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Tuesday, May 19, 2009

The Dealer Debacle

The news about the shutdown of hundreds of Chrysler and GM dealers across the country has been covered ad nauseum (or add nausea?) on the local and national news. Despite the flurry of coverage and interviews of long-time dealers standing in front of empty lots, no one's really asking very useful questions about the process and the real impact to the economy at the national or local level.

Here are a few questions I haven't heard addressed.

How much PROFIT opportunity is really being eliminated by the closing of hundreds of dealers? For dealers of American cars who have been dependent on factory rebates and huge discounts from sticker prices for over a decade, it seems relatively little money was made off actual new car sales after factoring in interest payments as the cars sat on the lot, inventory taxes, insurance, etc. I've heard most dealers make their money off after-the-sale service because (amazingly) many buyers still feel obligated to take cars back to the dealer even for routine service.

If dealers actually made most of their money from service -- not sales -- and car quality doesn't miraculously improve by an order of magnitude, is there not the same net opportunity for service profits and employment hours off the same amount of cars that are being sold right now? If the market used to be 9 million and has now shrunk to 6 million cars sold per year, the same number of labor hours will be required to service those cars whether they were sold by 5500 dealers or 4400. There would seem to be a path to daylight for dealers who maintained a good reputation for customer service and honesty as a pure service play in the industry. It might be MORE profitable to focus on service rather than worrying about carrying costs for new cars featuring iffy styling changes for notoriously fickle buyers.

How will dealer closings REALLY affect local and state tax revenues? Assuming aggregate demand for new or used cars is NOT a function of the number of dealers, the total number of cars sold will remain roughly the same, whether 5500 dealers sell them or 4400. Granted, in some local communities, the closing of dealerships may shift city tax revenues from hamlet A to hamlet B but at the state level, overall tax revenues should be roughly a wash.

Why are soon-to-be-former dealers being forced to sell all of their inventory in an arbitrary one-month interval? The technical answer lies in the institutions backing the "bridge loans" used by the dealer to cover the inventory on the lot. It also has something to do with coverage for warranty work for cars bought from an "unauthorized" dealer, thought this is a fuzzy area. This may be the single most damning action GM and Chrysler can take to burn every last remaining bridge they have to potential buyers. The car is the car, regardless of who handles the retail sale. Forcing the wholesale liquidation of nearly 20 percent of the current national inventory when there is already weak credit and at least a two-month glut of unsold vehicles does nothing but harm:

* it pits soon-to-be-former-dealers against survivors in price competition, potentially weakening the survivors
* it depresses retail prices of ALL cars across the entire country
* it depresses resale values, again hurting survivor dealers and owners
* it undermines confidence in potential buyers of GM and Chrysler in those firm's true ability and interest in standing behind their products

How big is the harm? Do some simple math. Assume the domestic market has shrunk to 6 million cars or about 500,000 units per month. Most dealers have at least a two-month inventory on hand or at least 1,000,000 cars. GM's and Chrysler's combined share is about 35 percent of the market so the inventory on the dropped dealers' lots adds up to roughly 70,000 vehicles. If you figure the average car is about $22,000 dollars, this forced liquidation might drop prices on those units another 30 percent or $6600 per car or about $426 million. However, those price cuts won't just affect prices at the dealers going under. It will drive down prices on the ENTIRE backlog of roughly 350,000 GM and Chrysler cars. That's $2.31 billion. With a B.

What were the surviving dealers thinking for the past six months? Heck, some poster on the Fool (me, in fact) figured out in November that American manufacturing capacity was going to see a 33 percent cut. It doesn't take a genius to see the retail operations would see a similar cut. When dealers saw the backlog of cars building between November 2008 and May 2009, could they not see a liquidation coming that would further depress prices? Why did they take any more inventory and take on more loans for that inventory? Why did they not pursue more aggressive discounting before the predictable liquidation flood hits and (hopefully only temporarily) drops prices 30 to 40 percent? The wider losses that might have been suffered by accelerating clearance sales would have been NOTHING compared to the losses they will suffer on their inventory now.

