jueves, 30 de abril de 2009

OMS pidió laboratorios a México desde 1999

La Organización Mundial de la Salud recomendó a México, desde 1999, instalar laboratorios para desarrollar vacunas

Thelma Gómez
El Universal
Jueves 30 de abril de 2009
politica@eluniversal.com.mx



México no posee la infraestructura para desarrollar y, virtualmente, producir la vacuna contra el virus de influenza porcina. Sucede que hace 30 años el gobierno federal desmanteló dos institutos especializados y dejó de invertir en la creación de productos biológicos, mientras que apenas hace un año adquirió una planta para producir la vacuna contra influenza estacional. Lo anterior, a pesar de que desde 1999 la Organización Mundial de la Salud (OMS) ha alertado con insistencia a las naciones a prepararse para una epidemia: una de sus recomendaciones fue crear laboratorios para desarrollar tratamientos de inmunización, con el objetivo vital de garantizar la disponibilidad de vacunas.

Los mayores productores de vacunas de influenza (aunque para la porcina aún no existe) son Australia, Canadá, Francia, Alemania, Japón y Estados Unidos. Se calcula que entre todos producen y distribuyen más de 262 millones de dosis, el 95% de las que se aplican anualmente. Los laboratorios de estos países tendrían la capacidad de desarrollar una vacuna para combatir el virus de la influenza porcina y una vez más México tendrá que depender de ellos.

Según puede constatarse en varios de sus documentos oficiales, a partir de 1999 la OMS mencionaba que en caso de una pandemia de influenza sería prioritario disponer de vacunas suficientes. En 2005 advirtió que menos de una decena de países disponían de empresas nacionales productoras de vacunas, lo cual provocaría que "la mayoría de los países en desarrollo no tendrán acceso a una vacuna durante la primera ola de la pandemia".

A su vez, en el documento Consideraciones para la vacunación en caso de una epidemia de influenza, la Organización Panamericana de la Salud previó que "en caso de una pandemia se requerirá dos dosis para proteger a cada individuo, por lo cual se estima que sólo un 14% de la población tendría acceso a una vacuna en los primeros meses de la pandemia".

Científicos consultados por la Unidad de Investigación de EL UNIVERSAL coinciden en que México tendría que estar desarrollando ya su propia vacuna contra la influenza porcina y no lo está haciendo. En América Latina, Brasil, en cambio, implementó un programa de monitoreo de los casos de influenza y fortaleció sus laboratorios dedicados a producir vacunas. De acuerdo con su Plan de Contingencia para Pandemia de Influenza, en 1998 -un año antes de las alertas de la OMS- el gobierno de ese país comenzó una estrategia para lograr autosuficiencia; entonces invirtió 150 millones de dólares para modernizar instalaciones y equipamientos de los laboratorios públicos que producen sueros y vacunas. Con un atraso ostensible, el gobierno mexicano dio los primeros pasos hace sólo un año, al comprar aquella planta.

El camino de la dependencia

Durante décadas el país tuvo un liderazgo en vacunas, mismas que se producían en los institutos nacionales de Higiene y de Virología, creados en 1956 y 1960, respectivamente. Aunque producían 90% de las vacunas requeridas, a partir de 1977 los fusionaron con otras dependencias del sector salud y en 1999 quedaron reducidos a dos áreas de una paraestatal creada por el gobierno de Ernesto Zedillo llamada Laboratorios de Biológicos y Reactivos de México, SA de CV (Birmex). De acuerdo con su página de internet, produce sólo dos de las 12 vacunas que incluye el esquema básico de vacunación.

Alejandro Alagón Cano, académico del Instituto de Biotecnología de la UNAM y especialista en la producción de sueros contra venenos, recuerda que el Instituto Nacional de Higiene "hacía vacunas de muy buena calidad, pero desde [Carlos] Salinas se le empezó a matar y se perdieron capacidades técnicas que teníamos como país".

Leticia Cedillo, especialista investigadora del Cinvestav del Instituto Politécnico Nacional (IPN) especializada en virus, afirma que hace un par de años se solicitó a científicos mexicanos opinar sobre un proyecto para establecer una planta productora de vacuna contra influenza. "Muchos científicos veíamos que podía venir una epidemia de influenza. Por ello se consideraba prioritario contar con un laboratorio que trabajara en la creación de nuevas vacunas para reaccionar ante este tipo de emergencias".

Fue hasta principios de 2008 que el gobierno mexicano anunció la adquisición de una planta, con la expectativa de elaborar 20 millones de dosis anuales, aunque en caso "de alguna emergencia" se tendría la capacidad de fabricar 60 millones. 2011 fue el año que se fijó para el inicio de operaciones.

En marzo pasado, además, se firmó un acuerdo con la trasnacional Sanofi Aventis para producir en México vacunas "ante el riesgo que representa la influenza y la influenza pandémica", según declararon públicamente funcionarios federales. En tal ocasión, el secretario de Salud, José Ángel Córdoba Villalobos, reconoció que hace 30 años el país era autosuficiente en la producción de vacunas; "ahora se busca ser autosuficiente como en esos tiempos".

De acuerdo con datos de la Secretaría de Salud, México compra cerca de 19 millones de dosis de influenza estacionaria cada año a un costo de 30 pesos cada una; es decir, invierte cerca de 570 millones de pesos tan sólo en esta vacuna. EL UNIVERSAL buscó al director general de Birmex, Samuel Ponce de León, para conocer si existe un plan tendiente a asegurar que en cuanto se desarrolle contra el nuevo virus de la influenza haya disponibilidad total y de producción nacional. Su respuesta fue que "no estaba autorizado para dar entrevistas". Otros funcionarios de la secretaría tampoco respondieron a la petición de entrevista.

Necesidades emergentes

Aún es pronto para saber cuántas dosis de vacunas contra el nuevo virus se requerirían en México, explica Esther Orozco, directora del Instituto de Ciencia y Tecnología del Distrito Federal (ICyTDF), pues es necesario saber cuál es la población que podría ser más susceptible. Y mientras estos estudios se realizan, apunta, es prioritario iniciar la investigación para que el país pueda desarrollar su propia vacuna.

Por separado, los gobiernos federal y del DF convocaron a científicos mexicanos a actuar de manera urgente. El martes anterior unos 12 especialistas en virología acudieron a una reunión en las instalaciones de Birmex, donde según algunos asistentes se expuso la necesidad de crear técnicas rápidas de diagnóstico, nuevos antivirales y la urgencia de la vacuna. Además, se anunció que Conacyt lanzaría una convocatoria para apoyar proyectos enfocados a investigar el nuevo virus.

El gobierno de la ciudad de México convocó a un grupo de científicos de varios centros de investigación a desarrollar un método de diagnóstico y una vacuna. El ICyTDF destinará 30 millones para apoyar la investigación científica que permita desarrollar métodos de diagnóstico, una vacuna y otros proyectos semejantes. Aparte, estableció contacto con el investigador Craig Venter, uno de los pioneros en el estudio del genoma humano, para que científicos mexicanos participen en la secuenciación genética de las cepas del virus de influenza porcina.

Rosa María del Ángel, especialista en virología del Cinvestav y una de los convocados por el gobierno capitalino, señala que poseer la secuencia genética del virus sería el primer paso para hacer una vacuna, y que después tendrán que desarrollarse los antígenos, hacerse pruebas en laboratorio con animales y probarla en humanos, todo bajo las normas de la OMS.

"Esta epidemia ha puesto sobre la mesa la necesidad de que el país desarrolle sus propias vacunas contra la influenza", comenta la especialista, lo cual tardaría no menos de cinco meses.

Selene Zárate, investigadora en genómica de la Universidad Autónoma de la Ciudad de México, considera que debe valorarse, asimismo, la necesidad de un centro dedicado a enfermedades emergentes, con capacidad de reacción rápida, métodos efectivos de diagnóstico y vacunas, de acuerdo con los lineamientos internacionales.

miércoles, 29 de abril de 2009

La pandemia y la doctrina del shock

"The Shock Doctrine" de Naomi Klein

Básicamente de lo que trata el libro es de lo siguiente:
En la primera mitad del siglo veinte, y desgraciadamente hasta la actualidad, los psiquiatras aplicaban terapias de shock para tratar casos graves de enfermedad mental. Una potente descarga eléctrica se aplicaba sobre la sien de los mismos. El shock sufrido solía tranquilizar a los pacientes por semanas o meses puesto que estos experimentaban una regresión psicológica hacia una etapa cuasi infantil. Claro, el daño cerebral provocado era lo de menos.

Con fundamento en estos conocimientos psiquiátricos, entre 1963 y 1983 un manual de operaciones de la CIA indicaba cuáles eran los métodos que debía aplicar un gobierno autoritario-represivo tercer mundista --las dictaduras militares latinoamericanas, por ejemplo-- para extraer información de sospechosos y presos políticos. Cuando a una persona se le mantiene en estado de shock, ésta psicológicamente se protege regresando a un estado cuasi infantil. En este estado mental debilitado es posible extraer información con mucho más facilidad de un prisionero. Ahora bien, ¿cómo se logra el estado de shock? Desde el momento de la captura de un individuo se debe buscar maximizar el impacto psicológico sobre el preso. Allanando su morada durante la noche y frente al resto de su familia es un buen método. Se vendan los ojos de los capturados y se les aisla de tal forma que no vuelven a saber, por meses, que fue del resto de sus seres queridos. Una vez capturado, diferentes métodos como la deprivación del sueño, el aislamiento prolongado, la simulación de ahogamiento y la aplicación sistemática de dolor corporal, entre otras tácticas, logran que el individuo llegue al estado de regresión necesario para que todas sus defensas psicológicas caigan y este se pliegue a la voluntad de sus torturadores proporcionándoles la información que necesitan. La efectividad de estos métodos no está en duda, aunque éticamente son indefendibles.

Según Klein lo mismo sucede con las diferentes economías del mundo. Haciendo un análisis de la historia económica reciente, en particular de diferentes instancias de aplicación de reformas de ajuste estructural, Klein concluye que por su carácter anti-popular y las profundas afectaciones que este tipo de reformas tienen en diferentes indicadores económicos --caída del empleo, pérdida de salarios reales, estancamiento económico, polarización del ingreso-- y sistemas de protección social --derechos laborales, fondos de retiro, sistemas de salud, sistema educativo, falta de crédito productivo--, es casi imposible implementar este tipo de reformas bajo circunstancias democráticas normales. Por tanto, surge el shock como facilitador. Es indiscutible que el miedo es una herramienta muy poderosa para crear y consolidar el consenso de una sociedad dividida. Probablemente el mejor ejemplo de este fenómeno puesto en práctica fue la política exterior y la política de seguridad interna impuesta por el gobierno de George W. Bush utilizando como catalizador de apoyo el pánico generado por los atentados del 11 de septiembre de 2001.

El shock puede manifestarse en diversas formas. Eventos inesperados y súbitos generan pánico en la población el cual es magnificado por las cajas de resonancia de los medios de comunicación --ojo, no he dicho que estén en contubernio con una agenda oculta del Estado, sin embargo su irresponsabilidad en el trato de la (des)información suele empeorar situaciones de pánico--. ¿A qué tipo de eventos se refiere Klein? Los hay de todo tipo: el estallido de una guerra, un atentado terrorista, un golpe de Estado, una devaluación súbita y profunda de la moneda, un magnicidio, una catástrofe natural o el brote de una pandemia. Un excelente ejemplo reciente del uso de la doctrina del shock en México es la eterna Guerra contra el Narcotráfico. El pánico que provoca en la población el alto número de ejecuciones que acaecen en el país ha desplazado completamente de la agenda pública cualquier discusión sobre pobreza, desigualdad, violaciones de derechos humanos --¿alguien se enteró de los asesinatos de activistas sociales en la Montaña de Guerrero?--, inconformidad social --les pregunto, ¿qué saben de Oaxaca desde 2006?--, corrupción política --¿qué fue de las revelaciones de la Auditoría Superior de la Federación sobre el uso de recursos públicos bajo el régimen de Fox?--, derechos laborales --¿cómo va la huelga minera?--, etc.

Ahora bien, no hay que ponerse conspiracionistas. Si bien hay instancias muy claras de la aplicación sistemática del shock --por ejemplo, el golpe de Estado de Augusto Pinochet-- suele suceder que éste se presenta como un evento exógeno. Por ejemplo, Gran Bretaña no pudo predecir la invasión de tropas Argentinas a las Islas Malvinas, sin embargo, el régimen de Margaret Thatcher capitalizó este evento para catapultar su popularidad e imponer, en los meses posteriores al hecho, una serie de reformas laborales impopulares y la privatización de diversas paraestatales.

Ahora sí, atendiendo el tema que nos ocupa: el brote de Influenza A H1N1.
A diferencia de algunos conspiracionistas pirados, a mí me parece irracional la tesis que argumenta que hay chanchuyo tras el brote epidémico. No, la mutación del virus es real y su peligro, aunque sobredimensionado, también lo es. Si acaso la culpabilidad del brote recae sobre algún sospechoso es sobre las pésimas condiciones de higiene y cuidado del medio ambiente de las granjas porcinas extranjeras en la región de Perote y la laxa supervisión de las autoridades veracruzanas y federales. Sin embargo, a pesar de la evidente negligencia, no hay dolo... esto es, nunca hubo intención de generar una pandemia.
Bien, se da la mutación y comienza la transmisión del virus Influenza AH1N1 de seres humanos a seres humanos. Pasan semanas y este asunto se convierte en epidemia. De un día a otro el gobierno, rebasado, transmite sus preocupaciones a la ciudadanía y solicita a todos tomar una serie de medidas de sanidad que ya todos conocemos. Mal por el gobierno por la tardanza y desinformación, pero no es posible argumentar que las medidas no son necesarias para evitar que el número de casos infectados rebase las capacidades de atención del Estado. Se establece una situación de pánico en la ciudadanía, la vida "normal" de los defeños se transforma completamente y la falta de información --y claridad en la comunicación-- sobre lo que sucede no ayuda nada. El gobierno sobredimensiona el problema y toma medidas controvertidas --como el cierre de los negocios restauranteros--. Podemos discutir la validez de estas medidas pero, la verdad, nosotros no tenemos aún la información necesaria como para hacer este juicio --y, aparentemente, tampoco la tienen el gobierno local y federal--.

