Wednesday, May 19, 2010
AlterNet: Cerberus Capital: Literally Blood-Sucking the Poor to Make Their Billions
Cerberus Capital: Literally Blood-Sucking the Poor to Make Their Billions
By Mark Ames, AlterNet
Posted on January 9, 2010, Printed on January 10, 2010
Wall Street vampires. Lately, a lot of Americans, including myself, have used the bloodsucking monsters as a metaphor to describe the Wall Street billionaires who rule us, and who are ruining us. Like so many awful stories of the past few years, it turns out that these Wall Street vampire-billionaires really exist, literally. Like all vampires, they live in remote castles, and they feed themselves by luring poor, desperate humans into their dens, hooking them into blood-pumping machines and sucking out their plasma for mind-boggling profits.
Cerberus Capital, one of Wall Street’s most notoriously ruthless leveraged-buyout firms (or “private equity firms” in PC-speak), recently made a $1.8 billion killing on its human plasma investment, a company called Talecris. Talecris was purchased for a mere $82.5 million just four years earlier, meaning Cerberus made 23 times its investment on human plasma. This was accomplished by the most savage, heartless means possible: by paying peanuts to impoverished human plasma donors, who increasingly come from Mexican border towns to blood-pumping stations set up on the American side, jacking up the price of plasma by restricting supply (a lawsuit filed by the Federal Trade Commission accused Cerberus Plasma Holdings of “operat[ing] as an oligopoly”), and then selling the refined products to the most desperately ill—patients suffering from hemophilia, severe burns, multiple sclerosis and autoimmune deficiencies. The products cost so much—one, IVIG (intravenous immunoglobulin) cost twice the price of gold as of last summer—that American health insurance companies have been dropping or denying their policyholders in increasing numbers, endangering untold numbers of people.
Tomas Asher, chairman of a company that trades in plasma, described the business this way: "It's like selling hog bellies or wheat or beef. It gets sold all over."
Profiting from ruined American lives is nothing new to Cerberus. (The company takes its name from the legendary three-headed attack dog of Greek legend who guards the gates of Hell, making sure no condemned soul ever escapes. How appropriate.) Cerberus is the same shady fund that bought Chrysler and GMAC in 2007 and drove them into the ground, blamed everything on unions (even after firing 30,000 Chrysler employees), and dumped the companies onto American taxpayers—but only after lining up tens of billions in taxpayer-funded bailout funds. Cerberus is led by some of the most aggressive "free market" Republicans of our time. The chairman of Cerberus is former Treasury Secretary John Snow, who oversaw the destruction of America’s economy while serving under Bush from 2003 to 2006, bragging during his tenure, "We are the envy of the world."
Snow bragged again in 2007 after Cerberus acquired Chrysler, "Over 25 years ago, when Chrysler faced bankruptcy, it turned to the United States government for assistance. Today, Chrysler again faces new financial challenges. But it is private investment stepping in to inject much-needed support." A year later, Snow was running around Washington begging and screaming for government handouts.
Joining Snow as international chairman for Cerberus is former Republican Vice President Dan Quayle, the pampered imbecile who couldn’t spell “potato” correctly. Two more perfect vampires couldn’t have been invented than Quayle and Snow for the America of the Bush Era—peanut-brained, sleazy jerks.
The top vampire in Cerberus is the fund’s founder, billionaire Stephen Feinberg, a major Republican Party campaign donor with a hardcore fetish for Harleys and big guns. Supposedly Feinberg was very uncomfortable with taking all those socialism-esque billions from American taxpayers. The New York Times described him as "a longtime free-market enthusiast and a Republican who never envisioned himself needing the government for help.”
What Feinberg did envision was callously taking control of Chrysler, stripping it down and making a killing off of it, as he coldly noted in an early 2008 memo to his investors: “We do not need to be heroes to earn a good return on the investment in Chrysler," he wrote. "We do not need to transition the car industry or even to return Chrysler to a much stronger relative position in the U.S. car market in order to be successful."
After Feinberg siphoned away billions of taxpayer dollars to pay off his bad investments, he told reporters, "From the day we bought it, we worked hard to improve it." Patriotism, not profit, he bleated: “I love this country. I feel it’s been great to me. I had a great chance."
