Archive for November, 2011

Patent Follies

Wednesday, November 30th, 2011

Deadly Monopolies, Harriet A. Washington,2011

Washington is a medical ethicist and bioethicist whose attitude seems to be summed up in this quote from Thomas Browne;
“No one should approach the temple of science with the soul of a money changer.”

The Real Henrietta Lacks, unsung hero of Polio vaccine

Who owns our bodies? Apparently not us judging from consistent court rulings. In 1951 tumor cells were extracted without consent from cancer patient Henrietta Lacks for further study. These cells, known as Hela were propagated and sold over and over and are still available for research today. They have generated millions of dollars in fees and have underpinned research breakthroughs and treatments too numerous to mention although their contribution to the development of Salk’s polio vaccine stands out for special mention. Henrietta’s husband had refused to consent to the cell extraction and the family only learned that the Hela line was world famous in 1994 when a son was approached to provide his cells for additional study.

Alistair Cooke’s Body Snatched

Appropriation of body parts without permission continues unabated and is a huge business worth billions today. Among those appropriated without permission were Alistair Cooke, long time host of PBS’ Masterpiece Theater. Some of these bodies including children have found themselves used in auto manufacturers crash tests.

Burroughs Ginsberg writings overturned plant patent

Then in 1980 the Bayh-Dole act was passed to allow the commercialization of patents resulting from government sponsored research. In that same year, 1980, the supreme court ruled that life can be patented leading to a gold rush of patents in plant and animal life. Traditional remedies and medicines known for hundreds or even thousands of years have been patented. Few have been overturned by the courts. A 1980’s patent on a Brazilian psychedelic plant was overturned not because of the plant’s traditional and sacred meaning to a Brazilian tribe but to the 30 year prior writings of Alan Ginsburg and William S. Burroughs. Bio-colonialism is OK but prior documented western “discovery” can be used to invalidate a patent.

While the human genome project itself and its discoveries were placed in the public domain, subsequent work to isolate individual genes responsible for certain diseases were allowed to be patented. That’s right, Alzheimer’s, cancers, and many other deadly diseases are owned and controlled by patent holders. More than 50,000, almost a fifth of all human genes are now patented, more than 36,000 by a single French company, Genset. Many genes were allowed to be patented even though researchers don’t know the gene’s function. These genes patents more than any single cause have stymied, slowed down, or even blocked outright research into tests and treatments of many deadly diseases. At the very least they have dramatically increased the cost of doing research as huge patent licensing fees must be paid.

The pharmaceutical industry was once the most profitable industry ever to exist on the planet. It has now fallen to the third most profitable and profits are in free fall off the cliff. Why? Because drug companies no longer develop important life saving blockbuster drugs like the statins (Zocor is off patent and Lipitor’s patent is expiring), but put their efforts into “me too” drugs and life enhancing drugs like Viagra or cosmetics.

They also pour enormous efforts and resources into defending through litigation and extending their patents with such tricks as combining two drugs whose patents are expiring into a “new” patentable drug, or re-branding a drug for a new purpose such as patenting an existing drug under a new name with FDA approval for use by black people (whatever that means genetically) exclusively. Remember thalidomide the drug that caused all those birth defects back in the 1950s and 1960s. Guess what, thalidomide is back as a relabeled newly patented drug for the treatment of lepers.

It costs upward of $1 million to fight a patent infringement case involving drugs. To prevent “me too” drugs, companies file not only the drug they want to market, but every near derivative they can imagine. One drug patent was surrounded by 1300 similar drug patents to make “me too” drugs virtually impossible to produce. Adding to the mess, some drug patents are 400,000 pages long (not a typo) and the company requesting the patent pays most of the patent office costs. Sounds a lot like the relationship between the ratings agencies and the financial companies who pay them. Imagine litigating over a patent that no one can possibly read or understand.

What can happen once a patent is granted for a drug? One drug capable of eliminating sleeping sickness was never marketed for that purpose but was re-branded as a facial creme to remove women’s facial hair. Not enough money in sleeping sickness? Several effective cancer drugs were not marketed because of low projected revenues and the university inventors were unable to override the company decision. Those drugs sit on the shelf useless.