Lo anterior es sólo una relación de los hechos. Ahora, visto desde la perspectiva de Klein, éste es uno de aquellos momentos propicios que los gobiernos suelen aprovechar para implementar medidas impopulares. ¿Qué se está haciendo, hoy en día con el préstamo de cientos de millones de dólares que solicitó el gobierno al Banco Mundial? ¿Irá a parar a las farmacéuticas de siempre? ¿Qué hay del préstamo anterior del FMI de decenas de miles de millones de dólares? ¿En qué se está gastando? ¿Cuál es el alcance de las reformas de seguridad que contemplan legalizar el allanamiento de morada o el espionaje telefónico y electrónico? ¿Qué hay de las implicaciones electorales que seguramente tendrá un hecho como la reciente pandemia?

Klein argumenta que el carácter del shock siempre es transitorio. El mejor antídoto para evitar que durante un periodo de shock se generen retrocesos legales significativos es: a) tener la cabeza fría; b) estar constántemente informándose sobre lo que sucede --más allá del evento del shock--; c) serenar a la gente en torno de uno y transmitirle la información que uno tiene; d) movilizar a la gente en contra de las medidas antipopulares tomadas durante el shock.

Coincido plenamente con el meil que me enviaste hace una hora --excepto la parte de la legalización de la portación de droga; ahí sí estoy plenamente de acuerdo ;-), aunque habría que analizar en detalle toda la reforma --.

Es nuestro deber contribuir a detener la histeria colectiva y regresarle a la gente su escepticismo tradicional para que no vuelvan a cometerse, como tantas veces en estos últimos 30 años, abusos de los gobernantes y los grupos de interés que los respaldan contra el bienestar general de la población.

martes, 28 de abril de 2009

American Casino

Todavía no sale esta película, pero estén antent@s, se estrena en septiembre en Nueva York.

Filmada a lo largo de todo el año de 2008 establece los vínculos pertinentes entre los "genios" de Wall Street y l@s ciudadan@s promedio que, al principio del filme enfrentaban dificultades para pagar sus hipotecas y al final perdieron sus casas.

¡Sumamente recomendable!



Pueden ver los avances en:

www.americancasinothemovie.com

Asimismo, no se pierdan la entrevista que le hacen a la directora y co-productora Leslie Cockburn en el programa Break Room a la mitad del Festival de Tribieca. Esta entrevista la pueden encontrar en la pestaña de "prensa" del mismo sitio de la película. La conversación que sostienen Cockburn y su interlocutor me parece una de las exposiciones más sencillas, concretas y, sobre todo, veraces sobre los pormenores de la crisis económica. ¡No dejen de verla!

Argumentos en contra de las pruebas estandarizadas entre otras medidas de reforma educativa

Las siguientes observaciones que hace Manuel García Jr. sobre el programa educativo estadounidense denominado "No Child Left Behind" son muy pertinentes para el caso de la reforma educativa conocida como Alianza por la Calidad de la Educación que se está llevando a cabo en México. Aparten unos minutos de su tiempo para darle lectura a este texto. Vale mucho la pena.



April 24-26, 2009
Killing the Sacred Cow

Homework, Testing and Stealth Apartheid in Education

By MANUEL GARCIA, Jr.


Humans are a species of ape that evolved more developed brains to compensate for the greater dangers of living on the ground instead of sheltering in the trees. Monkeys cluster into troops of several families each, for the mutual protection of the young, and to exert authority over the territory a troop inhabits. The monkey population of a jungle, for each species, will be distributed as a mosaic of troops, and the boundaries between these troops are the lines along which the competition for resources takes place. The survival and status of any single monkey is tied to that of its troop, and each member is imprinted with the behavior of excluding outsiders. This is to coalesce the members into a defensive force when attacked, and an offensive force when gaining territory and resources. It is also to guard a member's personal rank in the troop hierarchy, by excluding the competitive threat of new members.

It is helpful to keep these features of monkey life in mind when trying to understand the politics of education.

We must concede at the outset that humanity, like a mix of oil and water, will avoid solution and segregate into cells of pure type; our tribalism and racism are embedded in our natures, and it is only by conscious effort that primitive fears and instinctive behaviors can be redirected. It is a social convention -- politeness -- to assume we all make such conscious efforts today, but this in not actually the case. The unfortunate reality is that our society is quite hypocritical, and that most of us harbor prejudices, stereotypes, fantasies, preferences and impulses that we are ashamed to admit to, often even to ourselves. It is a social convention -- politeness -- not to talk truthfully about what we really want, and how we really think. While our highly developed frontal cortexes make it possible for us to devise conscious behaviors that redirect our primitive instincts, this advancement in brainpower also makes it possible for us to avoid truthful assessments of reality, by fabricating lies, euphemisms and delusions, and all these are extremely popular in our society.

To understand how we run primary and secondary education in the United States, it helps to accept these unflattering facts of our social selves. Though the picture to be presented was shaped by observations in California, it can be applied to much of the country.

The Mosaic of Schools

Most of the children in the United States are educated in publicly funded primary and secondary schools. Parents who have a greater sense of religious or racial or ethnic tribalism, or a greater sense of class competitiveness (which are all forms of fear) and have the financial means to assuage those fears, will fund the education of their children in private schools. Money is the measure of social immiscibility, it buys exclusivity.

It is a legal obligation of the governments within the nation to provide local systems of public primary and secondary education (K-12). These are funded by tax revenues, and so are resented by all individuals and corporations that define themselves by their property and profiteering. Since greed is another popular attribute in our society, these resentful taxpayers are a large population, and they organize politically to minimize their own taxes, as well as to minimize the funding of institutions serving tribes they disown ("those kind of people"). One has to recognize the strong correlation between property, or class, or "ownership," and "race" in the U.S. "Property" is stingy, and when spending prefers its own troops.

So, city and state governments run their K-12 public education systems like insurance companies: discharge the legal requirements to eliminate the liability, and do so at minimum cost. Similar to HMOs, these are EMOs, education maintenance organizations. A school district is the local government bureaucracy (usually a separate and city-wide jurisdiction) that performs the specific tasks of education, at costs limited by the combined amount of the local, state and federal tax subsidies awarded to the district, and which in turn are set by tax politics.

The essence of any bureaucracy is inertia and accumulation: it is not a rolling stone, it swells with moss. School districts will naturally try to maximize their income, to compensate for the penuriousness of tax politics at funding the resources for the children and the teachers (who in the early grades often supplement their classroom supplies from their own pockets), and the infrastructure of education. Also, they want to fatten the salaries and benefits of the administrators, teachers and service workers in the school district; which is pure human nature, and often enough justified in this field.

While most of the funding for school districts is from taxes, there can also be small private contributions, and corporate and foundation gifts, which are always part of some marketing or political agenda. These commercial forays into the schools are a corrupting influence -- literally as in the case of soda machines dispensing tooth decay to school children, with the intent of corrupting their minds by embedding "name brand recognition" -- and they are symptomatic of an anti-social tax imbalance. Charter schools are another example of the commercialization in public education, and they are also a tactic for union-busting.

The school district is itself a bipolar entity: its administrators seek to advance their careers by fulfilling the state mandates, primarily for cost, and in this they are in perpetual conflict with the teachers whose pay they always seek to limit, and who long ago organized into labor unions to protect themselves against the unrelenting pressure against their compensation (or employment). The stingier the tax base, the more acrid the labor dispute.

With the possible exception of in some very depressed and dangerous neighborhoods, parents will feel an instinctive "troop loyalty" to their local school. School is where their children are preparing for their futures, it is a community of hopes and dreams and the bright effervescence of youth. It is natural to experience a sense of community with the parents of your child's schoolmates. This sentiment can organize itself as "parent councils" allied to the school, and which contribute funds and labor to improve the school site and to provide additional resources, such as instructors in physical education, art, music, language, and for extra-curricular activities. Many such parent councils could form or group into political action committees lobbying for additional public money for education, but this is not typical (that is much more work and with little likelihood of payoff before your child 'ages out' of the school).

Obviously, neighborhoods with wealthier residents are likely to have better organized and funded parent councils, and more "perks" for their local schoolchildren. Additionally, the reputation of such schools benefit from the nature of their student bodies because of the obvious socio-economic correlation between affluence and achievement in school: families experiencing multi-generational affluence generally offer a home environment of greater stability and intellectual attainment within which their children can develop. Schools populated by such children, and given additional resources by parent donations, will be "better" by every accepted technical and popular measure. Any parent would want their child in such a school, and any parent whose child attends a lesser school will chafe at the "equity disparity," since public education is supposed to be non-discriminatory.

We are back to the monkey troop mosaic. How do we achieve equity? And, is it really a generally-held social goal to do so? Can a school district, in fairness, actually reduce the funding of a "good" school in a "rich neighborhood," or prevent the most senior teachers in the district from choosing to work there (job-site choice is a seniority benefit specified in labor contracts) so as to compensate for the equity imbalance with a poor neighborhood school? Wouldn't that be imposing a special tax burden on the parents of the wealthier neighborhood, and mightn't that simply discourage them from further contributions?; or chase away the most financially able, to other school districts or to charter or private schools?

Many "poor" schools are those with the very different and difficult challenge of extreme ethnic diversity from large immigrant communities, and so many first languages (there are 12 in some Oakland, California schools). This can be in addition to serving economically disadvantaged populations.

Is it possible to provide a uniformly equitable educational experience to every child, with school districts funded primarily by local (real estate) taxes in a nation of steep socio-economic and ethno-race disparities?

No, and we want it that way. Our first instinct is to seek to be in with the winners ("let's use Grandma's address to get him into a better school," "let's move over the hill to get into a better school district"). Our sympathies for the losers are insufficient to limit the advantages of the winners, and our tribalism and stinginess prevents raising all schools (in a state) to the conditions exhibited by the best examples. This, in any case, is the message transmitted by the political realities of today.

Money-and-Testing versus Children-and-Learning

A total of $972B was spent on public and private education at all levels in the U.S. in 2007. An average of $11,000 was spent per public school pupil (the highest public school per-pupil figure of 2005, and equalled by the Swiss), and public school pupils are 85% of the 37.9 million grammar school children and 16.5 million secondary school students in the U.S. Taking $6000 per pupil as an average spent on the 15% of students in private schools and home schooling (much higher costs for elite schools, typical of parochial schools, much lower for home schooling) my estimate of annual expenditures on primary education is $388.5B ($354.4B public, $34.1B private), and for secondary education it is $169.1B ($154.3B public, $14.8B private), for a total of $557.6B ($508.7B public, $48.9B private). This is a money stream of 'Pentagonic' proportion, so naturally it will attract considerable political attention.

The income of a school district is often about 40-some-odd percent from local taxes, 40-some-odd percent from the state (from income, sales and corporate taxes) and a small percentage from federal grants. The ratio between local and state funding proportions varies across the states. The school district exerts "local control" of the school system (physical plant, selecting the superintendent, labor contracting) and curriculum, but the state sets many standards and imposes numerous mandates (and takes direct control of districts that go bankrupt).

With the passage of the No Child Left Behind Act of 2001 (NCLB), the federal government now exercises greater influence on state educational standards. The NCLB imposes the requirement on the states to carry out standardized testing, issuing rewards or punishments in the form of federal grants to school districts either awarded or withheld on the basis of the test scores.

The US education system must serve a very diverse population, and in this regard it is at a disadvantage when compared internationally on standardized scales with good education systems with more homogeneous populations, like that of Finland.

Also, the domestic comparison of public and private schools is flawed because these two systems educate different types of populations. Private schools can cheery-pick their clients for socio-economic shine, academic potential, and mental and physical fitness. They do not have to make concessions for special education; submit to NCLB testing (only public education is so punished); or retain students deemed disruptive or academic failures, and who can be expelled permanently.

Public schools must accept all, accommodate all (though this is a bureaucratic struggle in cases that do not correspond exactly to one of the legally mandated accommodations), and cannot reject any. That adds overhead expenses to their per-pupil costs, making public schools unavoidably more expensive than many private schools. When these realities are factored into consideration, the US public school system can be judged to provide a worthy education for many of its students. The harshest criticisms of public education are broadcast by corporatist factions hostile to any effective socialist and democratizing institution; they also favor privatizing Social Security. ("Is Public Education Working? How Would We Know?" by Robert Freeman, http://www.commondreams.org/views05/0103-22.htm)

The cunning hypocrites of the George W. Bush administration had a real genius for stroking the yearning racism in the resentful hearts of the ownership class, and with the connivance of seasoned congressional 'pork barrellists', they devised the No Child Left Behind (NCLB) Act of 2001, which skewed federal funding for education to the outcomes of standardized tests in mathematics and reading. This was supposedly to ensure parents were getting value for their money and could choose "good" school districts and pressure "bad" schools to turn out "bad" teachers, and to have their children taught with the instructional methods that would ensure they achieved to the standards set.

