wanted to Ask About the Financial Collapse
Except for Your Fear As to What the Answer Might Be

(brought to you by*)

Since June 23, 2006, I have written 639 entries for this blog.

Never before have I ever said something was a "must read."

Nor am I now saying that some creation of mine is a "must read."

But what I am prepared to say is that what I am going to tell you about, and encourage you to read for yourself -- or watch as an online video -- is a must read for all Americans.

No issues over the past year -- indeed, over the past 70-plus years -- come close to the significance of those surrounding the economic harm we're all now suffering, brought on by what turns out to be deliberate, knowing, criminal fraud perpetrated by the so-called leaders of our financial and political establishment.

This is something every American has an obligation to understand -- as best we can, given the efforts of those responsible to cover up the facts (notwithstanding their professed commitment to "transparency") and the seeming lack of motivation by the establishment media (as with the onset of the second Iraq War) to investigate and report what's going on. For our sake and that of the future generations who will be paying for these crimes, we need to know what happened -- historically and recently -- that brought us to where we are, who played what roles, why they're not even being replaced let alone prosecuted, and what's going on now in Washington and Wall Street.

For those facts turn out to be far more startling and worse than anything I've even imagined, let alone actually asserted in any of the 47 blog entries I've uploaded on this subject over the past eight months (and are linked from the bottom of this entry).

What I'm referring to is Bill Moyers' interview with William K. Black, broadcast by PBS on the April 3, 2009, "Bill Moyers Journal." Here is the video, and a transcript, of that interview.

Only a smattering of brief excerpts are going to be reproduced here, but they should be enough to prompt you to want to watch, or read, the entire exchange.

First off, just who is this William K. Black? Here are some excerpts from his Web page at the University of Missouri-Kansas City School of Law (where you will find more, if you're interested):
Associate Professor of Economics and Law; A.B. (University of Michigan); J.D. (University of Michigan Law School); Ph.D. (University of California at Irvine) . . .

Bill Black is an Associate Professor of Economics and Law at the University of Missouri – Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics.

He was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and General Counsel of the Federal Home Loan Bank of San Francisco, and Senior Deputy Chief Counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. His regulatory career is profiled in Chapter 2 of Professor Riccucci's book Unsung Heroes (Georgetown U. Press: 1995), Chapter 4 (“The Consummate Professional: Creating Leadership”) of Professor Bowman, et al’s book The Professional Edge (M.E. Sharpe 2004), and Joseph M. Tonon’s article: “The Costs of Speaking Truth to Power: How Professionalism Facilitates Credible Communication” Journal of Public Administration Research and Theory 2008 18(2):275-295.
In short, Black is not just a member of cable television's shouting, "chattering class." In terms of education and experience, he knows what he's talking about.

Here's how Bill Moyers introduced him:
For months now, revelations of the wholesale greed and blatant transgressions of Wall Street have reminded us that "The Best Way to Rob a Bank Is to Own One." In fact, the man you're about to meet wrote a book with just that title. It was based upon his experience as a tough regulator during one of the darkest chapters in our financial history: the savings and loan scandal in the late 1980s. . . .

Bill Black was in New York this week for a conference at the John Jay College of Criminal Justice where scholars and journalists gathered to ask the question, "How do they get away with it?" Well, no one has asked that question more often than Bill Black. . . .

During the savings and loan crisis, it was Black who accused then-house speaker Jim Wright and five US Senators, including John Glenn and John McCain, of doing favors for the S&L's in exchange for contributions and other perks. The senators got off with a slap on the wrist, but so enraged was one of those bankers, Charles Keating — after whom the senate's so-called "Keating Five" were named — he sent a memo that read, in part, "get Black — kill him dead." . . .