To understand how Cerberus has profited from human blood and misery, here's some background: the United States is one of just a handful of nations around the world where companies can legally pay humans for their blood and then sell it for a profit. Human plasma is a particularly valuable component of human blood—it’s harder to extract, and can be used to manufacture all sorts of expensive therapeutic products. The market for human plasma products has swelled from just $2 billion in 1988 to over $12 billion per year, and according to a recent Morgan Stanley report, it’s a fast-growing business.
Despite all the billions that Wall Street’s vampires earn from plasma, the hapless humans whose veins they milk make barely a pittance—$30 dollars or so for spending an hour hooked up to a pumping machine that sucks the blood, sifts out the valuable plasma through a cold-filtering process and reverse-pumps the debased, icy blood back into the plasma donor's veins.
It’s such a miserable way to make cash that Cerberus and its fellow oligopolists have resorted to setting up plasma-sucking franchises along the U.S.-Mexico border, which have mushroomed like Starbucks Coffee did in the '90s. In the latter part of 2009 alone, Cerberus-owned Talecris opened four new plasma-milking factories, plastering the Mexican side of the border with advertisements promising easy cash, and parking special plasma-farm buses on the American side of the border to haul their human cargo to those milking dens not within walking distance of the Rio Grande.
Last summer, a newspaper reporter followed an unemployed 46-year-old Mexican manager from his border town to the pumping station in Brownsville, Texas, which has the highest poverty rate of any city in America:
"After entering the United States, Castillo didn’t have to walk far to sell his plasma. A few hundred feet up International Boulevard from the border, the IBR Plasma building sits on Washington Street, across from a Duty Free shop. The plasma centre still looks very much like the bulk second-hand clothing store it used to be, though long white vertical blinds now hide what goes on behind its windows. Inside, the waiting room is divided into two sections marked by sheets of paper taped to the wall: one for 'new donors' and another for 'return donors.' This was Castillo’s first visit, which meant he could make $30—about 400 Mexican pesos. Signs in Spanish and English offered an additional $10 to those who recruited other donors.
"Castillo lay in the big soft chair, he said, while they inserted the needle and his blood started pumping out. It was cycled into a machine that spun the red cells from the liquid, as if squeezing whey from curds. The whey, the watery plasma, was stored in a big plastic bag, while the red blood cells were periodically reinjected into his arm. While he laid there, he later told me, he wondered about what his plasma was really worth—and where it would end up. Castillo is an educated man with a degree in business administration; before coming to Brownsville he had done some research and found, among other things, that in Mexico donating plasma for money is illegal—as is the case in much of the rest of the world."
You might think that America would be ashamed of being the world’s top vampire nation. But actually, to the faux-market freaks like Cerberus Capital’s honchos, it just means locking in profits and locking out competition. Thomas Hecht, who heads a plasma products distribution company in Montreal, quipped: "The U.S. is the OPEC of the plasma business. You know what that stands for: the Organization of Plasma Exporting Countries."
But Cerberus is more than just about sucking people’s blood and government handouts. Stephen Feinberg also loves killing deer. In fact he loves shooting deer so much that, like the old Gillette commercial, he bought America’s guns 'n’ ammo industry. Two years ago, Cerberus bought Remington, America’s oldest firearms manufacturer, and since then they’ve snapped up companies making everything from bullets to silencers, which they’re combining into a new firearms monolith called Freedom Group. The free-marketeers at Cerberus are all about freedom.
Luckily for Cerberus, weapons are “flying off the store shelves,” thanks to all the paranoia about Obama "socialism," fed by all the bailout money that rightwing billionaires like Cerberus have looted. Sales have also been boosted by the wars in Iraq and Afghanistan—in other words, more government handouts for the billionaires, now that they own the guns ‘n’ ammo business. It’s all going so well that Cerberus is planning a huge IPO this year for Freedom Group, which should net another massive payout.
So Cerberus profits on both ends: from the bailouts, and from the backlash against bailouts; from the wars against Muslim terrorists, and from the paranoia back home about an alleged socialist-Muslim-terrorist president.
Either way, the vampires have us where they want us.