NCLB is the fruit of the "standards-based education reform" movement, which began in the late 1980s, surging in many states during the 1990s, and which was the standard camouflage of the school privatization forces. Its basic idea is to set absolute standards of what students "should" know and be able to do; to have these standards guide the development of curricula at the local level; to measure student performance, or "outcomes," by standardized tests; and to align assessments and professional development (of both students AND teachers) to these standards. Basically, an overt paleo-conservative control-freak nightmare of social engineering covering a covert privatization prospecting caper.

A basic criticism of standards-based education and NCLB is that "it is not realistic to expect all students to perform at the same level as the best students, nor to punish students simply because they don't perform as well as the most academically talented"

The [NCLB] Act requires states to develop assessments in basic skills to be given to all students in certain grades, if those states are to receive federal funding for schools. NCLB does not assert a national achievement standard; standards are set by each individual state, in line with the principle of local control of schools. The Act also requires that the schools distribute the name, home phone number and address of every student enrolled to military recruiters and institutions of higher education, unless the student (or the student's parent) specifically opts out. (http://en.wikipedia.org/wiki/No_Child_Left_Behind_Act)

The second clause noted above is no doubt to allow every college, and not just Harvard, to recruit your high-achieving Johnny or Jill.

"Teach To The Test," and Homework

How do state education departments and local school districts respond to NCLB? Are you kidding? Since money is on the line all the way down from the state's Title 1 grant (of federal funds to school districts, for disadvantaged children) to the local administrators' raises and the teachers' paychecks: the states can lower standards so as to "raise" test scores, the administrators narrow the curricula to the core material featured in the anticipated tests, and the teachers teach to the test.

Teachers cannot "waste time" coddling the slower learners (why should children develop at their natural pace when tax revolters want "accountability?"), nor can the school district "waste resources" on enrichment activities for the fraction of gifted students, unless there is a separate state program to fund such activity, and provided it doesn't distract the teachers from the overarching goal of priming their classes for "the test" (three weeks in April-May!).

Your child is a chip in a high-stakes game for career advancement and economic survival. As a result, all the fundamental material that is so essential to learn, like the times tables, and that was once "drilled" and taught by patient and creative repetition because of the evanescence of attention among the very young, is now sent home as "homework," because there is no time to teach it in class. This is why your child is burdened with homework, often of excessive quantity; it is displaced teaching.

The ideal amount of homework is zero: do real teaching and real learning during school, and allow the child to decompress, play, and engage in family life in those few hours between the bell closing the school-day and the goodnight kiss at bedtime (instead of displacing the entire family's after-work after-school activities in order carry the burden of a child's homework). The play, music lessons, time with friends, and family life after school are so essential to a child's development. (The Case Against Homework, by Sara Bennett and Nancy Kalish, 2006, Three Rivers Press/Crown Publishing Group, http://www.thecaseagainsthomework.com/).

As schools try to cram more and more into the day to prepare kids for No Child Left Behind testing or simply to stay competitive, there's no way teachers can get through all the material, especially with ever-growing class sizes. The result: assignments that cover concepts and techniques that haven't been taught thoroughly in class or that are brand new -- even though this is ineffective, according to educators. "Homework seems to have supplanted teaching," says Marcia, [a] mother from San Francisco. "Whatever the teacher hasn't finished becomes homework." Increasingly, parents are expected to take up the slack. (The Case Against Homework)

Robbing children of their time to be free, to instead do homework (often requiring a parent-tutor interrogator), because the necessary teaching was evicted from the curriculum so as to devote months of school-days programming children to function like robots primed for regurgitation at their anticipated tests, because every paycheck in the school system rides on the elevation of those test scores, is a most despicable intergenerational crime, and an utter debasement of teaching.

Betty Olson-Jones, president of the teacher's union in Oakland, California (the Oakland Education Association) recently stated in a public meeting that teaching to the test is like holding a lit match to a thermometer in a cold room. Naturally, the indicated temperature rises, but you have not heated the room. Real teaching to real students, as opposed to programming automatons-in-training, is like warming up a real space so the rise of the indicator corresponds to an actual change of environment.

State education departments can canvass the best insights of academic experts in education and child development, and recommend standards and methods; but, ultimately, actual learning is crafted by an individual teacher for each individual student, as a knowing and very human interaction shaped by the realities of the personalities involved. Standardized testing is the delusion of measuring out standardized children produced in standardized environments; and who can ever believe their child and their child's learning environment to be standard?

The only method of any effectiveness to improve any (and so every) child's learning is to provide more focused adult attention, ideally a single tutor per child. We can surmise that Alexander the Great was an indifferent student, but his education was probably better than might have otherwise been the case, because he was tutored by Aristotle. As our children are placed in larger groups before a single teacher, they receive less thoughtful consideration during the development of their thinking processes. One can imagine how learning would improve if the student-to-teacher ratio was 3:1 to 5:1 during grammar school (instead of 20:1), 6:1 to 8:1 during middle school (grades 6, 7, 8) (instead of 30:1), and under 12:1 through secondary school.

Hire more teachers and layoff more administrators? Yes, if children's learning is more of the goal than the manipulation of money flows. "Children" versus "money," "learning" versus "testing," how do you see your school district?

Shallow Curricula For Hurried Children


In my 1950s schooling, I spent all of third grade perfecting the times tables. Today, they send them home and ask parents to infuse them into their offspring in two weeks, and then move on (with copious homework) to double and triple digit multiplication, estimating sums and differences, the rounding of large numbers, and even long division! Yes, I saw these later in fourth and fifth grades, and could understand them then because I had the good basis of the times tables on which to build. Imagine, even in those primitive times I eventually got smart enough to do calculus in high school, and to be drafted. So, what is the rush today, beyond an artificially induced money panic?

Fewer than one-third of US 4th-grade and 8th-grade students performed at or above a level called "proficient" in mathematics; "proficiency" was considered the ability to exhibit competence with challenging subject matter. Alarmingly, about one-third of the 4th graders and one-fifth of the 8th-graders lacked the competence to perform even basic mathematical computations (Rising Above The Gathering Storm, The National Academy of Sciences, 2006)

The recommendation of national experts in math and science education, on primary school math and science curricula, is that fewer and basic concepts be presented, and that more time be devoted to each. This is to build a solid foundation of understanding in young minds of hummingbird-like flightiness, on which a more elaborate framework of learning can be erected later, as their ability for complex thought and sustained attention increases.

The National Research Council recommends that schools [K–8] present fundamental concepts gradually over several years, rather than cramming them into a few weeks or months. It also suggests focusing on core topics, such as the atomic-molecular theory of matter, evolution, cell theory, and Newtonian laws of force and motion. (Janet Raloff, "Strategies To Improve Teaching," Science News, December 8, 2007; Vol.172 #23, p. 366)

The NRC's recent book, Ready, Set, Science! Putting Research to Work in K–8 Science Classrooms (National Academies Press, Washington, D.C., 2008) "aims to improve science education by building on the results of a recent study of U.S. teaching methods and emerging data on how children learn and retain scientific concepts." It "offers examples of classroom projects that let kids assimilate such concepts by testing them out."

What exists in too many early-grade classrooms is a jumbled heap of a curriculum with many disconnected bits, like a slumping unstable talus slope eroded from a once monolithic mountain of knowledge. All this does is confuse the eager if simple minds of children. The reason one-fifth of 8th-graders, nationally, cannot do simple calculations is because they still don't know the times tables, and whatever personal circumstances may conspire to impede their learning, they definitely have not been helped by being rushed along through shallow curricula, which reflect the underlying societal impatience for monetary payoffs.

The ideal 3rd-grade math curriculum would train children to have the skills of first-rate bookies and odds-makers. Besides the arithmetic of sums and differences, this is the mathematical skill of greatest impact: the ability to find products, to perceive fractions and proportions. Any educational system focused primarily on children's learning would ensure EVERY child could do this by the end of fourth grade BEFORE moving on to other concepts in mathematics, or anything involved in general science. We should base our pacing of instruction on the developmental clocks of the children -- individually -- not to one artificial standardized timer wound by the impatient hand of the revolted tax-obsessed mentality of the ownership class.

No homework, slow down, simpler curricula, more playground breaks, person-to-person teaching in the class, no high-stakes testing, pacing and focusing attuned to the natural cycles of attention and distraction of children, and their natural rate of information absorption. Children are like fresh blades of grass in that they can't be yanked up to be made to grow faster, that can be deadly. Instead, they blossom eagerly into favorable environments that are tended and prepared by patient and perceptive adults who anticipate the children's development.

The Sacred Cow

The great difficulty for many parents will be that they cannot let go of their competitive fears, and they will defend homework -- the sacred cow -- and testing as tools that will give their youngsters a leg up. After all, many competitive parents are part of the tax-obsessed mentality of the ownership class that pushed for the NCLB type of institutionalized pressure on the states' public education systems.

This anxiety over financial accumulation ("success") is blind to such facts as:

According to a 2001 review of more than 120 studies of homework and its effects by Professor Harris Cooper of Duke University, the country's leading homework researcher, and his updated 2006 review of an additional sixty studies, there is very little correlation between the amount of homework and achievement in elementary school and only a moderate correlation in middle school. Even in high school, "too much homework may diminish its effectiveness or even become counterproductive," writes Cooper in his research review of early 2006.

Many countries with the highest scoring students in achievement tests, such as Japan, Denmark, and the Czech Republic, have teachers who assign little homework. Meanwhile, countries such as Greece, Thailand, and Iran, where students have some of the worst average scores, have teachers who assign a lot of homework. Americans students do as much homework as their peers in other countries -- if not more -- but still manage to only score around the international average.

Citations for the two items above, as well as more data and recommendations are to be found in The Case Against Homework.

It only takes a few minutes of reflection to realize how much better our children would be if freed from homework and the testing driving it:

-- They would have more opportunities for play and physical exertion during and after school, counteracting the obesity-inducing damage of the fast-food, TV and internet 'couch-potato' commercialism they are bombarded with.

-- Kids' school backpacks would become much lighter, if they need them at all, since they can dispense with the lugging back-and-forth of workbooks, binders and assignment notebooks (or 'day planners'). Many kids today have backaches because they are so loaded down.

-- They would have the time to get more sleep, the lack of which is a significant health and developmental problem. For children, lack of sleep has a similar effect to a limitation of oxygen: it harms mental development. Also, with enough sleep, mood improves and stress is reduced.

-- Children diagnosed with ADHD (attention deficit, hyperactivity disorder), and that today may be drugged to "calm them down" so they will sit through long class periods, might be easily accommodated if allowing to burn off their extra energy for fifteen minutes in the playground every forty-five minutes, and for hours after school, ensuring a sound night's sleep and alert mind the next morning. A 19th century accommodation to be sure, but it works (ADHD often diminishes with age, and fades into a normal adolescence or young adulthood; usually a 3 to 5 year lag in the development of focusing attention and impulse control, compared to peers). And, is it really worth it to drug your kid to put him or her through the teach-to-test and homework grind?

-- It is true there is a small proportion of children who have more serious problems in regard to attention and/or hyperactivity and must be treated with specific interventions (this is not a euphemism for drugs, they need helpful "company"), but the explosion of much milder cases today is largely driven by the undue pressure put upon our schoolchildren.

It is only in a world where schooling or adherence to a particular set of social norms is compulsory that a condition like ADHD becomes a disorder. There was greater scope over a century ago than there is now for children to do other things in childhood and wait until they settled down in adolescence without being treated for their condition. (--David Healy, interviewed by Christopher Lane)

Some parents take things one step further in the effort to give their kids an edge: They try to get them diagnosed with a learning disability, even if they don't have one, says one family therapist from Northern California. "Most of the kids I see are pretty normal, average kids. They don't have learning disabilities. But the parents want to do all this testing and get all these special arrangements," she says. Such arrangements include extra time on tests and tutoring. (The Case Against Homework)

Paraphrasing Jesus Christ's "the word was made for man, not man for the word" from the New Testament, imagine: a school system that is molded to the requirements of each child, not a school system that regiments all children to an arbitrary standard whose purpose is entirely mercenary.

Education as a Monkey War

The real purpose of No Child Left Behind standardized testing is to maintain segregation.

Neighborhoods and districts with "good schools" and "high" test scores are "rich" and primarily white. "Poor," "minority" and many "urban" schools are those with large non-white populations, with many immigrant children and so many languages; and parents with less money.

For he that hath, To him shall be given; and To he that hath not, from him shall be taken even that which he hath." (Matthew 13:12).

In the case of our monkey war over education we might apply the above freely this way: For the school district that hath high test scores, To that school district shall be given $, and To the school district that hath not high test scores, from that school district shall be taken even that $ which the school district has. This is how NCLB will dispense its "grace."

The parents of children in the more homogeneous, "higher performing" schools do not want to mix with the lower social classes and darker races, and they want to have greater "competitive" advantages given to their children (i.e., to graduate with high grades from a "good" school and get into a "good" college, to go on and make more money in a "good" career). This segregation is based on primitive racism, plus primitive competitiveness, plus fear, and the usual comfort most people find in their ethnic and class clannishness.

The smarmy reactionaries of the George W. Bush administration crafted the NCLB Act to preferentially funnel government money to the whiter wealthier neighborhoods, it is stealth apartheid.

It is also stealth union-busting, because test scores are used to judge teacher and school performance, and to make salary and job-action decisions in the public school systems. Increasing the funding to charter schools encourages non-union hiring, and school privatization enterprises. Also, NCLB incites pressure for school privatization by stoking public resentment over "low performance" as showcased by test results from hard-pressed public schools. The clause about military recruiting seems to be merely incidental to the NCLB package, and thrown in for convenience.