Now Black is focused on an even greater scandal, and he spares no one — not even the President he worked hard to elect, Barack Obama. But his main targets are the Wall Street barons, heirs of an earlier generation whose scandalous rip-offs of wealth back in the 1930s earned them comparison to Al Capone and the mob, and the nickname "banksters."
Here are some excerpts from the interview. To give the text a little more appearance of organization, and to find what you may be looking for, I have put in bold "headings" of sorts, either emphasizing their words or [bracketed inserts] of my own.

BILL MOYERS: How did they do it? . . .

WILLIAM K. BLACK: Well, the way that you do it is to make really bad loans, because they pay better. Then you grow extremely rapidly, in other words, you're a Ponzi-like scheme. And the third thing you do is we call it leverage. That just means borrowing a lot of money, and the combination creates a situation where you have guaranteed record profits in the early years. That makes you rich, through the bonuses that modern executive compensation has produced. It also makes it inevitable that there's going to be a disaster down the road.

BILL MOYERS: So you're suggesting, saying that CEOs of some of these banks and mortgage firms in order to increase their own personal income, deliberately set out to make bad loans?


BILL MOYERS: How do they get away with it? I mean, what about their own checks and balances in the company? What about their accounting divisions?

WILLIAM K. BLACK: All of those checks and balances report to the CEO, so if the CEO goes bad, all of the checks and balances are easily overcome. And the art form is not simply to defeat those internal controls, but to suborn them, to turn them into your greatest allies. And the bonus programs are exactly how you do that. . . .

BILL MOYERS: Why did they call them liars' loans? . . .

WILLIAM K. BLACK: Liars' loans mean that we don't check. You tell us what your income is. You tell us what your job is. You tell us what your assets are, and we agree to believe you. We won't check on any of those things. And by the way, you get a better deal if you inflate your income and your job history and your assets. . . . [T]hey were also called, in the trade, ninja loans . . . no income verification, no job verification, no asset verification. . . . One company produced as many losses as the entire Savings and Loan debacle. . . . IndyMac specialized in making liars' loans. In 2006 alone, it sold $80 billion dollars of liars' loans to other companies. $80 billion. . . . Even Ronald Reagan, you know, said, "Trust, but verify." They just gutted the verification process. We know that will produce enormous fraud, under economic theory, criminology theory, and two thousand years of life experience.

BILL MOYERS: Is it possible that these complex instruments were deliberately created so swindlers could exploit them? [NJ: And the role of AAA ratings.]

WILLIAM K. BLACK: Oh, absolutely. This stuff, the exotic stuff that you're talking about was created out of things like liars' loans, that were known to be extraordinarily bad.

And now it was getting triple-A ratings. Now a triple-A rating is supposed to mean there is zero credit risk. So you take something that not only has significant, it has crushing risk. That's why it's toxic. And you create this fiction that it has zero risk. That itself, of course, is a fraudulent exercise. And again, there was nobody looking, during the Bush years. So finally, only a year ago, we started to have a Congressional investigation of some of these rating agencies, and it's scandalous what came out. What we know now is that the rating agencies never looked at a single loan file. When they finally did look, after the markets had completely collapsed, they found, and I'm quoting Fitch, the smallest of the rating agencies, "the results were disconcerting, in that there was the appearance of fraud in nearly every file we examined."

BILL MOYERS: So if your assumption is correct, your evidence is sound, the bank, the lending company, created a fraud. And the ratings agency that is supposed to test the value of these assets knowingly entered into the fraud. Both parties are committing fraud by intention.

WILLIAM K. BLACK: Right, and the investment banker that — we call it pooling — puts together these bad mortgages, these liars' loans, and creates the toxic waste of these derivatives. All of them do that. And then they sell it to the world and the world just thinks because it has a triple-A rating it must actually be safe. Well, instead, there are 60 and 80 percent losses on these things, because of course they, in reality, are toxic waste. . . .

BILL MOYERS: Is there a law against liars' loans?

WILLIAM K. BLACK: Not directly, but there, of course, many laws against fraud, and liars' loans are fraudulent. . . . because they're not going to be repaid and because they had false representations. They involve deceit, which is the essence of fraud.