Sunday, May 17, 2009

The War on Terror and Logic -- 2009 Edition

It's May 2009 and we're about five months into a new Presidential Administration and new Congress. The new players have had a chance to orient themselves, take a few meetings, read a few intelligence briefs and make a few decisions regarding the War on Terror (TM) and Logic. So how are they doing? Well, judging from recent events, terror seems to be holding up quite nicely. Logic? Not so much.

The Obama campaign ran on a pledge to close the Guantanamo Bay internment camp for terrorist suspects. Obama the candidate also ran on a pledge to eliminate the use of military tribunals to decide the fate of the terrorist suspects, citing material flaws with the process. Obama the President initially made good on the pledge to close Guantanamo and began pushing to move detainee trials to civilian venues but flip-flopped on the civil trials stance in the past week. That change will in turn jeopardize the ability to transfer detainees to civilian facilities and close Guantanamo as desired by January 2010.

The debate over these issues has not only drawn Dick Cheney out of his undisclosed retirement bunker back into the spotlight, but has pitted the Democratic Speaker of the House Nancy Pelosi against the entire CIA, requiring its current Director and long-time Democratic power broker Leon Panetta to defend his agency from his own party. These debates and the resulting press coverage have featured several new fallacies of logic which are likely to crop up repeatedly and are thus worth documenting and discussing.

Picking up where we left off from the Bush era... (see links #1 through #5)


FALLACY #13: Enhanced interrogation techniques are required because they are uniquely capable of forcing bad guys to divulge vital security information unavailable by other means.

FALLACY #14: Enhanced interrogation techniques are not torture.

#13 and #14 are flip sides of the same bad coin. Former VP Cheney has repeatedly claimed information was gleaned from enhanced interrogation of prisoners that thwarted attacks on the United States. He claims there is a laundry list of vital facts obtained from the enhanced interrogation of key suspects and has filed a petition (rejected by the Obama Administration and CIA) to make that list public. Even if such a document exists, the fact that terrorist A provided fact X under enhanced interrogation does not prove fact X wasn't already known via other methods or that fact X could not have been learned by other means and other sources without "enhanced interrogation."

If enhanced interrogation techniques are so effective at reducing hardened terrorist suspects to compliant, truth-telling snitches, one would think one, maybe two, okay maybe FIVE trips to the interrogation room would do the trick. In reality, numerous journalists (Seymour Hersch and Jane Mayer to name two) and internal military and CIA records show that DOZENS of suspects were "interrogated" DOZENS and HUNDREDS of times over the course of months and years. So much for #13. If #13 isn't true, the continued administration of "enhanced interrogation techniques" which provided no useful information over the course of months / years is nothing BUT torture serving no strategic purpose.


FALLACY #15: Bi-partisan support of a strategy means the strategy is correct. -- The occasion of long-time political opponents suddenly agreeing upon something is often touted as a certain guarantee that X simply MUST be the correct thing to do. In reality, it doesn't mean X is right, it doesn't mean X is wrong. It simply means a multitude of political and legal forces have mysteriously shifted to temporarily align goals which may have nothing to do with the benefit of We the People. Keep in mind that until about August 2007, the vast majority of people agreed that low interest rates and zero-down mortgage loans were a great way to keep the economy moving.

#15 is currently being used by Democrats and Republicans alike to support the Obama Administration's sudden reversal on the use of military tribunals instead of American civil courts for detainees. The Obama Administration's new rational hasn't been well explained much but is clearly resulting from a combination of feedback from the military and CIA about protecting information that might come up in trials and feedback from states fearful of having "terrorists" kept in Federal or state prisons should convictions occur.

Wow. Where does one start?