I think the key to understanding NCLB and the current distortion of public education by teaching-to-the-test and homework-as-displaced-teaching is to see NCLB as being targeted pork barrel to encourage public school privatization and enable stealth apartheid, and a tactic of top-down class warfare in the same spirit as the Bush tax cuts for the wealthy.

While a cunning and clever ruse, it is sad to think that such mean-spirited small-mindedness exists, to so callously destroy the learning experiences of millions of children just to advance the grasping monetary ambitions, and to indulge the worst prejudices of the ownership class.

The best hope for the future is that enough parents and children revolt simultaneously, killing the sacred cow of homework, and joining into a large enough political force to overturn the NCLB distortion of public education, before the children "age out" of the system and the parents lose personal interest in the struggle.

Manuel Garcia, Jr. can be reached at mango@idiom.com

Poemas de Khalil (Luis Nieves)

Summayah

when the dark of evening came,
you began your reign of bombs on our ancient land
and against the fires of anti-aircraft guns
i cradled my summayah in my arms,
and I vowed to you,
oh, enemy of the sun, (1)
we will resist.

your blue black bombs fell as
you came to our lands proclaiming
“all aggression must end!”
but it was you who created these nation states,
and for what reasons were our lands divided at your conference tables?
who was it that cut up our peoples into artificial boundaries?
who separated brothers, uncles and cousins?
before your coming we did not know such worlds.

did you not know?
that at the end of my day,
summayah would run to the gate and jump into my arms?

ahmad.
summayah loved her uncle, ahmad.
before the tortuers trained at fort bragg, north carolina
disappeared him for one year.
before the electric prods
before the pulling of nails from fingers
drove him insane.

she loved ahmad.
now he sits in the sun
everyday.

listen, enemy of the sun,
there are those of us who have read and studied
those of us, who know who underdeveloped africa,
the middle east,
asia,
the pacific,
and the americas.

summayyah would have been six in a month.
and she had asked me to buy her a blue bicycle.

listen, enemy of the sun,
be I left childless,
be i a grave digger,
be I chisling stone markers
i will rise,
you may delay us,
but you cannot stop us.

today, we are burying summayah.
no one speaks.
this is the new world order.

STOP, enemy of the sun!
do not tell me of your democracy,
do not speak of humanitarianism
oh, enemy of the sun,
if you continue to tell me these lies
I will tell you of the middle passage,
i will tell you of your wounded knee,
i will tell you of your trail of tears,
i will tell you of hiroshima,
I will tell you of chile,
i will tell you of grenada,
i will tell you of panama,
i will tell you of my iraq,
i will tell you of my summayah.
but, for the peoples of the world,
i would like to imagine my grand-daughter describing summayah’s laughter
filling clear air, and playing in open fields.

in writing the setting
she will point to these summayahs looking to the skies:

the skies will be blue, clear and bright.

and our summayahs will taste the scent of wildflowers
blossomings.



Jerusalem

my heart,
today reminds me of the first day of our honeymoon.
the olive flowers are blossoming.
rain falls lightly.

you asked to marry
when the blossoms came.
In the hills above our village.

in different times,
we would go
once again
to the hills.
for our twenty-fifth anniversary.

because of you
i asked for permission from my keepers,
for a day,
or an afternoon.
then,
just an hour.

but my captors laughter
was drowned out by the
screaming as the f-16 fighters
bombed gaza-
for the seventh straight day.

it is summer.
because of the heat
i daydream of
a cup of cold water
from the well for our olive trees,
and think of fahim pruning the olive trees in my absence.
as a lonely dove settles on the razorwire
that encircles muhammad, ali myself
and all of palestine.

muhammad had a picture of our flag
when the captors found it
they asked
where is this place?
then they began furiously beating him.

my heart,
surely it is time
ihklas is old enough to marry
and to go to the training camps.

today, muhammad received a letter
an isreali soldier refused to let his wife pass
and she gave birth at the checkpoint.
the baby died.

it is fall.
ghazi, our imam
led us in prayers during our 11th ramadan here.
His daughter was not allowed to go for heart surgery.

it is winter.
i break the ice on our water jugs.
across the valley
the apartheid wall lengthens its shadow.

in the evening,
the soldiers cut down the olive trees

to warm themselves.


Poemas escritos por KHALIL (LUIS NIEVES)

lunes, 27 de abril de 2009

Occupation 101



Excelente documental reciente sobre la historia de la ocupación israelí sobre los territorios palestinos y la vida diaria de estos bajo un régimen de apartheid y represión. Desgraciadamente no contempla el bombardeo reciente a Gaza, pero ustedes podrán imaginarse que si la situación estaba así de mal antes, ¿cómo estará ahora?

Película fundamental ampliamente recomendada por este escribidor.

Pueden verla en el siguiente hipervínculo:

Occupation 101

martes, 21 de abril de 2009

Efervesencia social en Guadalupe

Apr 1 2009

After a month and a half of political deadlock, violent confrontations with police, and the death of a union militant, Guadeloupean activists reached a wide-ranging agreement with the French government. While the movement's grievances stemmed from the exorbitant living expenses in, they were firmly rooted in the French overseas territory’s history of economic exploitation and racial inequality. The movement’s success marks a new chapter of political and social activism in the French Antilles.

On January 20 the Caribbean archipelago of Guadeloupe witnessed the launch of the largest political movement in its history. For 44 days a mass general strike brought the French overseas territory to a standstill: Schools and universities closed, major commerce was suspended, banks shut down, hotel rooms emptied, government services were discontinued, restaurants were shuttered, public transportation halted, and motorists became pedestrians as gasoline distribution was interrupted.


Guadeloupe on Strike: A New Political Chapter in the French Antilles
By Yarimar Bonilla


Huge demonstrations accompanied the strike, with as many as 100,000 people marching in the streets demanding social and economic change. After a month and a half of political deadlock, violent confrontations with the French police, and the death of a union militant, Guadeloupean activists reached an agreement with the French government on 165 demands, including a 200-euro ($250) increase in the monthly minimum wage, measures to aid farmers and fishermen, lower bank fees, reduced airfares between the islands and France, and reduced prices on food, housing, water, gasoline, and public transportation.

The strike was organized by a coalition of 48 organizations, including trade unions from a wide spectrum of industries (gasoline distribution, commerce, tourism, civil service, health care, education, and agriculture to name a few), as well as environmental groups, peasant organizations, political parties, pro-independence activists, consumer rights advocates, associations for disability rights, fair housing proponents, music and dance groups, and a wide range of other political, cultural, and civic leaders. These diverse activists came together under the name Lyannaj Kont Pwofitasyon (LKP), which can be loosely translated as the Alliance Against Profiteering (the complete list of member organizations, the coalition’s full political platform, and copies of the agreements signed can be found on the LKP blog, lkp-gwa.org [3]). In Creole, lyannaj refers to a coming together, or a joining of forces, for a common goal. In this case, Guadeloupean activists found themselves in lyannaj against the “expensive life” (la vie chère) that characterizes the French Caribbean and the excessive profiteering and economic exploitation they call pwofitasyon.

Their political agenda first took shape in December around the high cost of gasoline, which in recent years had reached exorbitant levels—up to about $130 for a full tank of gas. Labor activists, particularly those in the UGTG (General Union of Guadeloupean Workers), decided to launch a movement to lower gas prices, but as other organizations joined the effort, it quickly became clear that gasoline was not the only important commodity whose price was inflated in Guadeloupe. Through a series of meetings, the collective developed a political platform that not only centered on the high cost of living but also tackled deeper problems, calling for, among other things, the development of the local fishing industry, the promotion of local cultural initiatives, an overhaul of the educational system, environmental planning, and employment initiatives. The collective eventually produced a list of 120 demands.



While the LKP movement can arguably be seen as a response to the global economic crisis, its demands are rooted in Guadeloupe’s particular history of economic exploitation and racial inequality. As a French overseas department, Guadeloupe enjoys relatively high salaries and standards of living compared with other Caribbean societies. It has one of the highest per capita incomes in the region, and the minimum wage is the same as in France (almost $1,200 per month when the strike began). However, these high salaries are accompanied by high prices on most consumer goods and services—ranging anywhere from 20% to 170% higher than the prices in mainland France. Moreover, Guadeloupe is plagued by a wider economic malaise; with an unemployment rate of 22.7%, compared with France’s 8.1%, and twice the French poverty rate (12.5% versus 6.5%), the contemporary economic landscape seems bleak, particularly for local youth (the unemployment rate is 50% for those under 25).

Merchants argue that high transportation costs, taxes, and tariffs oblige them to charge more for imported goods. Local political activists answer that the high prices are also the product of a larger racial and economic history. A small white minority, commonly referred to as the békés, monopolize Guadeloupe’s economy through their control of the import-export industry and most major retail operations. These elites are seen as the direct descendants, in both biological and economic terms, of the area’s colonial-era plantation owners and slaveholders. In fact, it was partly the fear that independence from France would only consolidate the békés’ economic dominance that led many in the region, including intellectuals like Aimé Cesaire, to turn to the political project of French incorporation. But that quickly proved disappointing: After Guadeloupe’s integration into the French Republic in 1946, the local economy collapsed, unemployment skyrocketed, islanders left in massive numbers, and dependence on the French state deepened—even as the economic dominance of the béké class remained as strong as ever.



The LKP members I spoke to said the movement was united in its critique of Guadeloupean society, but its activists do not have a common political solution. Some of the organizations in the collective are known for their pro-independence ideology, but others do not share it; in fact some of the organizations claim to have no political leanings at all, save for their opposition to high prices. This is a distinguishing feature of this new movement. Unlike previous generations of pro-independence or pro-autonomy political projects, the LKP does not imagine itself as a political organization advancing a specific political project.

The initial goal of the movement was conjunctural: to bring together a variety of organizational struggles in the context of a shared campaign in order to strengthen the work of each individual organization, and not necessarily to create a new institutional apparatus. But the LKP soon became larger than the activists involved could have imagined, partly in response to a local thirst for political and social change.

Despite the absence of an official political agenda for the movement, its platform was seen by many as a demand for more local sovereignty and autonomy, though not necessarily outright independence. The LKP itself does not advocate for greater autonomy, yet during the course of the strike, a popular chant emerged as the official slogan of the movement: “Guadeloupe belongs to us, Guadeloupe does not belong to you, you can’t do what you please in our country!” (La Gwadloup sé tan nou, la Gwadloup sé pa ta yo, yo pé ké fè sa yo vlé, adan péyi an nou!) Originally a protest chant created by Jacky Richard, a local bank worker, “Guadeloupe Belongs to Us” was set to music by the group Akyo and quickly became a massive hit. During the time of the strike, the song seemed to echo out of every corner in Guadeloupe: It was shouted by thousands of demonstrators during protests, sung by children on the playground, blasted out of car radios and open windows, and its lyrics were emblazoned upon thousands of T-shirts sold out of the trunks of cars.

The slogan’s ambiguity might explain its popularity, for it is unclear how the lines of belonging are drawn here: Who exactly constitutes “us” and “you”? And what are the implications of ownership or belonging in this context? This ambiguity speaks to a particular political agenda, one distinct from the political projects of incorporation and independence. As Raymond Gamma, an LKP spokesperson, told me: “We are trying to invent a new form of collective organization. Maybe we will find it within the French collectivity—not being French while at the same time being in the French ensemble [collective]. I don’t know. What I do know is that we are creating something that no one can imagine except us.”

On January 25, after nearly a week of social paralysis, the French state, locally represented by the prefect, Nicolas Desforges, agreed to meet with the LKP leadership. The ensuing three-day negotiations included local employers, LKP leaders, French government bureaucrats, and local politicians, who decided to broadcast the meetings live on Guadeloupe’s TV and radio stations, presumably to highlight their own role in the affair. However, the broadcast unexpectedly resulted in even wider sympathy for the LKP. “For three days we were able to see with our own eyes the incompetence of the French state, the shamelessness of the employers, the uselessness of the politicians, and the fierceness of the LKP,” a Guadelope resident told me.


Elie Demota

The main protagonist of the three-day miniseries was Elie Domota, the LKP’s main spokesperson. Over the course of the negotiation sessions he delivered a powerful J’accuse performance, directly confronting the French state for its lack of oversight and publicly airing the corrupt practices and outrageous profits of the local employers. Viewers described the event less as a negotiation than as a public trial, with Domota imagined as the people’s prosecutor, unmasking the relations of inequality that prevail in Guadeloupe. He quickly emerged as a star among the Guadeloupean public—numerous fan sites sprung up online, T-shirts with his name were seemingly mass-produced, and everywhere he went people chanted his name and asked for his autograph. The French national media also fell in love with him, devoting numerous articles and TV reports to his persona.

Despite the media attention and the massive local support, the negotiations ended after three days, when Desforges left the negotiation table, presumably uncomfortable with the “public hearing” style of the events. But since the televised negotiations had only strengthened support for the movement, the LKP was able to respond to the prefect’s departure with increased mass demonstrations.

As the French state stalled, Guadeloupeans took to the streets in record numbers: First 20,000, then 40,000, then 65,000 demonstrators marched in the streets in support of the LKP. In addition to the mass demonstrations, there were also incidents of violence, particularly at night, when many young demonstrators set fire to cars and trash bins and vandalized businesses and public offices.

On February 4, after two weeks of ongoing conflict, Overseas Minister Yves Jego arrived in Guadeloupe and sat down to negotiate with LKP representatives. This time the negotiations were not televised, but the LKP’s support continued. Demonstrators rallied outside the prefecture in Basse Terre, where the negotiations were held, setting up drumming circles where they danced and sang through the night and into the wee hours of the morning. The music of the drums spilled into the negotiation room, where LKP representatives carefully detailed the economic situation in the overseas departments for the seemingly naive Jego.