Available cancer drugs have been singularly disappointing resulting in an overall extension of average American lifespans a mere four months. Yet a single course of cancer drug treatment can cost $200,000 to $300,000 each. In one case, the Canadian health system, unable to reach an acceptable price agreement with the manufacturer, paid $218,000 for one Canadian patient to travel across the border for treatment in the US. We now learn that speculators often corner the market and horde these expensive drugs in order to hold doctors-patients-hospitals hostage for incredible additional markups. Oh the wonders of unfettered capitalism.

Unable to get American consents for drug studies, companies increasingly are testing drugs in Africa and Asia where they ignore consent requirements and feel free to use placebos where they would be required to use the best available treatments for their comparisons. That’s OK, their test subjects won’t be able to get the test drug anyway after the study ends. This is The Constant Gardener on steroids. See also The Body Hunters. And if the patients or their families sue with government help as in a case in Nigeria where 11 children died during a test and many other were disabled for life, the drug company “lost” all its records yet once a settlement was negotiated was able to identify its test subjects through DNA tests. Very mysterious record disappearance. The drug was never FDA approved fortunately.

But avoiding the need for consent is not limited to poor countries but is practiced domestically as well. One company had developed a blood hemoglobin substitute whose early tests showed up bad side effects. Needing another large clinical study to proceed the company came up with a novel idea. They kept supplies of the “blood” in EMT vehicles operating in whose areas contained mostly poor, primarily black and Hispanic populations. Whenever the EMT team picked up a patient who had lost blood they administered the artificial hemoglobin rather than the usual saline solution on the trip to the hospital. The company’s thin justification for avoiding the need for consent was that the subject was unconscious (sometimes), that no family members were present (sometimes) and that treatment was urgently required. (No, saline would have stabilized the subject til arrival at the hospital.) Once in the hospital, the company extracted blood samples three times a day for the study. If a subject asked why they were told it was a normal part of their treatment. In other words the subjects were never informed that they were in the study, of the known risks and side effects of their treatment, they were lied to throughout. The FDA did not approve the hemoglobin substitute.

For those that think the horrors of the Tuskegee syphilis experiments on black soldiers is ancient history, think again. After the military grade anthrax samples were mailed to important congressmen and newsrooms, a drug company rushed to develop a vaccine for anthrax. While the vaccine was in testing and after significant problems such as loss of vision and hearing and miscarriages had already surfaced, the DOD determined to vaccinate more than 100,000 troops with the non-FDA approved drug. Thousands of soldiers refused and were dishonorably discharged from service at great cost to themselves and the military. A pregnant soldier asked to be transferred but her commanding officer not only denied the transfer but forcibly had her vaccinated as an example. She miscarried. The FDA never approved the vaccination but the soldiers learned they had no legal recourse either against the military or the drug company. Today thousands of former soldiers suffer from the side effects.

Also on the subject of bio-colonialism, researchers are increasingly descending on isolated groups of people whose isolation give them a limited gene pool and therefore makes them useful for isolating particular disease’s genetic causes. Thus Easter Island, Hawaiians, a 2000 year old group of Jews in India are recruited for studies for which they are unlikely to benefit. An interesting example is Iceland where an Icelandic researcher formed his own company and set out to collect samples and information promising financial rewards and medical breakthroughs beneficial to Icelanders. Icelanders love genealogy and can track their ancestry often back to a Viking. They also keep extensive medical records tracing back for generations. Thus the researcher was able to put together a uniquely valuable data base with cell samples. Unfortunately breakthroughs and profits eluded him and the company fell into bankruptcy where control of the valuable data was lost. The information has now been sold to drug companies and insurance companies (Did you know your disqualifying pre-condition originated with some ancient viking?) The possible horrors are hard to contemplate.

While government grants still fund the vast majority of research on disease and treatment, the drug companies have dominated the control and marketing of the resulting breakthroughs. Drug companies also include the government subsidies when justifying high drug prices. A Pharma sponsored study put the average cost per drug at $800 million which they round to a billion in talking points. Ralph Nader’s group, using Pharma’s own numbers puts the actual cost at about $100 million, still serious money.

The patenting mess has drawn the universities and other institutions into a dependency on marketing their patents and research that has totally compromised their role as independent investigators. One researcher assembled the worlds most valuable collection of cells and materials to study Alzheimer’s only to see his University of Washington sell the collection to Pfizer. He and his subjects were unable to reverse the sale. In one court case, Duke argued that their university researchers should be protected in their investigations only to have the court rule that since Duke patents research and sells licenses they are indistinguishable from any other corporation and their employees cannot be expected to have special privileges. Universities are no longer special. Further, virtually all researchers whether in the University or elsewhere are on the take from the drug companies.