The terrorist attacks on September 11, 2001 were not aimed at freeing those convicted and imprisoned for the 1993 World Trade Center bombing. There's no proof that holding terrorist suspects without trials or International Red Cross access in Camp X-Ray produces any less risk of future domestic terrorist attacks than keeping them in the SUPERMAX SHU at Florence, Colorado. Arguments about where terrorist trials take place and their impact on terrorist recruitment are entirely misplaced. Recruitment of new terrorists has relatively little to do with Internet access to photos of a few naked, abused prisoners or even a few dead prisoners. Recruitment has EVERYTHING to do with the breakdown of public education in not only Iraq and Afghanistan but Pakistan as well. The militias aren't gathering recruits by holding up prison abuse photos, they're recruiting by destroying the fabric of local society and holding guns to the heads of teenage boys left with no alternative for survival.

FALLACY #16: We cannot close Guantanamo Bay because European countries are refusing to take released prisoners, Middle East countries don't want them returning to destabilize their countries and we don't want terrorists on American soil.

First of all, if any current detainees are given a fair trial and found guilty of aiding and abetting terrorism or direct attacks against the United States, they're not GOING to be released, they'll be kept in prison. If someone is worried about a convicted terrorist escaping from a SHU at an American SUPERMAX prison facility, they probably should plan a weekend drive to one of our fabulous federal prison complexes and check the place out. If we trust those facilities to hold convicted cocaine cartel bosses controlling armies of narco-terrorists, I think they can handle a few more twenty-something brain-warped Islamic terrorists. They won't get out, they won't have anyone to talk to promote more terrorism here in America or anywhere else, they'll virtually disappear.

The argument behind #16 really involves the fear of what will happen when we have to release detainees held for years without a fair trial who are IN FACT innocent or whose prosecution was compromised by gross incompetence of American officials responsible for their interrogation or subsequent internment. Arguing against releasing a detainee who is in fact INNOCENT is essentially an argument that "if they weren't a terrorist going in, they might be so angered by their unjust capture / detainment that there's a high likelihood they will BECOME a terrorist when we release them."

Wow. That's a stunningly perverted take on the most basic concept of justice and liberty. If you are falsely accused of murder and framed by a career-minded, get-tough-on-criminals DA and an accomplice providing bogus forensic tests then we find one year or ten years or twenty years later you are innocent, you STILL have to rot in jail for life because you might be really pissed and might actually kill someone upon your release? That's EXACTLY the argument being made about detainees at Guantanamo.

What about detainees with indirect or direct ties to actual terrorist plots or actual terrorist attacks? Those who use the argument behind #13 are essentially claiming others who SUPPORT the closing of Guantanamo actually want to release detainees who might have been tortured or whose convictions might be jeopardized by evidence obtained under torture -- REGARDLESS of the detainee's actual culpability. No such argument is being made. The tighter rules of evidence suggested by the Obama Administration's revised tribunal policy are virtually identical to those of civilian law. Civilian courts do not require the release of a suspect if fact X confirming his guilt was divulged via unlawful coercion of the suspect or someone else. If fact X can be proven through testimony or evidence from other sources unrelated to the tainted evidence, fact X can still be introduced to the trial and used to support a conviction. The only time the suspect must be freed is if the ONLY source of fact X is the testimony obtained via illegal means and no alternate facts obtained via legal means exist to support a conviction.


FALLACY #17: If members of both parties knew about X and said nothing to object, X must be acceptable. -- This argument is being used to damage House Speaker Nancy Pelosi, who lately seems to require no outside help in undermining her credibility on virtually any issue. Dick Cheney and others have claimed Pelosi was among a handful of Congressional members who received secret briefings about both the domestic surveillance program and enhanced interrogation techniques. Giving Dick Cheney the benefit of the doubt momentarily, silence on Pelosi's part at the time doesn't indicate the programs were justified or legal. Silence on Pelosi's part merely indicates Pelosi is part of the problem and her actions require investigation like the rest of the players. The other aspect to this fallacy is that it assumes that information shared with Congress at the time about X was complete and factual. If the information conveyed what we know now, then certainly, silence on the part of those receiving it is quite daming. However, what if the information -- by mistake or intent -- was framed as "contingencies being reviewed for legality and effectiveness" and not yet actual operational policy? In that event, any defense of the actions taken using this logic collapses.