Finally, on February 8, after a 20-hour negotiating session that ended at 8 a.m., the LKP negotiators believed an agreement had been reached. But that afternoon, as LKP representatives and local elected officials were on their way to sign a finalized agreement, they learned that Jego was on a plane back to France, having signed nothing. Before making any deals, Jego later said, he had to consult the Parisian government.

With both the prefect and the overseas minister having abandoned negotiations, the tension in Guadeloupe reached an all-time high. Meanwhile, the French national newspaper Le Monde published a report detailing corruption and illegal practices at the Guadeloupean oil refinery, backing many of the LKP’s claims during the negotiation sessions and its insistence on the absurdity of local gasoline prices. In addition, the popular French TV channel Canal Plus aired a documentary titled Les derniers maîtres de la Martinique (The Last Masters of Martinique) about the békés, featuring candid, racist commentary by local Antillean elites. Both the documentary, which was widely viewed in the French Caribbean, and the Le Monde report strengthened support for the movement, and once again Guadeloupeans took to the streets—this time reaching 100,000 demonstrators, nearly a quarter of the territory’s population. At the same time the strike spread to Martinique, where a coalition called the February 5th Collective declared a strike of their own around similar issues.



After almost a month of peaceful protest, Domota declared that the movement had “walked enough” and was now going to change its methods. The following morning, barricades blocking major thoroughfares sprang up across the territory, and for the week of February16–21, Guadeloupe came to a complete halt. The barricades, assembled out of palm branches, old tires, and emptied cars, served as both a political symbol and a site of political action. People stood guard at the barricades, often receiving visitors who would come to offer support and solidarity. One LKP supporter, who was involved in the barricades in the town of Gosier, told me that the most important aspect of the barricades was the relationships of solidarity and partage (sharing) that were developed. Neighbors would come daily to bring food, coffee, and cigarettes to the protesters. They would spend time with them on the barricade, talking about the recent events, the goals of the movement, and the actions to come.

Although the barricades were a community space during the day, at night the violence would escalate, as bands of disaffected youth took over from the demonstrators (particularly in Pointe-à-Pitre and surrounding urban areas). Often wearing ski masks, groups of mostly young men fired shots into the air and set fire to barricades, cars, garbage containers, and even local businesses. Some joined the barricades as a form of protest, but others sought to profit by either charging people to pass through the barricades or by looting local stores. This type of protest is not uncommon in the French Antilles, where labor conflicts are often accompanied by “unofficial” violent actions at night. Nor is it uncommon in French society more widely, as evidenced by the Parisian riots of 2005. But in this case the French state responded in a particularly confrontational way, deploying hundreds of gendarmes to the region.



The gendarmes arrested more than 50 demonstrators, according to news reports, and roughed up many of them, including Alex Lollia, an LKP delegate and the head of the multi-industry Confederation of United Workers, who was hospitalized after a confrontation at a barricade. Both professional and amateur journalists closely documented these clashes, and the images of the stark opposition between heavily armed French troops and unarmed local protesters stoked the fires even more.

On the night of February 17, after Lollia was hospitalized, the violence reached a new level, resulting in the death of Jacques Bino, an LKP supporter and union militant. Bino was on his way home from an LKP meeting when he found himself heading toward a flaming barricade. As he began to turn his car around, he was fatally shot in the chest. According to the authorities, the shot came from young protesters on the barricades who mistook Bino for a police officer. But many in Guadeloupe question this official story and suspect foul play. The investigation into his death is still ongoing, but many feel that the truth will never be known. During my visit in March, I was repeatedly told: “This is our Kennedy assassination.”

Many believe that Bino was murdered to either weaken or discredit the movement. But his death actually served to rally supporters even more. His funeral turned into a massive demonstration as about 25,000 mourners crowded into the small town of Petit Canal to pay him tribute. The death captured the attention of the media once again, and this time even the French president took notice. On February 19 Nicolas Sarkozy met with Antillean elected officials in Paris and offered a public address to the Antillean population, which was broadcast on RFO, the French overseas TV network. He promised to solve the crisis and recognized the need for France to rethink its relationship with its overseas departments. However, in Guadeloupe most remained skeptical and dissatisfied with Sarkozy’s statement. That it was transmitted on the overseas network, rather than a French national network, was taken as a sign that the Antilles continue to be regarded as marginal to the French nation.

Soon after Sarkozy’s address, LKP leaders returned to the negotiating table with a new set of mediators from mainland France. The powerful economic elite in Guadeloupe, represented by the local chapter of the French business association MEDEF, refused to reach an agreement. However, over the course of the strike a new employer organization had emerged: the UCEG, which represents smaller, local Guadeloupean business owners, many of whom have also long struggled against the economic monopoly of the white elites. Along with local elected officials, these business owners were able to reach an “inter-professional agreement” that would grant a raise of 200 euros to the lowest-paid workers. On February 26 the LKP delegation, local employers’ associations, and local elected officials officially signed this agreement—which was called the Jacques Bino Accord.


Domota signs a deal with government representatives.

The prefect declared the general strike over, but in fact it continued until March 4, when a final 165-point agreement was signed. At this point the LKP called for a suspension of the general strike; schools and banks reopened, and many Guadeloupeans returned to work. However, smaller strikes and negotiations continued, as workers sought to implement the Bino accord in their workplaces. LKP delegates continue to negotiate several of the other elements of the agreement, including a finalized list of reduced-price grocery items. Meanwhile, an agreement was reached in Martinique on March 11, but a new movement erupted on the French island of Réunion, in the Indian Ocean, and a general strike was declared in France for March 19—fueling fears that the Antillean crisis might spread through the rest of the Republic.

Although labor strikes are common in the French Antilles, the wide impact, mass support, and broad agenda of the LKP strike was unique in Guadeloupe’s history. For many, this episode marks the beginning of a new chapter of political and social activism in the French Antilles. Although the LKP was originally conceived as an ephemeral alliance, the massive support that the movement received during its month and a half of uprising have obliged it to take shape as a new political actor. The movement’s leaders are now in the process of institutionalizing the LKP, though it remains unclear what form this will take. It is uncertain what the long-term impact of the movement will be and how it will affect the socioeconomic future of Guadeloupe, but one thing is clear, as the new slogan on T-shirts and banners in post-strike Guadeloupe asserts: “Nothing will ever be like it was before!”

Todo sobre la crisis, con Janet Tavakoli

April 19, 2009
Janet Tavakoli
Author, "Dear Mr. Buffett: What an Investor Learns 1, 269 Miles from Wall Street"
Q&A Podcasts




Info: Janet Tavakoli is founder and president of Tavakoli Structured Finance, a Chicago-based firm that provides consulting to financial institutions and institutional investors. . Her new book is called "Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street." Its the story of her meetings with Warren Buffet prior to the economic downturn and how that impacted the way she views investing. She is a former adjunct professor of derivatives at the University of Chicago's Graduate School of Business. She has also worked for Westdeutsche Landesbank in London, Bank One in Chicago, Merrill Lynch, PaineWebber, and Bear Stearns





Uncorrected transcript provided by Morningside Partners.
C-SPAN uses its best efforts to provide accurate transcripts of its programs, but it can not be held liable for mistakes such as omitted words, punctuation, spelling, mistakes that change meaning, etc.

Q&A With Janet Tavakoli

BRIAN LAMB, HOST, CSPAN Q&A: Janet Tavakoli, author of the book ”Dear Mr. Buffet,” what do you think of money?

JANET TAVAKOLI, PRESIDENT, TAVAKOLI STRUCTURED FINANCE: What do I think of money? You know, I’m glad you asked that question because this is all about money and whether or not Washington protected our money and what has happened to our money over the past few years.

Money was nothing more than something we human beings created in order to enhance our probability of survival. So money is a very important means of exchange.

You know, and back when we created money, the reason we did it is because, let’s say I was growing wheat. Well, I would have to exchange my wheat in the marketplace for various goods and services that I needed. And if somebody didn’t need wheat at the moment, it would be hard for me to barter my wheat for something else.

So we created money as a representation that I have this wheat behind it. I’ll give you this piece of paper or this coin and someone else will take that piece of paper or coin for your goods because they know that I have wheat backing my coins.

And we created money to make it easier for us to trade goods and to enhance our ability to get the things that we need to survive, to make life better for everyone. So money isn’t an evil thing. Money is actually a good thing that we humans created.

And that’s why it’s all the more important for our government to take a key responsibility in protecting the value of our money so that it’s accepted everywhere in exchange for goods and services and so that we, the population, can create that from the value that we’ve created.

LAMB: What’s been your own relationship to money in your life?

TAVAKOLI: My own relationship to money, the way I view it, may be different than a lot of other people. I’ve always just viewed it as a means of independence, and that may just be coming from being a woman and growing up in the United States. I viewed money as a way to provide security and freedom.

I was never all about accumulating vast quantities of goods. I wanted money so that I would have the freedom to do the things that I enjoy doing in life and to provide opportunities for the people in my life that are important.

LAMB: Where do you live?

TAVAKOLI: I live in Chicago. In the mid-west.

LAMB: How do you make your money?

TAVAKOLI: I make my money from intellectual capital. So I used to work more with my hands. Now I work more with my mind. I was a former chemical engineer and I worked in chemical companies and in an oil refinery to make a living.

Now I make my living primarily by analyzing things, figuring things out, mainly for large financial institutions, chiefly people that I worked for in the past, only people that I know and know well.

And I make it in the tongue-twisting products that brought the global economy to its knees. Things like credit derivatives, collateralized debt obligations, things that most Americans haven’t heard of, but these are the things that got into our financial markets and were abused and misused.

So the global financial economy now, some people say it had a heart attack and I say, no, it’s actually more like appendicitis where you have toxic assets leaking into the system and basically crippling it.

And what we are doing right now, instead of fixing the problem, is we are prescribing some very potent, addictive painkillers. And that’s not the way to go when the economy is having an appendix attack.

LAMB: What word would you use to describe the way you feel about what’s going on?

TAVAKOLI: I have some complicated feelings about what’s going on, Brian, because I’m sure that there are many people who believe that they are doing the right thing. But what is going on now is misguided and the policies that we’ve adopted will only make our pain and suffering drag out.

And it has the – what’s going on now is we are delaying fixing the problem. We haven’t created any transparency so we’re covering up the problem. And all of our policies seem designed to give comfort to the financial system and, in some cases, unwarranted comfort and undeserved comfort.

LAMB: Actually, that’s a fine answer but I was looking for a word like, you know, we hear the commentators use like, they hear like, ”I’m scared.” Are you scared? Should we be scared about what’s going on?

TAVAKOLI: We should be – we should be very worried. I don’t want to scare the American people. Let me first say, and this is a very important thing, that I don’t think has been stressed enough to the American people.

If you have money in a bank and you are underneath the FDIC threshold of $250,000 per individual, for a married couple that would be $250,000 each plus another $250,000 jointly for a total of $750,000, most Americans are underneath this limit, your deposits are just fine.

Your deposits would be just fine even if your bank went into receivership. Your deposits are fine. You don’t have to have a run on the bank. You will get your money. The FDIC is doing a very good job with that.

So, but most people are afraid and concerned because of the wealth effect. They have seen their net worth dramatically decline. Their 401(k) accounts, the value of their home, their job security, in some cases, or their job.

So yes, I think as a country we should take this very seriously and fear isn’t a very useful emotion. But if you are feeling that way you want to harness it in a constructive way. Write your congressmen, write your senators. Tell them how you feel about what’s going on.

Inform yourself. Read the papers. Take that energy and put it to some good use because we Americans are now at a critical phase in our democracy. Our democracy has been deluded by the effects of the actions that we’ve taken to try to get out of this financial crisis.

LAMB: By the way, do you think the $250,000 limit will be extended beyond the end of this year?

TAVAKOLI: I hope it will be. The old limit was $100,000 and it’s a big difference, isn’t it? And I think part of the reason of increasing the limit was that so people wouldn’t withdraw funds above the limit, but also to attract money that was fleeing from money market accounts because money market accounts started liquidating assets out of the fear that they may have toxic assets and people were taking money out of money market funds.

That money had to go somewhere. And it was a better idea to have that money go to the banks that needed deposits. And if more money was going to go to the banks, we needed to raise that limit, that guarantee limit.

So I hope that limit will be extended, but Americans should watch that. If you are above the $100,000 limit and, you know, you’re close to the $250,000 limit, you’ll want to watch that very carefully to see if those guarantees will be extended.

Even though it appears that the government is willing to just willy-nilly print money to prevent any bank from going into receivership, which I think is a galactically bad idea.

LAMB: This book ”Dear Mr. Buffet,” is which book for you? What’s the number?

TAVAKOLI: Well, if you count the second editions of my other books, it would be the fifth book. My first book was on credit derivatives and people have heard a lot about that these days. They’ve – and they’ve added to the risk in the system by providing leverage and providing opacity.

So a lot of bad guys pulled a lot of shenanigans using credit derivatives, which increased risk in the system and increased people’s ability to borrow in a hidden way so that there was a lot of debt in the system that was invisible.

And banks themselves were often running invisible hedge funds. The legacy investment banks were running invisible hedge funds, but so were our major banks and that includes JPMorgan, Citigroup, Bank of America, our largest banks.

So it added a lot of risk to the system, and people are in denial about their ability to manage those things and also collateralized debt obligations which are – include these packages of mortgage securities, some of which were overrated and over-priced the minute they came to market.