BILL MOYERS: Why is it so hard to prosecute? Why hasn't anyone been brought to justice over this? [NJ: And FBI warning 2004, but radical reduction in FBI investigators today.]

WILLIAM K. BLACK: Because they didn't even begin to investigate the major lenders until the market had actually collapsed, which is completely contrary to what we did successfully in the Savings and Loan crisis, right? Even while the institutions were reporting they were the most profitable savings and loan in America, we knew they were frauds. And we were moving to close them down. . . .

[T]he FBI publicly warned, in September 2004 that there was an epidemic of mortgage fraud, that if it was allowed to continue it would produce a crisis at least as large as the Savings and Loan debacle. And that they were going to make sure that they didn't let that happen. . . [T]his crisis is . . . certainly 100 times worse than the Savings and Loan crisis [and yet there are only] one-fifth as many FBI agents [available to investigate the crimes involved in it] as worked the Savings and Loan crisis. . . .

[NJ: Role/responsibility of President Clinton, Summers, Rubin, Senator Graham]

WILLIAM K. BLACK: There were two really big things, under the Clinton administration. One, they got rid of the law that came out of the real-world disasters of the Great Depression. We learned a lot of things in the Great Depression. And one is we had to separate what's called commercial banking from investment banking. That's the Glass-Steagall law. But we thought we were much smarter, supposedly. So we got rid of that law, and that was bipartisan.

And the other thing is we passed a law, because there was a very good regulator, Brooksley Born, that everybody should know about and probably doesn't. She tried to do the right thing to regulate one of these exotic derivatives that you're talking about. We call them C.D.F.S. And Summers, Rubin, and Phil Graham came together to say not only will we block this particular regulation. We will pass a law that says you can't regulate. And it's this type of derivative that is most involved in the AIG scandal. AIG all by itself, cost the same as the entire Savings and Loan debacle. . . .

BILL MOYERS: Why are they firing the president of G.M. and not firing the head of all these banks that are involved?

WILLIAM K. BLACK: There are two reasons. One, they're much closer to the bankers. These are people from the banking industry. And they have a lot more sympathy. In fact, they're outright hostile to autoworkers, as you can see. They want to bash all of their contracts. But when they get to banking, they say, "contracts, sacred." But the other element of your question is we don't want to change the bankers, because if we do, if we put honest people in, who didn't cause the problem, their first job would be to find the scope of the problem. And that would destroy the cover up.

BILL MOYERS: The cover up? . . .

WILLIAM K. BLACK: Geithner is . . . covering up. Just like Paulson did before him. Geithner is publicly saying that it's going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they're allowing all the banks to report that they're not only solvent, but fully capitalized. Both statements can't be true. It can't be that they need $2 trillion, because they have masses losses, and that they're fine. . . .

Geithner . . . was one of our nation's top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. . . . as president of the Federal Reserve Bank of New York, which is responsible for regulating most of the largest bank holding companies in America. . . .

Until you get the facts, it's harder to blow all this up. And, of course, the entire strategy is to keep people from getting the facts . . . about how bad the condition of the banks is. So, as long as I keep the old CEO who caused the problems, is he going to go vigorously around finding the problems? Finding the frauds? . . . Taking away people's bonuses? . . .

[NJ: What's wrong with the Obama Administration approach? Refusing to obey the law.]

WILLIAM K. BLACK: . . . [1] [F]irst, the policies are substantively bad.

[2] Second, I think they completely lack integrity.

[3] Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they're refusing to obey the law. . . .

BILL MOYERS: So, Paulson could have done this? Geithner could do this?

WILLIAM K. BLACK: Not could. Was mandated--

BILL MOYERS: By the law.

WILLIAM K. BLACK: By the law. . . .

BILL MOYERS: What the reason they give for not doing it?

WILLIAM K. BLACK: They ignore it. And nobody calls them on it. . . .