Read more of Mark Ames at eXiledonline.com. He is the author of Going Postal: Rage, Murder, and Rebellion: From Reagan's Workplaces to Clinton's Columbine and Beyond.
© 2010 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/145044/
Monday, May 17, 2010
Op-Ed Columnist - The G.O.P. - Going to Extreme - NYTimes.com
May 16, 2010
Going to Extreme
By PAUL KRUGMAN
Utah Republicans have denied Robert Bennett, a very conservative three-term senator, a place on the ballot, because he’s not conservative enough. In Maine, party activists have pushed through a platform calling for, among other things, abolishing both the Federal Reserve and the Department of Education. And it’s becoming ever more apparent that real power within the G.O.P. rests with the ranting talk-show hosts.
News organizations have taken notice: suddenly, the takeover of the Republican Party by right-wing extremists has become a story (although many reporters seem determined to pretend that something equivalent is happening to the Democrats. It isn’t.) But why is this happening? And in particular, why is it happening now?
The right’s answer, of course, is that it’s about outrage over President Obama’s “socialist” policies — like his health care plan, which is, um, more or less identical to the plan Mitt Romney enacted in Massachusetts. Many on the left argue, instead, that it’s about race, the shock of having a black man in the White House — and there’s surely something to that.
But I’d like to offer two alternative hypotheses: First, Republican extremism was there all along — what’s changed is the willingness of the news media to acknowledge it. Second, to the extent that the power of the party’s extremists really is on the rise, it’s the economy, stupid.
On the first point: when I read reports by journalists who are shocked, shocked at the craziness of Maine’s Republicans, I wonder where they’ve been these past eight or so electoral cycles. For the truth is that the hard right has dominated the G.O.P. for many years. Indeed, the new Maine platform is if anything a bit milder than the Texas Republican platform of 2000, which called not just for eliminating the Federal Reserve but also for returning to the gold standard, for killing not just the Department of Education but also the Environmental Protection Agency, and more.
Somehow, though, the radicalism of Texas Republicans wasn’t a story in 2000, an election year in which George W. Bush of Texas, soon to become president, was widely portrayed as a moderate.
Or consider those talk-show hosts. Rush Limbaugh hasn’t changed: his recent suggestion that environmentalist terrorists might have caused the ecological disaster in the gulf is no worse than his repeated insinuations that Hillary Clinton might have been a party to murder. What’s changed is his respectability: news organizations are no longer as eager to downplay Mr. Limbaugh’s extremism as they were in 2002, when The Washington Post’s media critic insisted that the radio host’s critics were the ones who had “lost a couple of screws,” that he was a sensible “mainstream conservative” who talks “mainly about policy.”
So why has the reporting shifted? Maybe it was just deference to power: as long as America was widely perceived as being on the way to a permanent Republican majority, few were willing to call right-wing extremism by its proper name. Maybe it took a Democrat in the White House to give some observers the courage to say the obvious.
To be fair, however, it’s not all a matter of perception. Right-wing extremism may be the same as it ever was, but it clearly has more adherents now than it did a couple of years ago. Why? It may have a lot to do with a troubled economy.
True, that’s not how it was supposed to work. When the economy plunged into crisis, many observers — myself included — expected a political shift to the left. After all, the crisis made nonsense of the right’s markets-know-best, regulation-is-always-bad dogma. In retrospect, however, this was naïve: voters tend to react with their guts, not in response to analytical arguments — and in bad times, the gut reaction of many voters is to move right.
That’s the message of a recent paper by the economists Markus Brückner and Hans Peter Grüner, who find a striking correlation between economic performance and political extremism in advanced nations: in both America and Europe, periods of low economic growth tend to be associated with a rising vote for right-wing and nationalist political parties. The rise of the Tea Party, in other words, was exactly what we should have expected in the wake of the economic crisis.
So where does our political system go from here? Over the near term, a lot will depend on economic recovery. If the economy continues to add jobs, we can expect some of the air to go out of the Tea Party movement.
But don’t expect extremists to lose their grip on the G.O.P. anytime soon. What we’re seeing in places like Utah and Maine isn’t really a change in the party’s character: it has been dominated by extremists for a long time. The only thing that’s different now is that the rest of the country has finally noticed.