And if that wasn’t enough, investment banks were creating these things in their financial meth labs, knowingly selling things that they knew or should have known were overrated and over-priced. And it didn’t stop there, they went one better.

In 2007, when it was clear that this activity should be shut down because we had mortgage lenders failing throughout the country, instead of shutting down these financial meth labs, investment banks sped up.

They accelerated the bad deals they were bringing to market and these now weren’t just bad deals, many of them were just phony securitizations with no other purpose than to hide losses.

LAMB: Let me interrupt to ask you to do the simple thing of defining a lot of this language. Credit derivatives – who invented that term?

TAVAKOLI: I don’t know who invented the term. It’s been around for maybe 15 years. But credit derivatives didn’t start growing until the late ’90’s and in 2000. That’s when we saw really this huge growth spurt.

LAMB: Have you any idea who started it? -I mean is there a ...

TAVAKOLI: Well, JPMorgan Chase was in the forefront of pushing credit derivatives technology. And it wasn’t meant to be a bad thing, originally. Now a credit derivative, what is that?

Well, if you have a bond, let’s say, and somebody – you have the debt of someone, a government bond or a corporate bond you expect to get paid back par at maturity. And you have credit risks. You put money upfront, you expect to get your money back at the maturity of the bond. In between you get coupon payments.

But, let’s say you wanted to protect your investment in a bond and you were worried about the credit. You could buy credit protection, a credit derivative. It’s not a bond. It’s derived from a bond. So it’s a derivative, and it’s a credit derivative. You’re trying to protect your credit.

So you could say, I’ll pay you all of my coupon or part of my coupon to protect my money that I will get paid back at maturity. So it was an idea, originally, of hedging or transferring risk. It was meant to be a good thing. And in all candor banks created it because they wanted to get loan risk off their balance sheet.

But they had put loans on their balance sheet at prices that didn’t make sense. So they realized, if we could persuade, dazzle, and persuade the Fed that we could create this big pocket that has virtually zero risk called a super senior tranche. Then we don’t have to pay much of anything for that protection. And we can basically transfer most of the risk of these mispriced loans off of our balance sheet. That’s how it started.

LAMB: OK. You’ve said a lot of things that the average person is going – and I’ll consider myself in that ...

TAVAKOLI: Right.

LAMB: ... category – a super senior tranche? ...

TAVAKOLI: Right. It was supposed to be super safe.

LAMB: What’s a tranche?

TAVAKOLI: Tranche. Now if I take a package of mortgages and I put them all together in a pool I can create a little business, you could say, that’s going to pay cash out from all these mortgages that are paying their interest rate every month and their principal.

And so a tranche of this pool of mortgages will be – let’s say, Brian, you love risk. And you would say, look Janet, I don’t know if any of these mortgages will go into foreclosure. But I’m willing to take the risk of, let’s say, the first four percent of the mortgages in this pool, whoever they are, if they default I’ll take that risk but I want to get paid more. And I’ll say, OK, Brian, you have the riskiest tranche, called the equity tranche.

Someone else doesn’t like that much risk but they say, Brian took the first four percent of the mortgages to foreclose if any, I’ll take the next four to eight percent. And I want to get paid a little bit less than Brian but, you know, not nothing. I want to, you know, have a fair amount of risk. That’s the second tranche.

And so on up the line until you get to what was supposedly this super safe, super senior where basically they say we’re protected because all of these other guys, all of these other tranches are taking losses before I take a loss.

LAMB: So all these tranches, by the way, are not backed up by the Federal Deposit Insurance Corporation?

TAVAKOLI: Not at all, no. This risk was purely on the investor. Many of whom were sophisticated investors.

LAMB: What happened to the – as I was growing up, the simple process of going into a bank and getting a mortgage, paying them – I can remember when they were nine percent, 10 percent loans.

TAVAKOLI: Yes.

LAMB: And the bank just keeping that mortgage. Why did they have to go to this business of securitizing this?

TAVAKOLI: All right. Now, you know, Brian, you’ve hit the key problem on the head. And that is, if you had gone to a bank, a bank generally knows you. They know your – where you live. They, you know, maybe even knew people in your neighborhood.

They basically have an idea of whether or not your job was secure. They could verify your savings. You generally have your savings with the same bank that you got your mortgage from. So they knew who you were, your character, your credit, your capacity to pay. And that was a good idea.

When we had sound lending practices at banks packaging mortgages together was a really good idea because people would put 20 percent down. Their total debt was no more than 36 percent of their income.

We had a number of things that we looked for for a good solid mortgage loan. That’s prudent lending. We really need to get back to and we’re nowhere near that yet. But the reason that was a good idea is because it allowed you to buy a house.

You could borrow money. That’s called leverage, and you could pay for your house over time. People used to have parties when they paid off their mortgage. It was supposed to be a reason to celebrate. Not a reason to borrow more money and take more money out of your house.

It was a very good idea and those securitizations, those packages of loans were pretty safe stuff. It was a good idea, the housing market was stable. Now everyone in the mortgage business took the business very seriously because you wanted homeowners to succeed. You wanted them to be able to pay back.

To give somebody a mortgage loan that they can’t pay back is not doing them a favor. To allow everybody access to that kind of lending is not a good idea. You aren’t doing somebody a favor if you put them in a house overnight and they have to default on their mortgage. All that you’ve done is give them a mortgage loan. You haven’t helped them buy a house.

LAMB: So if you were to find that person or a group of people that decided at one point that this was a very quick way of making lots of money ...

TAVAKOLI: Yes.

LAMB: ... would you put your – what tail – what donkey would you put the tail on?

TAVAKOLI: You know, there are a lot of donkeys out there to put the tail on. There were a number of mortgage lenders that grew up across the country, largely unregulated. So you had mortgage lenders like AmeriFirst, like Countrywide, like New Century. Those are the larger ones.

But you have a number of smaller ones throughout the country. We’ve had hundreds fail. And these people didn’t necessarily know the borrowers. They were all about churning mortgages in order to earn fees.

Now we could have stopped this early on. But it was investment banks, not our traditional banking system, but investment banks. And by them I mean all five of them: Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, Bear Stearns who got involved in saying, we’ll package these up now instead of the banks and we’ll sell them to investors.

But, they were giving an incentive to mortgage lenders to say, look, we’ll give anybody a loan because we can earn fees and there won’t be very much scrutiny about what we’re doing and how we’re doing it.

So if you want – if you can’t afford the house, you know, you can get a mortgage on 80 percent of the value of the home and we’ll give you an additional loan to be able to buy the house. So basically people were buying homes with effectively no money down. And they were buying homes they couldn’t afford.

Now, in some cases, people were buying homes they could afford and they were slammed with risky mortgage products that they didn’t expect when closing occurred. So we had a combination of things.

One were people who saw they could exploit the system, mortgage brokers who basically wanted to earn fees. People who wanted to borrow and buy too much house that they knew they couldn’t afford hoping that housing prices would go up and bail them out.

And the third category, which is a very sad category, and those people who were actively mislead. Those loans were presented as if they were a gift. And they were really a Trojan Horse loan that people rode into bankruptcy. They rode to their financial ruin.

So people whose credit maybe was already shaky or whose financial situation was shaky basically thought, well, maybe I can make it, you know, mortgage brokers are telling me it’s OK. They’re telling me that my interest rate will stay low when the reality was it would pop up to the stratosphere and their principal balance, in some cases, could even increase.

So we had a combination of riskier mortgage products made to homeowners who were taking on too much debt in the first place. And that’s a formula for disaster. We destabilized our housing market.

LAMB: But as you know we can – and you tell me what you think. But we can – I could show you a video right now about both the Republicans and the Democrats saying over the last 20 years, we want everybody in a house.

People bragging about and politics the percentage of people in the United States that own their house, or at least are buying their house. Is there a culprit out there? Is there a group of people in politics or ...

TAVAKOLI: Yes.

LAMB: ... in investment banking? Can you name anybody that we – or I’m not sure you would even want to blame anybody but ...

TAVAKOLI: Well, this is a bipartisan ...

LAMB: How could this happen again?

TAVAKOLI: This is a bipartisan problem. You have people like Barney Frank and Chris Dodd who have been big proponents of this homeownership and big proponents of Fannie and Freddie lowering their lending standards. These are our big indirect mortgage lenders because they buy mortgages from people who have been the mortgage lenders.

And it has destabilized our housing market. If you deviate from prudent lending and you put too much leverage in the system, and you have individuals putting on too much debt, it’s a formula for failure. What happens is you get a bubble in prices and as those prices come down you see, as Warren Buffett might say, ”When the tide goes out you see who’s been swimming naked.”

And there are a lot of nudists in America right now. Unfortunately, their efforts were misguided. And if this was a way to buy votes, it’s a really bad way to do it because ...

LAMB: But, you know, if you look at the board of directors of Freddie and Fannie ...

TAVAKOLI: Yes.

LAMB: ...both Republicans from politics and Democrats ...

TAVAKOLI: Yes.

LAMB: ...from politics served on the board all through those years as the people running them were taking millions of dollars out. Now how did that happen?

TAVAKOLI: Well, there has been a lot of crony capitalism. And I think Americans need to pay attention. We have a financial oligarchy. This has been said in many places. And I completely agree with that. These people practically have Tim Geithner on speed dial. And I was hopeful that when somebody like Obama came in that there would be meaningful change. If anything the situation has gotten worse. But this is bipartisan. You’ll notice that President George Bush, when he was in office, he elevated Roland Arnall, who was the head of Ameriquest, that had been involved in alleged mortgage fraud, massive, sued by almost every state in the Union.

And he was elevated to the position of Ambassador to the Netherlands. The Netherlands didn’t even like it. There were articles in the Netherlands saying it was reprehensible because it sent a very bad public policy message.

Not only can you do things that are against the American interest and can help destabilize the housing market, a huge piece of our economy, but you can be rewarded with an ambassadorship. It was incredible.

And Congress approved it. So this is a bipartisan mish mash that we have of people whose interests are not serving the American people, primarily. They’re primarily serving and protecting the financial sector. And we’ve bailed out a lot of bad guys, a lot of bad guys.

A lot of people, and I heard, I mentioned Paul Volcker was talking in Toronto, and he said that, ”Well, people relied on models and this was a mathematical error.” And I’ve been a big critic of models over the years and I have to tell you, this was not a model issue; this was a management issue.

We had people who knew or should have known they were selling things that were value destroying securitizations and their sale provided money to mortgage lenders who were originating fraudulent loans, in some cases, and in other cases, loans that were brand new risky products that were overrated by complicit rating agencies.

And I knew this sitting in Chicago, and I didn’t say it after the fact. I said it in real time and, you know, I gave examples of, this deal should not close. This deal is ridiculous and has more red flags for fraud than anything I have ever seen. It’s a classic situation for fraud. This deal shouldn’t close. It’s going to crumble.

And I gave warning after warning about that and started speaking out about it in public. So there weren’t any outliers, like model outliers in mathematics, there were just a lot of outright liars, and we have not held people accountable for this. In fact, we’ve been bailing them out.

LAMB: Let me go over some of your own background. Where were you born?

TAVAKOLI: I was born in Chicago, but in my adult life I’ve lived in Iran for a year, in New York and London in the financial business, working primarily for investment banks, and some large banks.

LAMB: What part of Chicago?

TAVAKOLI: The south side of Chicago.

LAMB: Did you go to high school there?

TAVAKOLI: I did, yes.

LAMB: Where did you go to college?

TAVAKOLI: I went to college in Chicago, to an engineering school, Illinois Institute of Technology.

LAMB: And you got a chemical engineering degree?

TAVAKOLI: Chemical, yes.

LAMB: Why, what was your life like and why did you want to be a chemical engineer?

TAVAKOLI: I always liked math and I liked chemistry a lot, and my father had died when I was twelve years old, and I thought about, well medical school or something in the sciences, but with a four-year chemical engineering degree you can get a job and support yourself, and that was in the mid-’70s when we were just coming out of a recession.

So it was foremost in my mind that I wanted to be able to be self sufficient, but then I got married right out of college, moved to – worked as a chemical engineer, moved to Iran for a year, came back to the United States and worked my way through the graduate school of business at the University of Chicago.

Then I moved to New York for a number of years, more than 10 years and then to London, and worked in the financial services industries, so I know many of the key players who are involved in the mortgage meltdown. I knew them personally and still know many people who are involved now in what’s going on.

LAMB: You married an Iranian by the name of Tavakoli.

TAVAKOLI: That’s correct. That’s my ex-husband’s name.

LAMB: And where did you meet him?

TAVAKOLI: I met him in school, in engineering school.

LAMB: How long were you married?

TAVAKOLI: I was married for five years.

LAMB: And what did you learn about living in Iran?

TAVAKOLI: Well, you know ...

LAMB: And what year was it, I’m sorry.

TAVAKOLI: I lived in Iran before, during, after the Shah was overthrown, for that period of time, and I left Iran around three months after Khomeini returned, and for me, it was an eye opening experience to observe, why do people believe the things that they believe?

And I even challenged my own beliefs, not my beliefs, but I challenged the way that I look at the world and how that it can appear funny to other people. My ex-husband was born a Muslim, but he didn’t practice, none of his – his family was very secular, so they didn’t pray or weren’t religious, yet of course religion is a very important part of Iran as a whole.

And I remember when we were living in the United States, even something like our practices for burying our dead. There was a wake for one of the professors at the Illinois Institute of Technology, and I had a class to attend and I couldn’t attend the wake with my ex-husband. I went separately, but he came back from the wake white as a sheet, and he said, ”You didn’t tell me. You didn’t warn me about this.”