Professional journals such as JAMA and the New England Journal of Medicine have been compromised to the point they are little more than paid drug ads. Journal articles are ghost written by drug employees with the named authors having no access to the underlying research numbers. Because everyone qualified is on the take, independent peer review of articles is no longer possible. The big danger in all this is that drug companies are able to hide and lie about the actual clinical trial results and cover over or minimize side effects. Thus doctors who rely on journals to keep up with medical advances are mislead as to the true risks of the drugs they prescribe.

Even worse, doctors are on the take to the tune of $6 billion a year with an additional $2 billion in junkets. How can a patient rely on a corrupted doctor’s recommendations for treatment?

Drug companies also contribute financially to the FDA’s operating costs. This gives them the power to remove FDA officials who may oppose approval. The FDA has moved from denying approval of questionable new drugs to requiring larger warning labels as if this will prevent or limit the drug’s inappropriate use. When a drug is pulled by the FDA it often is re targeted and relabeled and reintroduced with FDA approval such as the infamous thalidomide.

Lula da Silva announces Brazil’s HIV march-in

Governments all have the ability to require “compulsory licenses” for critical drugs like those for HIV. Brazil shocked Pharma in 2007 by announcing a compulsory license for Merck’s HIV efavirenz. India has long ignored drug patents and have become proficient as reverse engineering patented drugs. Brazil’s action has set off a chain reaction among other governments causing the drug industry to start to rethink its pricing policies for poor countries. In the last 20 years only 4 drugs have been developed for diseases unique to poor countries. One of those is sold only as a vaccine for visitors to those poor areas not for the residents themselves.

The Gates Foundation, WHO, and other groups are experimenting with a new model where entire governments in poor countries guarantee a market for a drug to treat diseases like sleeping sickness or malaria. It is hoped the guarantee will finally induce drug companies into manufacturing drugs for these diseases. International organizations are also encouraging drug companies to think of pricing tiers for poor countries and are helping to police the illegal re-importation of the cheap drugs. The actions of Brazil and India are encouraging this trend but counter pressures come from WTO attempts to enforce intellectual property rights, i.e. patents.

There have also been a few cases where gene patents have been overturned, most famously for the seven ovarian cancer patents on the genes BRAC1 and BRAC2. This case has been appealed and will likely end before the supreme court. Still this temporary limited victory gives Washington hope that things might be reversing and ever optimistic, she looks forward to the day when Bayh-Dole will be eliminated and the plant and animal and gene patent rulings reversed. Dream on. At least patents expire after twenty years unless companies figure cleaver ways to extend them so research and development may be able to resume after this wasteful interregnum.

Civilization Lost

Friday, November 18th, 2011

The Price of Civilization, Jeffrey D. Sacks, 2011

Justice Oliver Wendell Holmes Jr.

Sacks quotes Supreme court justice Oliver Wendell Holmes Jr.; “I like to pay taxes. With them I buy civilization.” Hence the title of his book and its subtitle “Reawakening American Virtue and Prosperity.” Fortunately, Holmes, who died in 1935, would not live to see the death of his ideal in the current age of unfettered greed.

Sacks begins by citing the guiding economic principles of his mentor Paul Samuelson of MIT whose textbook Economics, first published in 1948 has been used in most introductory economics courses including this reader’s ever since.

    Markets are reasonably efficient institutions for allocating society’s scarce economic resources and lead to high productivity and average living standards.
    Efficiency, however, does not guarantee fairness (or “justice”) in the allocation of incomes.
    Fairness requires the government to redistribute income among the citizenry, especially from the richest members of the society to the poorest and most vulnerable members.
    Markets systematically underprovide certain “public goods” such as infrastructure, environmental regulation, education, and scientific research, whose adequate supply depends on the government.
    The market economy is prone to financial instability, which can be alleviated through active government policies including financial regulation and well-directed monetary and fiscal policies.

Sachs goes on to give the reasons why income inequality is at historic high levels, and yet taxes on wealth are historically low, why government is doing virtually nothing about redistribution and is providing almost none of the things government is uniquely required to provide like support for research, education, environmental regulation, infrastructure, etc. The picture is predictable awful.