FALLACY #18: The existence of dozens or hundreds of documented cases throughout Iraq, Afghanistan, Guantanamo Bay and other secret CIA black sites does NOT prove abuse was directed at the highest levels of government. -- New York Representative Peter King (R) was interviewed on the May 17 edition of Face the Nation and explicitly rejected any claim that abuse and torture were condoned as a matter of policy. He said the following: (#6)

--------------------------------
No, because there was no connection at all between the CIA memos, the interrogations that were carried out, the extra interrogations of Khalid Sheikh Mohammed and the others, have nothing to do with with MP reservists might have been doing at Abu Ghraib. That was out-and-out torture, that was out-and-out humiliation and debasing of prisoners, and there is no way that they knew what was going on as far as the CIA examining Khalid Sheikh Mohammed. That is a phony argument that’s thrown out there to try to meld it all together.
--------------------------------


King's argument ignores the fact that descriptions of the abuse by the victims and of those inflicting the abuse are nearly identical across many sites, despite the majority of enlisted personnel having no advanced training in interrogation techniques. He also ignores the fact that military facilities like Abu Ghraib had CIA officers on site providing guidance on targets and techniques. Finally, he ignores the fact that the photos of the abuse taken by Lynndie England and her cohorts did not involve the worst of what took place at Abu Ghraib. As author Jane Mayer documented in her book The Dark Side, the worst abuse was administered in an isolated prison block referred to as "Tier Alpha One" reserved for the exclusive use of "OGAs" -- "other government agencies" -- without Army MPs present. How did the CIA officers remain on base without an agreement between Army and CIA leaders? How was that agreement not known to brass within CENTCOM, the Pentagon and Langley?

King's argument also reflects a profound ignorance of the tactics used by groups pursuing such extra-legal activities. Compartmentalization of those enlisted to do the dirty work is a key component of the strategy to guard against discovery of the larger program and chain of command when a portion of the operation is compromised. Compartmentalization is core to the strategy of the very terrorist organizations we claim to be fighting. Apparently, King understands so little about the tactics of our opponent he cannot recognize them when we use them ourselves.

The key point to remember about Peter King's appearance on Face the Nation is that he did directly state that the abuses at Abu Ghraib constituted torture. "Out-and-out torture" were his exact words (see above). He just doesn't believe that abuse was performed under the direction of senior government or military officials. Watch this space for future flip-flops.


FALLACY #19: Releasing 200 new photos of prisoner abuse will further derail our campaign against terrorism by providing more recruitment material for Al Qaeda and the Taliban. -- Let's assume that the 200 photos in question don't constitute 200 unique cases of abuse and that there might be five or ten photos of the same incidents, yielding 20 to 40 new actual cases of abuse. The United States has already publicly confirmed the existence of these photos, thus confirming the actual incidents themselves and confirming their severity as being similar to previous documented cases. If progress in the war on terror is jeopardized by photos of abuse we've already publicly confirmed, the war on terror isn't in danger of being lost due to PR on an Internet scale. It is being lost at the local level in impoverished villages where local and state governments in Iraq, Afghanistan and Pakistan are failing to provide basic public services and protect the safety of their citizens. The war is being lost through brutal intimidation applied directly at the local level through grisly public dismemberments and beheadings.

The additional photos WILL be released at some point. It's only a matter of months, years or decades. The debate over the photos is really a debate about the ability of the American government and the American people to face facts and change course. We need to understand how our country came to the conclusion that organized, systemic torture was effective and appropriate in defending the country when it is neither. More importantly, we need to understand why our country continues to involve itself in so many strategies that require secrecy that is antithecal to a properly functioning government and society.