Posted by Jim at 11:49 AM
Friday, May 14, 2010
Excite News - Obama pledges end to 'cozy' oil relationships
Obama said he shared the "anger and frustration" felt by many Americans, and he acknowledged differing estimates about just how disastrous the damage from the leak could become. He said the administration's response has "always been geared toward the possibility of a catastrophic event."
Op-Ed Columnist - We’re Not Greece - NYTimes.com
May 13, 2010
We’re Not Greece
By PAUL KRUGMAN
It’s an ill wind that blows nobody good, and the crisis in Greece is making some people — people who opposed health care reform and are itching for an excuse to dismantle Social Security — very, very happy. Everywhere you look there are editorials and commentaries, some posing as objective reporting, asserting that Greece today will be America tomorrow unless we abandon all that nonsense about taking care of those in need.
The truth, however, is that America isn’t Greece — and, in any case, the message from Greece isn’t what these people would have you believe.
So, how do America and Greece compare?
Both nations have lately been running large budget deficits, roughly comparable as a percentage of G.D.P. Markets, however, treat them very differently: The interest rate on Greek government bonds is more than twice the rate on U.S. bonds, because investors see a high risk that Greece will eventually default on its debt, while seeing virtually no risk that America will do the same. Why?
One answer is that we have a much lower level of debt — the amount we already owe, as opposed to new borrowing — relative to G.D.P. True, our debt should have been even lower. We’d be better positioned to deal with the current emergency if so much money hadn’t been squandered on tax cuts for the rich and an unfunded war. But we still entered the crisis in much better shape than the Greeks.
Even more important, however, is the fact that we have a clear path to economic recovery, while Greece doesn’t.
The U.S. economy has been growing since last summer, thanks to fiscal stimulus and expansionary policies by the Federal Reserve. I wish that growth were faster; still, it’s finally producing job gains — and it’s also showing up in revenues. Right now we’re on track to match Congressional Budget Office projections of a substantial rise in tax receipts. Put those projections together with the Obama administration’s policies, and they imply a sharp fall in the budget deficit over the next few years.
Greece, on the other hand, is caught in a trap. During the good years, when capital was flooding in, Greek costs and prices got far out of line with the rest of Europe. If Greece still had its own currency, it could restore competitiveness through devaluation. But since it doesn’t, and since leaving the euro is still considered unthinkable, Greece faces years of grinding deflation and low or zero economic growth. So the only way to reduce deficits is through savage budget cuts, and investors are skeptical about whether those cuts will actually happen.
It’s worth noting, by the way, that Britain — which is in worse fiscal shape than we are, but which, unlike Greece, hasn’t adopted the euro — remains able to borrow at fairly low interest rates. Having your own currency, it seems, makes a big difference.
In short, we’re not Greece. We may currently be running deficits of comparable size, but our economic position — and, as a result, our fiscal outlook — is vastly better.
That said, we do have a long-run budget problem. But what’s the root of that problem? “We demand more than we’re willing to pay for,” is the usual line. Yet that line is deeply misleading.
First of all, who is this “we” of whom people speak? Bear in mind that the drive to cut taxes largely benefited a small minority of Americans: 39 percent of the benefits of making the Bush tax cuts permanent would go to the richest 1 percent of the population.
And bear in mind, also, that taxes have lagged behind spending partly thanks to a deliberate political strategy, that of “starve the beast”: conservatives have deliberately deprived the government of revenue in an attempt to force the spending cuts they now insist are necessary.
Meanwhile, when you look under the hood of those troubling long-run budget projections, you discover that they’re not driven by some generalized problem of overspending. Instead, they largely reflect just one thing: the assumption that health care costs will rise in the future as they have in the past. This tells us that the key to our fiscal future is improving the efficiency of our health care system — which is, you may recall, something the Obama administration has been trying to do, even as many of the same people now warning about the evils of deficits cried “Death panels!”
So here’s the reality: America’s fiscal outlook over the next few years isn’t bad. We do have a serious long-run budget problem, which will have to be resolved with a combination of health care reform and other measures, probably including a moderate rise in taxes. But we should ignore those who pretend to be concerned with fiscal responsibility, but whose real goal is to dismantle the welfare state — and are trying to use crises elsewhere to frighten us into giving them what they want.