He joins other writers disillusioned with an Obama that he supported. He details how health care “reform” was decided in secrecy in negotiations with the insurers and pharmaceuticals and in complete disregard for public option that wanted at least a public option. He goes on to show how Obama and lawmakers disregard public opinion in issue after issue, from environmental reform to energy policy to banking re regulation and wall street makeover. The voters are clearly the disenfranchised as the administration and Congress listen only to powerful interests and the elites.

But Sachs is ever the optimist and in part 2 he attempts to demonstrate that things can change for the better. He goes through an obscure numbers exercise to show that things can improve with modest changes – no need for radical overhaul. Unfortunately his exercise doesn’t really address the fundamental problem of income redistribution and the proper role of government called for by Samuelson. But how can even the modest goals be met in our current state of political paralysis? Sachs suggests maybe a third political party will arise miraculously from the ashes to save us. Yeah right. Or maybe the Millennials (those born after 1992 with their inadequate and partial educations thanks to our dysfunctional governments) will save us. American society does everything it can to destroy the future prospects for the next generation and then expects them to come save us from ourselves?

This reader enjoyed the clear, simple writing to explain where we are and how we got here, but the solutions, unfortunately are also simple (as in retarded).

Liberal’s Capitulation

Thursday, November 17th, 2011

Death of the Liberal Class, Chris Hedges, 2011

Most accounts of our current political paralysis starts in the 1970s or with the election of Reagan and focus on the role of the Neocons and their greedy corporate masters. This history starts with the outbreak of the Great War (WWI) and asks the question: What happened to the once powerful and independent liberal class, the Democratic party, the labor unions, the academics and intellectuals, the liberal media, the arts, music, and theater to allow the total takeover of the corporate masters and their war machine? Hedge’s answer:

The liberal class has ossified. It has become part of the system it once tried to reform. It continues to speak in the language of technical jargon and tepid political reform, even though the corporate state has long since gutted the mechanisms for actual reform. The failure of the liberal class to adjust to the harsh, new reality of corporate power and the permanent war economy, to acknowledge its own powerlessness, has left the liberal class isolated and despised. The liberal class has died because it has refused to act as if anything has changed. It ignored the looming environmental and economic collapse. It ignored the structural critique that might pull us back from the horrific effects of climate change and a global depression. Our power elites and their liberal apologists lack the ideas and the vocabulary to make sense of our new and terrifying reality.

This situation has left the entire country disenfranchised and Hedges joins the growing list of writers who supported the Obama election hoping for change, and are now totally disillusioned. The timidity of Obama and the liberal class to stand up to the Corporate elites is both frightening and astounding. He fears the disenfranchised, in their disillusion, will be manipulated by demagogs and does not rule out a fascistic takeover. he quotes Jaron Lanier:

The preponderance of them (the disenfranchised) are located in rural areas and in the Red States, the former slave states. And they are connected (via the Internet) and get angrier and angrier What exactly happens? …There is a potential here for very bad stuff to happen.

This reader would have liked Hedges to start a little earlier, with the progressive movement and Teddy Roosevelt (TR) that brought the robber barons under control and broke up Standard oil. Government control expanded and incomes were better distributed. This short progressive era also saw the first American colonies in Cuba and the Philippines and the use of gunboat diplomacy to open Japan and persuade Columbia to allow an independent Panama in exchange for a little 100 mile corridor called the Panama Canal zone.

This short progressive period ended under liberal president Woodrow Wilson, former President of Princeton University, who aided and abetted the corporate and banking interests who wanted the US to enter WWI so it would have a seat at the table in determining the future of Germany and Europe and the fate the Ottoman Empire at war’s end. To this end, the corporate and media powers created the first modern propaganda machine under George Creel, silencing opponents of war (most Americans and their Congressional representatives). With the German U boat sinking of the Lusitania, Wilson was able to push his war resolution through Congress and launch America into the new era of the perpetual war state.

The propaganda machine created such memorable slogans and “The war to end all wars” and “the war to make the world safe for democracy”, both patently false. At the end of the short war, the propaganda machine instantly turned to vilify Russian communism blaming the Germans and lower East Side Jews for fomenting the revolution.