========================================

#1) http://watchingtheherd.blogspot.com/2006/05/war-on-terror-and-logic.html

#2) http://watchingtheherd.blogspot.com/2006/05/democrats-came-to-same-conclusion.html

#3) http://watchingtheherd.blogspot.com/2006/05/constitutional-crisis.html

#4) http://watchingtheherd.blogspot.com/2006/09/war-on-logic-continues.html

#5) http://watchingtheherd.blogspot.com/2007/07/war-on-terror-and-logic-have-shovel.html

#6) http://www.cbsnews.com/htdocs/pdf/FTN_051709.pdf

Sunday, May 10, 2009

Grades Are In -- A Banker's F

On May 7, 2009, the Federal Reserve officially released the results of the so-called stress tests applied to America's biggest banks. If you believe the Fed, the tests were intended to identify remaining vulnerabilities in banks to additional declines in the overall economy so they can shore up any minor problems and install confidence in the markets that the system is sound and capable of providing credit to businesses and consumers.

So what were the final grades? Officially, ten of the nineteen banks analyzed were found to be in need of additional capital. Not "insolvent" mind you, not in danger of an "imminent collapse", just in need of a few billion here or there so they can be counted on to lend money even if employment or GDP drop a few more percentage points. The banking equivalent of a little repointing around a few loose bricks. Sounds like the equivalent of a Gentlemen's C.

That's what you might believe from the commentary on the results from the Fed and Treasury, who tried to dance a fine line between the forgiving but stern dean clearly telling the struggling students they need to endeavor to improve their grades "or else" without panicking their parents into pulling them out of school entirely. If you analyze the true financial position of the ten in trouble and the circular logic trapping the Fed, the Treasury and (by proxy) American taxpayers into a never-ending chain of conflicting interests and self-defeating financial positions, the real grade for these ten has to be a Banker's F.

The Mechanics of Banking

Traditional banks make money by

1) attracting deposits (counted as liabilities on their books) by paying interest
2) lending money (counted as assets on their books) and collecting interest from borrowers
3) using interest payments from loans to pay interest owed to depositors
4) pocketing the difference

They also make money by charging interest rates on credit cards that make loan sharks envious, charging huge fees for using foreign ATMs, paying bills late or overdrafting checking accounts, but that's not really germane to the analysis here (smile).

If the bank is successful at managing this delicate balance and can prove it can make money with its practices, the bank can attract additional capital by selling shares to investors then loaning out a fraction of that additional money like they do the deposits to start the cycle and make even more income.

An extremely conservative bank nervous about having enough money on hand for withdrawals by depositors would keep virtually all depositor dollars in the vault but would then never make any additional money to pay the depositor's interest and would quickly go out of business. A bank that lent every depositor's dime out to borrowers would not have enough on hand to satisfy withdrawals by depositors which would quickly destroy any confidence of depositors to put their money in the bank and it would collapse.

The trick to banking is deciding how much to lend and how much to keep on hand. This balance is usually represented as the reserve ratio, the fraction of assets on hand (numerator) versus deposits (denominator). The REAL trick of banking is that this ratio is not only critical to the profitability of individual banks but it has a huge impact on the entire economy because the lower the ratio, the more fiat money is being created out of thin air for the economy to use. If the ratio isn't low enough, the money supply cannot keep up with population growth, much less economic growth. If the ratio is too low, an excess of fiat money beyond what's needed to keep pace with population growth and "safe" economic growth will be created, causing the excess to chase phantom profits and pipe dreams, producing inflation and/or bubbles in specific asset classes.

This all sounds relatively scientific but the usefulness of the ratio as a guardrail is only as good as the quality of the assets used in the numerator. Therein lies the flaw with the reserve ratio rule, the recent track record of financial regulation and the attempt to use stress test results to instill confidence in the system.


Truth or a Really Good Story?

The key takeaways from the release of the stress test results were that

* all of the nineteen banks tested proved to be solvent in the current economic state…
* BUT that ten of them would technically fall short of the desired reserve ratio…
* IF a few key economic statistics worsened by X amount

One of the key variables used in the model was unemployment which was tested at a worst-case level of 10.3 percent. How much of a "margin" is a 10 percent worst-case estimate when unemployment is already at 9 percent and has jumped 4 percent in one year? Higher unemployment will produce lower household incomes, more mortgage defaults and lower demand for homes, all of which will drastically impair the value of major asset classes counted in the numerator of these banks' reserve ratios.