Posted by Jim at 9:23 AM
Monday, May 10, 2010
Op-Ed Columnist - Sex and Drugs and the Spill - NYTimes.com
May 10, 2010
Sex & Drugs & the Spill
By PAUL KRUGMAN
“Obama’s Katrina”: that was the line from some pundits and news sources, as they tried to blame the current administration for the gulf oil spill. It was nonsense, of course. An Associated Press review of the Obama administration’s actions and statements as the disaster unfolded found “little resemblance” to the shambolic response to Katrina — and there has been nothing like those awful days when everyone in the world except the Bush inner circle seemed aware of the human catastrophe in New Orleans.
Yet there is a common thread running through Katrina and the gulf spill — namely, the collapse in government competence and effectiveness that took place during the Bush years.
The full story of the Deepwater Horizon blowout is still emerging. But it’s already obvious both that BP failed to take adequate precautions, and that federal regulators made no effort to ensure that such precautions were taken.
For years, the Minerals Management Service, the arm of the Interior Department that oversees drilling in the gulf, minimized the environmental risks of drilling. It failed to require a backup shutdown system that is standard in much of the rest of the world, even though its own staff declared such a system necessary. It exempted many offshore drillers from the requirement that they file plans to deal with major oil spills. And it specifically allowed BP to drill Deepwater Horizon without a detailed environmental analysis.
Surely, however, none of this — except, possibly, that last exemption, granted early in the Obama administration — surprises anyone who followed the history of the Interior Department during the Bush years.
For the Bush administration was, to a large degree, run by and for the extractive industries — and I’m not just talking about Dick Cheney’s energy task force. Crucially, management of Interior was turned over to lobbyists, most notably J. Steven Griles, a coal-industry lobbyist who became deputy secretary and effectively ran the department. (In 2007 Mr. Griles pleaded guilty to lying to Congress about his ties to Jack Abramoff.)
Given this history, it’s not surprising that the Minerals Management Service became subservient to the oil industry — although what actually happened is almost too lurid to believe. According to reports by Interior’s inspector general, abuses at the agency went beyond undue influence: there was “a culture of substance abuse and promiscuity” — cocaine, sexual relationships with industry representatives, and more. Protecting the environment was presumably the last thing on these government employees’ minds.
Now, President Obama isn’t completely innocent of blame in the current spill. As I said, BP received an environmental waiver for Deepwater Horizon after Mr. Obama took office. It’s true that he’d only been in the White House for two and half months, and the Senate wouldn’t confirm the new head of the Minerals Management Service until four months later. But the fact that the administration hadn’t yet had time to put its stamp on the agency should have led to extra caution about giving the go-ahead to projects with possible environmental risks.
And it’s worth noting that environmentalists were bitterly disappointed when Mr. Obama chose Ken Salazar as secretary of the interior. They feared that he would be too friendly to mineral and agricultural interests, that his appointment meant that there wouldn’t be a sharp break with Bush-era policies — and in this one instance at least, they seem to have been right.
In any case, now is the time to make that break — and I don’t just mean by cleaning house at the Minerals Management Service. What really needs to change is our whole attitude toward government. For the troubles at Interior weren’t unique: they were part of a broader pattern that includes the failure of banking regulation and the transformation of the Federal Emergency Management Agency, a much-admired organization during the Clinton years, into a cruel joke. And the common theme in all these stories is the degradation of effective government by antigovernment ideology.
Mr. Obama understands this: he gave an especially eloquent defense of government at the University of Michigan’s commencement, declaring among other things that “government is what ensures that mines adhere to safety standards and that oil spills are cleaned up by the companies that caused them.”
Yet antigovernment ideology remains all too prevalent, despite the havoc it has wrought. In fact, it has been making a comeback with the rise of the Tea Party movement. If there’s any silver lining to the disaster in the gulf, it is that it may serve as a wake-up call, a reminder that we need politicians who believe in good government, because there are some jobs only the government can do.
Posted by Jim at 8:32 AM