[At a minimum] where's the Pecora investigation? . . . The Great Depression, we said, "Hey, we have to learn the facts. What caused this disaster, so that we can take steps, like pass the Glass-Steagall law, that will prevent future disasters?" Where's our investigation?

What would happen if after a plane crashes, we said, "Oh, we don't want to look in the past. We want to be forward looking. Many people might have been, you know, we don't want to pass blame. No. We have a nonpartisan, skilled inquiry. We spend lots of money on, get really bright people. And we find out, to the best of our ability, what caused every single major plane crash in America. And because of that, aviation has an extraordinarily good safety record. We ought to follow the same policies in the financial sphere. We have to find out what caused the disasters, or we will keep reliving them. And here, we've got a double tragedy. It isn't just that we are failing to learn from the mistakes of the past. We're failing to learn from the successes of the past.

[NJ: Best practices; worst practices]

WILLIAM K. BLACK: In the Savings and Loan debacle, we developed excellent ways for dealing with the frauds, and for dealing with the failed institutions. And for 15 years after the Savings and Loan crisis, didn't matter which party was in power, the U.S. Treasury Secretary would fly over to Tokyo and tell the Japanese, "You ought to do things the way we did in the Savings and Loan crisis, because it worked really well. Instead you're covering up the bank losses, because you know, you say you need confidence. And so, we have to lie to the people to create confidence. And it doesn't work. You will cause your recession to continue and continue." And the Japanese call it the lost decade. That was the result.

So, now we get in trouble, and what do we do? We adopt the Japanese approach of lying about the assets. And you know what? It's working just as well as it did in Japan.

BILL MOYERS: Yeah. Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?

WILLIAM K. BLACK: Absolutely. . . .

BILL MOYERS: But what might happen, at this point, if in fact they keep from us the true health of the banks?

WILLIAM K. BLACK: Well, then the banks will, as they did in Japan, either stay enormously weak, or Treasury will be forced to increasingly absurd giveaways of taxpayer money. We've seen how horrific AIG -- and remember, they kept secrets from everyone . . . Treasury and both administrations. The Bush administration and now the Obama administration kept secret from us what was being done with AIG. AIG was being used secretly to bail out favored banks like UBS and like Goldman Sachs. Secretary Paulson's firm, that he had come from being CEO. It got the largest amount of money. $12.9 billion. And they didn't want us to know that. And it was only Congressional pressure, and not Congressional pressure, by the way, on Geithner, but Congressional pressure on AIG. . . .

[NJ: What can we do? Why not keep CEOs in place?]

WILLIAM K. BLACK: We need some chairmen or chairwomen . . . in Congress, to hold the necessary hearings. And we can blast this out.

But if you leave the failed CEOs in place, it isn't just that they're terrible business people, though they are. It isn't just that they lack integrity, though they do. Because they were engaged in these frauds. But they're not going to disclose the truth about the assets.

BILL MOYERS: And we have to know that [the truth about the assets], in order to know what?

WILLIAM K. BLACK: To know everything. To know who committed the frauds. Whose bonuses we should recover. How much the assets are worth. How much they should be sold for. Is the bank insolvent, such that we should resolve it in this way? It's the predicate, right? You need to know the facts to make intelligent decisions. And they're deliberately leaving in place the people that caused the problem, because they don't want the facts. And this is not new. The Reagan Administration's central priority, at all times, during the Savings and Loan crisis, was covering up the losses. . . .

BILL MOYERS: Yeah, and this week in New York, at this conference, you described this as more than a financial crisis. You called it a moral crisis.



WILLIAM K. BLACK: Because it is a fundamental lack of integrity. But also because, if you look back at crises, an economist who is also a presidential appointee, as a regulator in the Savings and Loan industry, right here in New York, Larry White, wrote a book about the Savings and Loan crisis. And he said, you know, one of the most interesting questions is why so few people engaged in fraud? Because objectively, you could have gotten away with it. But only about ten percent of the CEOs, engaged in fraud. So, 90 percent of them were restrained by ethics and integrity. So, far more than law or by F.B.I. agents, it's our integrity that often prevents the greatest abuses. And what we had in this crisis, instead of the Savings and Loan, is the most elite institutions in America engaging or facilitating fraud. . . .