Another key limit tested by the analysis was a drop in home prices by 22 percent. This actually sounds like a much more severe worst-case test than the 10.3 percent assumption on unemployment but it likely ignores a major "location, location, location" factor of the housing bubble and the compound fraud in mortgage backed security ratings and credit default swaps that fueled it. There are several areas of the country which saw home prices jump over one hundred percent over the past six to eight years. As starry-eyed homebuyers and speculators began chasing ever-rising prices, huge numbers of loans were issued against those inflated values, then fed into the MBS wholesale chop shop to be carved up and traded as high-quality rated securities among investors which then became assets on the banks of books to fuel additional fiat money expansion which expanded demand for housing in a circular loop.

The real point is that large numbers of empty homes in bubble markets won't simply drift back down to "normal" values. They are likely to decline far below that -- even to zero -- as vandalism, damage from the elements and failed models of ex-urban living drive future buyers elsewhere. In essence, what has to be modeled is not the aggregate value of all homes but the value of homes directly involved with the most risky mortgages that will default and the chain of mortgage backed securities and credit default swaps piled on top of those bad loans. That drop is very likely to be far greater than a mere 22 percent, again rendering the stress test results meaningless.


Circular Logic / Circular Firing Squad

The pattern of intervention established so far by the Treasury and Federal Reserve Bank renders the entire stress test effort pointless as a confidence building exercise. As the PR team hit the news shows to promote the test results, a subtext of the message sent to banks and the public was basically that no banks were found to have gaps that reasonable efforts in the private sector could not fill and therefore once the banks plug those gaps, that's it -- no more money from taxpayers. Unfortunately, nearly two years of haphazard public policy and private, inscrutable decision-making at the Fed have firmly planted the following ideas in the minds of bankers, investors and the public:

1) housing prices cannot be allowed to find a new floor for fear of triggering more collapses in the value of mortgage backed securities on the books of banks worldwide

2) further drops in MBS values held by banks cannot be allowed for fear of rendering many large banks insolvent under normal reserve ratio requirements

3) banks failing to meet reserve ratio requirements will further tighten credit to businesses and consumers, further accelerating economic contraction

4) banks rendered insolvent by collapsing MBS valuations and direct mortgage portfolios will trigger further payments of credit default swap contracts in amounts that none of the counterparties to those swap contracts can actually fulfill

5) the Federal Reserve is willing to print as much money required -- devaluing the dollar -- and hand it over as many formerly-non-member institutions as necessary to prevent a collapse of non-member institutions from exposing the insolvency of its members

6) the Treasury is willing to inject as many taxpayer dollars as needed to into failing automakers to defer massive job cuts that would deepen and prolong the economic slowdown

7) the more the government borrows to drop into bailouts, the more reluctant foreign holders of Treasury investments become of buying more US debt, reducing demand for Treasuries, which lowers Treasury prices which poses interest rate pressures on an economy already critically dependent on low interest rates for any recovery / expansion

8) to prop up the value of Treasury bills to satisfy foreign investors, the Fed will do everything in its power to maintain low short term interest rates, punishing savers and encouraging more to attempt to invest in stocks, commodities or derivatives to combat the risk of inflation produced by printing trillions of dollars

What are investors, bankers and consumers / taxpayers to conclude from this list of self-defeating policy goals? First, these banks ARE still in trouble and WILL need more capital to survive. Second, by failing to force divestitures and downsizing of the trouble firms as part of the risk remediation, the government is allowing them to remain "too big to fail" which means the government WILL have to bail them out when the time comes. Third, by leaving these banks TBTF, the government is encouraging private investors to keep their capital out of the banks so the government can cover the losses until a point of equilibrium is reached. Finally, these philosophically incoherent goals are likely to produce economic statistics and performance like few have experienced or can predict. The level of risk facing every type of investor has never been higher and has room to grow.