And I said, ”Warn you about what?” and he said, ”Janet, it was horrible. It was just horrible. His body was laying right there, and everybody went up to the body and was touching the body and talking about how wonderful he looked, and he didn’t look wonderful.” So for him it was a traumatic experience.

And something as - our simple customs can appear to an outsider to be traumatic, and he had lived in the United States for a number of years. He had gone to his under graduate in the United States and then was getting his Ph.D. when I met him. So it wasn’t as if he was new to the United States, it’s just that, even a simple custom can throw a curve ball to foreigners.

And when I looked at the Iran as a country I was mindful of that when I was viewing their customs and their practices. But I have to say that the thing I appreciated the most about coming back to the United States is our government, that we have three branches of government that are supposed to provide checks and balances.

We haven’t been doing a great job of that lately, but the concept of checks and balances is important. After you live in a country where you really don’t have a lot of legal recourse, you are pretty much at the whim of the executive branch of government in Iran, and that’s not a good place to be.

And as an American, I didn’t – I of course did not feel safe there and was not safe. I was caught in riots several times in Iran, and fortunately I was able to say, you know, I’m a Tavakoli. I’m married to an Iranian and people would pretty much leave me alone, but it wasn’t a safe situation.

LAMB: What was your maiden name?

TAVAKOLI: Hebenstreit, it was a German American name. I’m a German. I’m an American mutt, Irish-German mixture.

LAMB: And go back to the financial services business, what companies, can you name them - that you worked in for twenty years in both New York and London?

TAVAKOLI: Yes, I worked for a number of banks and investment banks including, Merrill Lynch, the former Paine Webber, which became UBS, for Goldman Sachs for a period of time, for Solomon Brothers – I was in Michael Lewis’ ”Liars Poker” training class. That was my first position on Wall Street, for Bear Stearns, Bank of America.

LAMB: Was there a time when you did this that you said to yourself, and I’d love you to tell us that, this is not right. This business is going off track here.

TAVAKOLI: Well, in any large complex financial business, where there’s a lot of money to be made, you’ll always have some jokers, and the idea was the system would punish people who went off the rails, and when I started in the business it was a much smaller business.

People knew each other. People that I started out with in the business - we all still pretty much know each other, and people would not pick up the phone of people who behaved badly. I remember reading the biography on Andre Meyer, one of the financiers at Lazard Freres, and somebody called him about somebody who had not behaved well in the financial business and they said, ”What do you think about him?” and he said, ”I don’t know him,” and they said, ”Of course you know him, you worked with him.”

And he said, ”I don’t know him!” And that was the way that the bad actors were dealt with, you just shunned them. And, you know, so we’ve always had that element in the financial services business and it’s never been very good about punishing people in the business.

But the past few years, and I start out my book with meeting Warren Buffett because it was just a good place to start, but the book isn’t really about Warren Buffett. It’s about the global meltdown, but I used him as a benchmark. His character, I talk about that a bit in our meeting and the way that he does business creates value.

What has happened in the past few years has destroyed value. It’s a whole way of being and living in the world that’s different, and I argue that creating value is a much healthier way to invest and a much healthier way to run the economy.

But when I met Warren in August of 2005, he had already had a bad experience with bad lending, with insane lending, I should say, and with the bankruptcy of a mobile home manufacturer called Oakwood, who issued loans that were packaged up by Credit Suisse First Boston and were later deemed to be value destroying securitizations.

Now that happened in 2002, so it’s not like the problems that we have are new. It’s that the problems that we have exploded and they were unchecked, and our government failed to regulate, and I also say in the book that contrary to popular belief that there was no one who could regulate credit derivatives, no one who could regulate the system, I’ll say well, actually I think there was.

That was the Securities and Exchange Commission. We also hear that most of the activity that went on was not illegal, and I’m here to say well, actually I’m going to raise my hand for that one and say, you might want to rethink whether or not this was illegal, because selling securitizations that you know are stuffed with loans that are going to implode and yet have a triple A rating on them when there’s substantial principal risk.

And if you saw that without explicitly explaining that to investors, and you knew it or should have known it, it seems to me you might be in violation of a few securities laws. And the SEC could have shut down these financial meth labs that provided the money to the mortgage lenders that kept the party going.

We could have nipped it in the bud by shutting off the money spigot, by stopping that kind of securitization activity, and we had reason to do it, and we had reason to know we needed to do it, with precedents like the one that Warren Buffett observed. And not only that, Warren Buffett wrote about it in his 2003 shareholder letter, which came out in April of 2004, and he posted it on his Web site.

Now, when the smartest investor, arguably the smartest investor in the history of mankind, puts out a warning like that in public, signs his name on a shareholder letter and puts it on his Web site, why do we the American people ignore it?

Why is our government ignoring it, and why are they making it easier for that activity to go on instead of harder, because many of the actions that our government took in the intervening years made it easier for people to do it, easier to get away with it, and then to cap it all, we’re bailing people out who should have been stopping this activity instead of, you know, accelerating the activity.

LAMB: So, the average person sits here and looks at this town, and sees that a lot of power has come back to this town from the financial world. Who – give us a tip on how you can learn to understand what they’re doing.

Take Tim Geithner for instance, he’s been in the news constantly. He’s the Secretary of the Treasury. He used to run the New York Federal Reserve Bank, most people want to know what that means.

TAVAKOLI: That was a very bad appointment.

LAMB: Why is that?

TAVAKOLI: Because Tim Geithner has been part of the problem and not part of the solution.

LAMB: As an individual?

TAVAKOLI: Yes, as an individual, he’s been very closely connected with people on Wall Street. You have Jamie Dimon as one of the – on the board of the New York Federal Reserve, Tim Geithner used to be ...

LAMB: Jamie Dimon runs JP Morgan?

TAVAKOLI: He runs JP Morgan Chase. He used be – I like Jamie, by the way, and I’ll get to that if we have time, but Tim Geithner was president of the New York Federal Reserve.

You had Hank Paulson, former CEO of Goldman Sachs, who was our Treasury Secretary mostly - before Tim Geithner, and Hank Paulson was the CEO of Goldman Sachs at the time that they were putting on these transactions with AIG that later became so problematic. And those contracts could have been negotiated so that AIG didn’t go under, but that didn’t happen.

Instead, everything that happened was very much to the financial advantage of his former employer Goldman Sachs. He was an interested man. You might recall what Thomas Paine said about interested men. He said that, ”History has shown us that we can not trust interested men.”

To just take their scenario as a given is very foolish. Congress should have questioned that. In fact, why are we having the CEO of a former investment bank in a position to make decisions that are to the advantage of his former investment bank?

LAMB: Let me give a contrary point, just for discussion purposes. You ask a man like Hank Paulson to come in because he really understands what’s really going on.

TAVAKOLI: Oh really?

LAMB: And then he takes it and turns it, I mean, if you have somebody you want sitting at your elbow saying, what’s really going on here? Hank goes, ”I know what’s really going on here. And this is what you’ve got to change.”

TAVAKOLI: Well, that is one argument, but this myth about Goldman Sachs being better than everyone else and the best and the brightest is similar to the AIG myth about being the best and the brightest. And we should question how these people came to be so exalted, came to be revered, as if they’re a different species of financial professionals.

LAMB: Well again, let me stop you. If you are over in Congress and you’re fundraising and you run a financial services committee and you get a tremendous amount of money, why, you know, how can, well, it’s obvious, what do you say to that? I mean, both sides – they give money to both sides.

TAVAKOLI: Yes. You say that we pretty much have a bought Congress because they know where their money is coming from, but that’s – we put people into Congress to protect our interests, but that isn’t how it’s been working out for us.

The taxpayer is footing the bill for a lot of malfeasance and Congress is not questioning the malfeasance that went on. You know, I wrote ”Dear Mr. Buffett” in even simpler English than I’m using today with no graphs, no charts because it’s easy to understand what went on here.

When you create a lot of bad loans, and it’s not just the housing market, but let’s use the housing market because that’s what most people can see. When you create a lot of bad loans in the housing market and then pass them off as if they’re not bad loans, obviously, there’s a fraud going on, and now you’ve destabilized the housing market, a large part of the U.S. economy.

And I’m here to say that this wasn’t an innocent mistake. It wasn’t a math error. It wasn’t a black swan. It was the result of Black Barts, like the Californian stagecoach robber who used to engage in bloodless robbery and get away with it.

LAMB: But there are a lot of people that were in this business in New York who are revered today. They gave a tremendous amount of money to Carnegie Hall, to Cornell Medical School. The president of the United States, Jerry Ford, went on the Citigroup board after that when Sandy Weill was running that show.

Bob Rubin was Secretary of the Treasury and he’s been in a couple of those companies, Goldman Sachs and Citi and all of that, and made a lot of money. I mean, we’ve all seen that. Shouldn’t we trust these people? They’ve been elected by the public. They’ve been, you know, in Bob Rubin’s case, he was approved by the United States’ Senate. Why wouldn’t these people be trusted?

TAVAKOLI: Well, you know, there are a lot of good people in finance, but what you have here are, as I say, interested men. And that’s why – I didn’t say persons of interest, although we may someday. I said interested men.

Let’s take the case of Bob Rubin. Bob Rubin was the Treasury Secretary under Bill Clinton. One of Bill Clinton’s last acts in office was to eliminate a restriction, and it used to be that you couldn’t lobby your old department for five years. Clinton got rid of that.

So when Enron was about to go under – you’ll recall it went bankrupt in December of 2001. That fall, Bob Rubin, who at the time was working for Citigroup, and Citigroup was a big creditor of Enron, he called the Treasury Department, and he asked a Treasury official if it wouldn’t be - to put pressure on the rating agencies not to downgrade Enron. Imagine that.

Now, what he did was not illegal because Bill Clinton had raised that restriction. However, in my opinion, it is extremely inappropriate. And, you know, Goldman keeps saying how we have so much integrity; we’re the best, the brightest and so on. Let me take that argument further.

Well first of all, that was just outright inappropriate even though it wasn’t illegal. And now, fortunately, the Treasury Department didn’t listen to that. They basically, told him to go away, and they didn’t pay any dignity to that.

But Enron went bankrupt the following December, as you’ll recall, and Citigroup was a creditor. Bob Robin, when he made that call, was an interested man. He didn’t have your interests in mind, the American taxpayers interest’s in mind, or my interests in mind. He had Citigroup’s interest in mind.

LAMB: How do you find people that don’t have the public’s interest in mind, then, to run these things? I mean – and how do you know what’s going on ...

TAVAKOLI: And who are competent because we’ve had, you know, a lot of incompetent people at the SEC who basically couldn’t find a credit derivative with a flashlight and a map. So, it’s not ...

LAMB: But why is that? Why can’t they find ...

TAVAKOLI: Well, I think they can, but a lot of people who get into these jobs are politically connected, you know, Cox was a former member of the House of Representatives who got out of the House of Representatives before the door hit him on the behind. You know, we’ve had a lot of those kinds of appointments in Washington.

LAMB: Why do you say that about him?

TAVAKOLI: Well, I’d rather not get up too far off the topic here, but ...

LAMB: The reason, I mean, the public is, basically, drowning in credit default swaps and derivatives and collateralized security ...

TAVAKOLI: And it’s a very simple – it’s really much simpler than that, isn’t it? It’s a lot of bad lending that was tolerated, and a lot of packaging of those bad loans and selling them with false labels that kept the party going. And they kept draining money out of mainstream America, and set us up for a huge fall. That’s not hard to understand.

Credit derivatives were just a way of making the problem even worse. It was sort of like throwing gasoline on the fire. But, you know, the fire, the way the fire was started, was very easy to understand.

LAMB: But go back. These people, Bob Rubin, and let’s take Hank Paulson one that’s, I don’t know ...

TAVAKOLI: Well, let’s continue on Bob Rubin…

LAMB: ... those two. They are now firmly located in institutions in New York and Washington that have a lot of respect in the political world. I mean, people never ever ...

TAVAKOLI: Well, Bob Rubin is no longer at Citigroup, do you realize?

LAMB: Oh, no. I’m not talking about the Council on Foreign Relations or the Johns Hopkins here in town.

TAVAKOLI: Let’s continue with the Goldman myth and with Bob Rubin for a second. After the Enron call, you know, now we move fast forward to the current problems that Citigroup had. Citigroup – probably the better solution, would have been to put Citigroup in receivership, which is, we have FDIC deposit insurance.

You put Citigroup into receivership, the shareholders are wiped out, and the people, the debt holders, the creditors of Citigroup, end up taking the loss. And instead we use public money to bail out Citigroup’s creditors.

Well, how did that happen? Well, that was because we started this whole TARP program under Hank Paulson, who at the time was Treasury Secretary, former CEO of Goldman Sachs. Bob Rubin was a former co-chair of Goldman Sachs.

Now, if you look at Wikipedia, you won’t find that fact on Wikipedia, oddly enough. I don’t know if that’s Wikipedia. That has nothing to do with anything, but I’m just saying that a lot of people aren’t aware of that fact.

So, Bob Rubin was co-chair of Goldman Sachs. These were interested men. Now, Bob Rubin is at Citigroup. Citigroup basically should – needs to go into receivership and had a lot of problems. That didn’t happen. Instead, it got $25 billion of TARP money in October and it didn’t end there.

In November we did another bailout of Citigroup where we gave it another $20 billion dollars, and guaranteed more than $300 billion in Citigroup’s assets, and notice what I said about assets and what could be on Citigroup’s balance sheet. And we just guaranteed it.