BILL MOYERS: It was relatively a handful of people.

WILLIAM K. BLACK: And their ideologies, which swept away regulation. So, in the example, regulation means that cheaters don't prosper. So, instead of being bad for capitalism, it's what saves capitalism. "Honest purveyors prosper" is what we want. And you need regulation and law enforcement to be able to do this. The tragedy of this crisis is it didn't need to happen at all. . . .

[NJ: Black's four-point plan.]

Now, going forward,

[1] get rid of the people that have caused the problems. That's a pretty straightforward thing, as well. Why would we keep CEOs and CFOs and other senior officers, that caused the problems? That's facially nuts. That's our current system. So stop that current system.

[2] We're hiding the losses, instead of trying to find out the real losses. Stop that, because you need good information to make good decisions, right?

[3] Follow what works instead of what's failed.

[4] Start appointing people who have records of success, instead of records of failure. That would be another nice place to start. There are lots of things we can do. Even today, as late as it is. Even though they've had a terrible start to the administration. They could change, and they could change within weeks. And by the way, the folks who are the better regulators, they paid their taxes. So, you can get them through the vetting process a lot quicker.

[End of transcript excerpts.]

Following this interview there was at least one person, a woman Black refers to only as "a commentator," who questioned Black's charge that Paulson and Geithner have violated the requirements of The Prompt Corrective Action Law. He answers at length in a statement (which at least I find persuasive) on the "Bill Moyers Journal" site, William K. Black on The Prompt Corrective Action Law. Here is a very brief sampling excerpt:
Before the legal minutia, let’s not lose sight of the policy issue

To review the bidding to date: there is a consensus among economists and white-collar criminologists (and senior regulators that have successfully resolved prior crises such as William Seidman, Edwin Gray, and Paul Volcker) that failing banks should be placed promptly into receivership if they cannot recapitalize. So the fundamental question, even if the PCA law was never passed, is what can the nation do to end the disastrous Paulson/Geithner policy of covering up the largest banks’ losses and leaving the CEOs and senior officers that caused their failures, often through fraud, in power? How many of those of us that voted for Mr. Obama believed that they were voting for a continuation of Bush’s failed financial regulatory policies? Given the terrible cost to taxpayers during the early years of the S&L debacle of “forbearance” for failed S&Ls, the horrific failure of Japan’s embrace of the cover up of its bank losses, and the great success of the vigorous reregulation of the S&L industry why would we adopt the failed strategy instead of the proven success? The way we reregulated the S&L industry was not simply an economic success, it was vital to restoring at least some integrity. We insisted on honest accounting, used prompt receiverships, and rooted out the control frauds. This led to over 1000 felony convictions related to the debacle – the greatest criminal justice success in history against elite white-collar criminals.

On to the legal specifics

The commentator argues that the PCA law does not mandate receiverships, citing exceptions to the mandatory language. None of the exceptions apply in the circumstances we are discussing and neither the Bush nor the Obama administration purports to be following such exceptions. Instead, what is occurring is a coverup designed to evade the PCA that relies on abusive accounting to hide the banks’ losses that arose due to mortgage and accounting fraud. There is a certain awful symmetry to thinking that the cure for accounting fraud is greater accounting fraud countenanced, even arguably mandated, by the government. Governmental abuse of accounting makes it far harder to prosecute bank officials that enriched themselves through accounting fraud.
At that site is also a link to an earlier piece he wrote on the subject, William K. Black, "Why is Geithner Continuing Paulson's Policy of Violating the Law?" Huffington Post, February 23, 2009.