The Permanent Imperial Presidency

Mr. Sunshine, former Vice President Dick Cheney, appeared on the May 10 edition of Face the Nation to advance his lobbying campaign for releasing memos which supposedly confirm the amount of crucial intelligence gleaned from torturing Al Quaeda suspects. A full transcript of his appearance is available on the CBS News website (#1). A quick review of the actual reality of our "War on Terror" (TM) and the claims advocated by Cheney make it clear he is really just continuing to advocate for his real goal -- the permanent imperial Presidency.

In the interview, Cheney cited the following points:

* the Obama campaign promoted the idea of halting "enhanced interrogation techniques" and the terrorist surveillance program and now as the Obama Administration is fulfilling those promises

* the Bush Administration had all the proper paperwork authorizing their "enhanced interrogation" and terrorist surveillance programs

* these programs were responsible for filling in many of the blanks not known about Al Qaeda and were instrumental in preventing attacks on America and battling Al Qaeda for eight years

* Cheney has filed requests to de-classify CIA reports which summarize all of the valuable information obtained from these practices

* by rolling back these programs, the Obama Administration has made America less safe

The reality is that:

* the Obama Administration made no claim during the campaign of ending domestic surveillance (a continuing point of frustration for many Obama supporters), only ending domestic surveillance without warrants under existing FISA law

* the Obama Administration now is attempting to do exactly what the Obama campaign promised to do after winning an election won in large part due to those pledges

* the Bush Administration implemented policy changes which classified vast categories of documents about Executive Branch actions and EXTENDED classification periods of documents dating back to the Bush I Administration

* yet the Bush Administration and Cheney himself played a principle role in divulging personal information about a CIA agent responsible for researching firms providing money conduits between clean oil dollars and potential terrorist groups, all in an attempt to discredit an opponent who questioned the integrity of yellowcake claims included in the State of the Union address which were instrumental in scaring the American public and Congress into authorizing the Iraq war

* the Bush administration claimed new rules were required because there was a gap in policy for detainees and had new guidelines drafted by appointees which omitted any reference to longstanding guidelines within the UCMJ and US code

* even proving suspect X provided piece of information Z after being tortured does not prove Z was not already known or could have been learned more effectively via other means and sources

There are several comments Cheney made that are worth explicitly recapping and refuting. In response to Bob Schieffer's question about the documents which "prove" the torture and domestic surveillance prevented attacks, Cheney said this:

-----------------------
I say they did. Four former directors of the Central Intelligence Agency say they did, bipartisan basis. Release the memos. And we can look and see for yourself what was produced. The memos do exist. I have seen them. I had them in my files at one time. Now everything is part of the National Archives. I'm sure the agency has copies of those materials, and there's a formal way you go through, once you're a former official, a formal way you go through requesting declassification of something, and I started that process, as I say, six weeks ago. I haven't heard anything from it yet. I assume...
-----------------------


Wow. FOUR former directors of the CIA have seen these classified documents? I presume he is referring to Michael Hayden, Porter Goss, George Tenet and current Secretary of Defense Robert Gates who was CIA Director during the first Bush Administration. Support from four former CIA Directors, three of whom could be indicted for war crimes for their role in implementing and continuing these practices hardly constitutes unbiased, bi-partisan agreement on the legality or worth of these practices.

Or maybe he's counting support from James Woolsey, the man who proudly referred to the Iraq War as the beginning of World War IV. The same man whose law firm acted as a registered agent for the Iraqi National Congress, the ex-patriot consortium of cons who brought us Ahmen Chalabi, who brought us "Curveball", the man who brought us the "proof" we needed to invade Iraq. Woolsey may believe the documents Cheney cites somehow "prove" the torture and domestic surveillance but if Woolsey has actually SEEN the documents, Cheney has a bigger problem because Woolsey had absolutely no right to see those documents since he left the CIA before they existed. (#2)

Or maybe he's counting support from John Deutsch, another CIA director with a strong track record of protecting vital, highly confidential information. Deutsch, as most probably don't recall, was found to be taking home highly sensitive CIA documents on his CIA laptop computer then surfing the Internet from that laptop on his unsecured home Internet connection. He exited the CIA rather unceremoniously and was pardoned by Bill Clinton as he left the White House. As is the case with Woolsey, any support from Deutsch for these documents "proving" these programs prevented attacks against the United States can only be based on faith because Deutsch also had no legal right to see those classified documents created well AFTER he left the CIA. If he HAS seen these documents, again Cheney and the Bush-era CIA directors should face more legal troubles from the disclosure of those documents (if they exist).