That means the U.S. taxpayer, the U.S. government, meaning you, and me and every other U.S. taxpayer, and it didn’t end there. Then, at the end of February, we had, what I call, a non-transparent or opaque bailout of Citigroup that most taxpayers don’t even know happened because our investment in Citigroup was in a form of what we call, preferred shares.

Instead, we agreed to convert it to common shares at a price that was favorable to Citigroup at an above market price. So that, again, was an additional backdoor bailout of Citigroup. It’s never-ending…

LAMB: But as you and I sit here today all these banks are telling us they’re making profits now, and they’re better than they expected and their stock is going up. I noticed a couple of these stocks have gone up.

TAVAKOLI: I’ll get to that in a minute. We are being lied to and I’ll explain how we are being lied to in a moment.

But getting back to Bob Rubin, we did all these bailouts at Citigroup. And Bob Rubin at the time, you know, that Citigroup needed its first bailout said that, ”Well, I didn’t know anything about CDOs.” He had a reputation for being the risk wizard, a risk wizard.

Well, look, if you are in finance and you haven’t been aware of the fastest growing structured financial product in the past few years in the form of collateralized debt obligations or CDOs and you are sitting on the board of Citigroup.

And you are going to say when Citigroup needs to go into receivership that, let’s bail it out, and by the way, I didn’t know what CDOs were, I have to say, what is the best and brightest about Goldman Sachs?

I don’t get it because, frankly, all you have to do is read the newspapers and stay up to speed.

LAMB: You know, a lot of these folks you’re talking about in New York City give a lot of money to charity. I want to go back to that for a moment. Does the media in New York lay off of them because they’re giving money to all those cultural institutions in New York?

TAVAKOLI: I don’t know why the media in New York is laying off of them. I don’t have the answer to that question.

LAMB: But have they in the past? Have they gotten away with doing all this and making all of this money and then giving it away and not being looked at closely?

TAVAKOLI: Well, they haven’t been looked at closely and they should be. And it could be the contributions. I don’t know. I don’t know why the media, though, would be impressed necessarily with charity contributions. So I don’t know if that’s it, or if the media needs access and they don’t want to irritate these people. I don’t know what the answer to that question.

LAMB: Well, the media in New York often serves on the same boards that these people that have given money serve on.

TAVAKOLI: But serving on a board doesn’t necessarily mean you’re compromised, but there certainly is something going on because the media isn’t nailing them. The ”New York Times” has done pieces on Bob Rubin completely bypassing the whole problem of interested man, and even being an interested man, he wasn’t interested enough to read the newspapers and find out about the fastest growing financial products that were sitting under his own nose.

LAMB: OK, go back to Tim Geithner. He’s there, now. He’s the Secretary of the Treasury-- by the way, Larry Summers, what do you think of him?

TAVAKOLI: Well, Larry Summers was one of the proponents of doing away with Glass-Steagall, and that was bipartisan, by the way. It wasn’t just Larry Summers. But we didn’t put any handcuffs in place to prevent the kind of thing that just happened here, so I don’t know what Larry Summers’ mindset is or everything about Larry Summers’ background ...

LAMB: But you – Glass-Steagall did what to what?

TAVAKOLI: Yes, I should explain that. Glass-Steagall basically allowed banks to get involved in what used to be called investment bank activity. What I mean by that? So instead of being and FDIC insured institution that takes in deposits from depositors and makes loans to the local community or do that on a big scale, now you could do things like rock and roll.

And start trading credit derivatives, start trading stocks, start doing the things that they did before the Depression that got us into trouble and led to the Great Depression.

So basically we said let’s get rid of Glass-Steagall and allow banks to act as if they’re Goldman Sachs or Bear Stearns and basically had those mini companies going on within the whole banking institution. The idea was that banks could make more money and that they would control the risk.

But the reality was that the OCC, the Fed and the SEC weren’t really doing much in the way of regulation and really didn’t understand a lot of these products.

LAMB: OK, let’s go back to the average person sitting here saying – and they’re not worth a lot of money and they’ve lost a lot in this process. Their 401(k)s are down.

TAVAKOLI: Yes.

LAMB: And they’re looking – is there – did Bob Rubin or Tim Geithner or Larry Summers or Hank Paulson do anything illegal?

TAVAKOLI: I don’t believe that any of those individuals did anything outright illegal because our Congress didn’t pass laws to prevent it from happening.

LAMB: But what I was getting at was if you’re in their shoes - they sit there and say, this is terrific, I made $100 million dollars last year. I’m now serving my government. I’m trying to save all this kind of stuff and this is my solution to the problem and they’ve just – they’re just living.

TAVAKOLI: Well you have to take a look at the underlying institutions that, you know, Hank Paulson, as an example was head of Goldman Sachs when Goldman Sachs’ alternative mortgage products was putting out some bad products. And this has been written about. Allan Sloan of ”Fortune” won a Loeb award for an article that talked about, you know, residential mortgage-backed securities packaged up by Goldman Sachs alternative mortgage products.

And I’m here to say that any financial professional worth their salt knew or should have known that a product like that was overrated and that the labels in no way represented the risk at the time they were sold.

LAMB: If President Obama called you to the Oval Office and gave you, I don’t care, a half hour or an hour and said, ”Tell me what I should do?” Give us an idea what you would do.

TAVAKOLI: Well, there is no magic bullet answer. At this point it’s gotten so far out of control that no one has a magic bullet answer. However, the things that we need to do are the things, you know, getting back to prudent finance, the kinds of prudent finance that Warren Buffett is involved in.

He has a mortgage lending unit and it’s doing fine because they’re prudent mortgages, 20 percent down, no more than 36 percent of your overall debt load when you take on the loan and so on. Now of course the housing market has been hurt because housing prices have gone down so, you know, people – the equity in people’s homes has been eroded. We still have too much debt and too much leverage in the housing market, but start there.

Any new loan, you know, enforce those restrictions. Certainly don’t exacerbate the problem by allowing this to go on.

LAMB: OK, let me ...

TAVAKOLI: with the banks ...

LAMB: ... OK, hang on a second, my neighborhood bank never had – if you went to my neighborhood bank right now the interest rate’s so low, you know, you might want to give them the money.

They’ve never taken a risk. They’ve given out mortgages. They’ve always – what is it about the neighborhood banks that don’t get into this kind of problem and it’s all these New York-based operations, New York-Washington connection?

TAVAKOLI: Yes, isn’t that interesting? There are a lot of sound banks. You know, we have them in Chicago as well. Northern Trust says, we’re ready willing and stable. They made sound loans. Your neighborhood bank made sound loans. It’s doable.

So we have to go after the bad guys. If we think this won’t happen again that’s just idle daydreaming. We’ve seen it happen again and again; the S&L crisis, Drexel Burnham, the manufactured housing loan market at the beginning of this century. At the end of last century, commercial financial services charge off credit card receivables, fraud after fraud after fraud after fraud.

LAMB: OK, you’re back – we’re running out of time. You’re in the Oval Office and I want your advice. Give me specifics of what I can do to save this situation.

TAVAKOLI: Well, looking at the banks now I, you know, would look at the stress tests with a jaundiced eye, but we may have to put more banks into receivership. We can’t keep bailing out the debt holders of the banks, just throw money – throwing money at the banks hasn’t helped.

LAMB: When does the stress test information going to be public?

TAVAKOLI: I don’t know exactly when it’s going to be public.

LAMB: And what does it mean?

TAVAKOLI: They’re trying to see which banks are sound and which aren’t sound, but there’s been a lot of lying going on. You hear people like, well, Jamie Dimon, as an example, saying, ”Only three percent of mortgage loans are bad.” That’s extremely disingenuous. Ninety-seven percent are fine, three percent are bad. Extremely disingenuous because, first of all, most of that three percent is what the problem has been.

If you look at the subprime loans in 2005, 2006, 2007, more than 37 percent of the loans from 2005, 2006, as of – it was March of last year, already 37 percent were delinquent, meaning more than 30 days late. And in the 2007 loans were going bad lickety split. If you look at the overall loan market, more than eight percent are more than 30 days late of mortgages. This is horrific.

LAMB: By the way, Jamie Dimon, I don’t have the quote in front of me, is saying today, this is on Thursday before the Sunday it airs, that he wants to give the government’s money back and he wished he’s never gotten involved with the government and wants to pay off that loan. What’s he doing this for?

TAVAKOLI: I don’t know why Jamie wants to give the money back so quickly because that money was meant to be a buffer for the banks. If I were in his shoes I would hold on to it. Now his motive and Goldman’s motive for wanting to pay back may be so that they get the government out of their hair and they can pay their people whatever they want.

But Jamie may have a problem in the future with credit card debt. It’s a scandal that banks are allowed to charge people 29.9 percent on credit cards in cases where people were paying single digits they found that to double. Banks are raising fees, raising interest rates on consumers while we, the American taxpayer, are giving them low borrowing costs.

We are subsidizing them. We have bailed them out and they are charging usurious rates on credit cards, so ...

LAMB: Does the public have any responsibility in this?

TAVAKOLI: Yes. The public of course always has responsibility. But do they have any power because we are being taxed, but we aren’t being represented well, so we have taxation without effective representation. When did that last happen and when did we get up in arms about it?

But the public has a responsibility to try to borrow prudently and to inform themselves, to the extent they can on what’s going on, to write their congressmen. But unfortunately they’re lobbyists of one, with very little - limited resources and power.

But to really get on their local congressmen and senators and let them know that they’re outraged and that they won’t vote for them. They’ll lobby against getting them back into power if they don’t take care of the public interest.

LAMB: When you’re not writing books what kind of clients do you represent?

TAVAKOLI: Mainly some of the kinds of people we’ve been talking about right here. When they get into trouble and start fighting with each other or when they have a hairy problem then that’s the kind of business that I get involved in.

LAMB: Give us an example. Can you name some of your clients?

TAVAKOLI: I don’t talk about my clients in public or name them, but the kinds of things, as an example, if they have a dispute over a securitization and they say, ”I was actively misled, let’s sit down and talk about what happened here.”

Then the best way is really to sit down in a room and say, OK, this may have been a little them; it’s a little bit you. Let’ see if we can come to a settlement or an agreement here.

LAMB: Are you being hired by these big name companies that you’ve been critical of here?

TAVAKOLI: Yes. Only big name companies. Another example is, let’s say, their risk on their trading book and they don’t know if their traders are making as much money as they expect, more money than they expect, or less money than they expect because the models are just a mishmash and they can’t really tell.

They’re bringing in revenue, but they don’t know if it’s quality revenue or risky revenue. I’ll get involved in situations like that.

LAMB: Where did this – and you can put any name you want to on it – greed come from?

TAVAKOLI: Where did the greed come from?

LAMB: Yes. Where did this – when did this happen? Has it always been thus, or ...

TAVAKOLI: Well about a million years ago when human beings evolved that’s when greed started.

LAMB: But is it worse now than it used to be?

TAVAKOLI: The greed is certainly allowed to remain unchecked and, you know, when you get some bad apples in they tend to draw more bad apples in and, you know, the reason this happened now and the way that it happened is these products exploded and hiring exploded.

So if you had a bad core group at one of these investment banks they would start funding hedge funds and other people and once you’ve had a group together it became like Hawala in the Middle East, the way of transferring money around so nobody can tell what’s going on.

Now you’ve got a bunch of people who are basically in on it with you. So, you know, you had a guy from Merrill Lynch who is on the board of Ownit mortgage lending in California - can hardly say that’s arm’s length and they were originating a lot of mortgages and the head of Dallas, the head of – the CEO of Ownit was saying, ”I get paid more for a no-documentation loan than for a documentation loan.”

And it’s a classic situation for fraud, and Merrill Lynch was also packaging up some of those assets, as were other investment banks that were lending to them. When they went under, as far as I’m concerned, it was game over at the end of 2006.

There was no deniability for CEOs anymore. They should have shut those activities down within their investment banks, and they didn’t because they knew that people wouldn’t understand what was going on. Most Americans wouldn’t understand. Most congressmen wouldn’t understand and they could get away with it. So they accelerated that activity.

LAMB: What are the chances that these big companies, these big New York-based companies or the political institution in this town will clean up their act?

TAVAKOLI: Well, so far they’ve gotten away with the largest Ponzi scheme in the history of the capital markets ...

LAMB: Gotten away with it?

TAVAKOLI: … It dwarfs. They’ve gotten away with it so far.

LAMB: Kept a lot of their own money?

TAVAKOLI: Yes. It dwarfs what Madoff did. So far, they’ve indicted two former hedge fund managers, one of whom I know, Ralph Cioffi from Bear Stearns. That’s chump change. That’s nothing and, you know, even that may be difficult to prove whether or not anything was done wrong with respect to those investors.

I don’t know what representations that they made directly. I wasn’t in the meeting room, but with respect to what was going on in the rest of the industry, I’m here to say that, you know, so far they have gotten away with a Ponzi scheme that has taken down our housing market, that has contaminated our municipal bond insurance business so that it’s harder for us to raise money for water pipes and things that we need to get done.

This has been a huge crime on the American economy and so far, people aren’t being held accountable and we’re bailing out a lot of bad guys no questions asked. In some cases, we have to recapitalize the financial system, but the money that we’ve thrown in has, you know, been like throwing water on sand because we really needed to put some of these institutions into receivership.

LAMB: Janet Tavakoli is based in Chicago. She has about five books you can buy. I assume you can still get them on - in the bookstores or on Amazon.

TAVAKOLI: Amazon is probably the best place, easiest place.

LAMB: And the current book is ”Dear Mr. Buffett,” Warren Buffett that is. Thank you very much for joining us.

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