Nicholas Johnson's Related Blog Entries

Nicholas Johnson, "Who's The Reason?" September 5, 2008

Nicholas Johnson, "How Much Do You Owe the Chinese?" September 6, 2008

Nicholas Johnson, "Taxpayer Rescue," September 15, 2008

Nicholas Johnson, "Global Finance: The Great Fountain Pen Robbery," September 21, 2008

Nicholas Johnson, "Alternatives to 'The Plan,'" September 28, 2008

Nicholas Johnson, "Better Alternatives to Congress' Bailout Plan," October 2, 2008

Nicholas Johnson, "Can We Trust Our Bankers?" October 29, 2008

Nicholas Johnson, "It's the Economy," November 7, 2008

Nicholas Johnson, "Jobs, Not Unemployment, Key to Recovery," November 8, 2008

Nicholas Johnson, "Trust Your Instincts, Auto Bailout's Terrible Idea," November 14, 2008

Nicholas Johnson, "Auto Bailout: An Open Letter to Congress," November 19, 2008

Nicholas Johnson, "A Trillion Here, a Trillion There," November 20, 2008

Nicholas Johnson, "FromDC2Iowa's Weekend Edition," November 21, 2008 ("The Answer to Global Economic Collapse" and "Auto Bailout: 'Show Me the . . . Plan'")

Nicholas Johnson, "Citigroup Deal Stinks," November 25, 2008

Nicholas Johnson, "Only Select Few Are Thankful for Trillions," November 27, 2008

Nicholas Johnson, "Auto Loan Makes Too Few Dollars Even Less Sense," December 4, 2008

Nicholas Johnson,"Quick Fix for the Economy," December 12, 2008

Nicholas Johnson, "You Know It's Serious When We Start Laughing," December 15, 2008

Nicholas Johnson, "A Car in Every Garage," December 16, 2008

Nicholas Johnson, "Forget Madoff, Focus on Bernanke," December 17, 2008

Nicholas Johnson, "Of Theaters and Automobiles," December 20, 2008

Nicholas Johnson, "There's Bad News and . . . and . . .," December 21, 2008

Nicholas Johnson, "Et Tu, Toyota?" December 22, 2008

Nicholas Johnson, "Revolting Developments," December 23, 2008

Nicholas Johnson, "First Things First," January 8, 2009

Nicholas Johnson, "Why We Should 'Point Fingers' and 'Look Backwards,'" January 13, 2009

Nicholas Johnson, "Fool Me Twice," January 14, 2009

Nicholas Johnson, "Economic Sorrows and Solutions," January 27, 2009

Nicholas Johnson, "No More for Wall Street!" February 1, 2009

Nicholas Johnson, "Hang Onto Your Wallet," February 5, 2009

Nicholas Johnson, "Quick Fix: Support Jobless, Not Bankers," February 7, 2009

Nicholas Johnson, "Geithner's Same Old, Same Old," February 10, 2009

Nicholas Johnson, "Terrorist Bankers,"
February 13, 2009

Nicholas Johnson, "Financial Crises for Dummies," February 17, 2009

Nicholas Johnson, "They're Back!!" February 20, 2009

Nicholas Johnson, "The Burden We Ought to Bear," February 23, 2009

Nicholas Johnson, "Candid Conservatism," February 27, 2009

Nicholas Johnson, "Bankers as Arsonists," March 3, 2009

Nicholas Johnson, "Don't Buy Stuff," March 6, 2009

Nicholas Johnson, "The Story of Stuff," March 16, 2009

Nicholas Johnson, "What a Mess," March 19, 20, 2009

Nicholas Johnson, "Punishment to Fit Financial Crimes," March 23, 2009

Nicholas Johnson, "Don't Trust the 'Experts,'" April 9, 2009

Nicholas Johnson, "Obama's Potential Wall Street Downfall," April 12, 2009

Nicholas Johnson, "Can Economy Produce Americanized Hitler?" April 15, 2009

Nicholas Johnson, "Banks Declare Their Bailout a Success," April 16, 2009

* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson

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