Finally, I'm not an expert in document handling procedures for information stamped SUPER-DUPER TOP SECRET but I suspect that authorization to read is not the same as authorization to possess or duplicate. I wonder why copies of such highly secretive documents on the successes of our torture and illegal domestic spying campaigns would have or should have been kept in Dick Cheney's office. Maybe there's a story there worth investigating.

Schieffer then asked Cheney about his unusual campaign to sway public opinion on the issue of these programs and the release of information about memos drafted to provide legal cover for them. Cheney said the following:

Certainly. I've made it very clear that I feel very strongly that what we did here was exactly the right thing to do. And if I don't speak out, then where do we find ourselves, Bob? Then the critics have free run, and there isn't anybody there on the other side to tell the truth. So it's important -- it's important that we...

Schieffer then interrupted and asked if Cheney would be willing to testify under oath. The answer was less than an emphatic "hell yeah":

I'd have to see what the circumstances are and what kind of precedent we were setting. But certainly I wouldn't be out here today if I didn't feel comfortable talking about what we're doing publicly. I think it's very, very important that we have a clear understanding that what happened here was an honorable approach to defending the nation, that there was nothing devious or deceitful or dishonest or illegal about what was done.

I presume Cheney's conditions on Congressional testimony would involve a lead-lined room, blindfolds on all of the committee members, and no pens, pencils or note-taking apparatus of any kind. Cheney would also have twenty-four hours to answer each question and first contact all Bush Administration officials to get their story straight before providing a final answer.

The coup de grace (or coup de no grace perhaps) of Cheney's appearance was his comment on Rush Limbaugh being preferred over Colin Powell as a "loyal Republican". After being fed a mountain of bogus, manufactured intelligence and being asked to put his own reputation as a clear-thinking, cautious military professional on the line to sell the Bush war on Iraq to the United Nations and holding his tongue for the remainder of the first term, Powell's endorsement of a Democrat for President disqualifies him as a member of Cheney's Republic -- I mean Republican Party.

While annoying, Cheney's periodic emergences from his secured, underground bunker of paranoia and fear-mongering do serve a few useful purposes. By resurrecting these bogus rationalizations for the torture and illegal domestic wiretapping conducted by the Bush Administration, he puts the issue back on the front burner at a time when the widened presence of Al Qaeda and Taliban forces in THREE countries jeopardizes ACTUAL nuclear weapons. There's no more effective contrast that could be drawn between the flawed priorities of the Bush Administration and what those priorities should have been. Cheney's comments also help remind Americans of what the Republican brand really stands for…

* ignoring the real sources of terrorist threats and launching a war we didn't need
* keeping EVERYTHING secret, even documents of prior administrations
* EXCEPT when classified information can be used to discredit opponents
* EXCEPT when releasing information might help defuse efforts to investigate your wrongdoing
* sliming fellow party members who were hung out to dry by your conniving

Cheney never accepted the rule of law in his Nixonian era career or Bush era career. He fails to grasp that even if you can abuse the law while you're in power, you can't remain in power forever and once you're out of power, you don't get to pick and choose the laws the next guy enforces. That's the chance you take by abusing the law while in power.

Keep up the good work, Dick. I hope you're around for the next four years to help drive the final wooden stake into the heart of the party you love above all else.

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#1) http://www.cbsnews.com/htdocs/pdf/FTN_051009.pdf

#2) http://www.thenation.com/blogs/capitalgames/546