America entered a decade long period of unfettered capitalist madness culminating in the stock market crash of 1929 and the start of the Great Depression with its massive worldwide suffering. Two elections in 1932 were to seal the fate of the world for the next several decades; the US election of FDR and the German election of the Nazi party with Hitler as Chancellor. It is the latter model that Hedges fears for America’s future.

With FDR, the US entered another short progressive period, this time with major gains by labor unions. Even socialists were elected to office and there was a flourishing of art, literature, and theater directed at the mass of the working public. Hedges sites particularly, the musical “The Cradle will Rock” first produced in 1937. He also sites the writings of John Steinbeck. This progressive era was again cut short by war with FDR committing America to a two front war against Japan and Germany.

Once again, the propaganda machine was instantly turned against the Soviet Union at the end of the war and we entered the long not so cold war with misadventures in Korea and Vietnam. The unamerican activities hearings intimidated and silenced broad swathes of liberal artists and intellectuals at a time when they should have been speaking loudest. With a brief renaissance of the civil rights movement and consumer and environmental movements under Ralph Nader the country quickly reverted to corporate control.

Rosenthal Pandering to the Advertisers – Nader Fourth Most Powerful American

Hedges has a particularly bitter feeling for the New York Times and its then executive editor, right wing Abe Rosenthal who oversaw the marginalization of Nader and instituted a policy which seems to still be in place that Noam Chomsky was never to be sited in the Times. Hedges himself was forced out of the Times for speaking the truth after 15 years work in the Middle East. Even legendary reporter Sydney Schanberg (The Killing Fields) was forced out by the Times because he insisted on reporting the truth about New York. Hedges believes both Malcolm X and Martin Luther King would have been marginalized into irrelevance by the media had they lived a couple of years longer. Today the best the Times can do is offer Tom Friedman and his second Iraq war and benefits of globalization corporate cheer leading.

Greatest Living American Intellectual

Unions marginalized themselves by cozying up to management and cutting sweatheart deals undercutting their own membership. Universities turned the process of tenure from protecting the academic freedom of deserving members to a process of ensuring tepid work and conformity. Many disciplines became meaningless closed loops of obscurity such as the followers of Derrida whose language and work can have meaning only to those inside the loop. Theater has become meaningless extravaganza that few can afford to attend. Art has become a commodity to be manipulated by museums and the wealthy and is more about celebrity than any possible meaning.

Living an exemplary life

Hedges only glimmer of hope lies with the continuing works of Ralph Nader and Noam Chomsky. He also considers Howard Zinn’s life a meaningful example of honesty and protest, a man who believed history should be told from the point of view of its victims. His A People’s History of the United States remains an important legacy. As far as journalism is concerned, Hedges has little positive to say. Nader, though, sites Amy Goodman of Pacifica’s Democracy Now as the only place he turns today when he has something to contribute. Democracy Now was the only reliable source of the information during the Arab Spring and is now the most reliable source of information on the Occupy Wall Street movement.

The Truthful Journalist

We can only hope that meaningful change will come out the Occupy Wall Street movement. The alternative, fascistic scenario is too awful to contemplate. What is clear to Hedges is that the liberal class is incapable of fixing itself. It sold its soul to the corporate masters and is dead.

Coyotes, Goats, and Chestnuts

Tuesday, November 8th, 2011

Prodigal Summer, Barbara Kingsolver, 2000

An ecological tale from Appalachia. The main characters are two educated women.

Deanna Wolfe is a forty two year old forest service ranger – game warden who guards the mountain overlooking Zebullon Valley and the town of Egg Fork where she was born and raised. Her master’s thesis was on the role and importance of predators in the balance of nature. With the extinction of the red wolf from her area, a replacement is needed and for the first time she has spotted signs that coyotes may have arrived. She desperately hopes that the coyotes will stay and successfully raise families on her mountain. Young Eddie Bondo, a Wyoming rancher out to see the rest of country arrives on reclusive Deanna’s mountain, rifle in hand. From birth Eddie has known that the coyote is the enemy of the rancher and must be hunted down. Eddie and Deanna spend the rest of the book arguing about the proper role of the coyote in the grander scheme of things. Neither can convince the other but Eddie for the first time has met his match in a woman and the two become lovers. Deanna knows Eddie will disappear some day.

Lusa Maluf Landowski, descended from Polish Jews and Palestinians, is an entomologist teaching at the U of Kentucky in Lexington where she meets Cole, a farmer from Egg Fork, sent by local farmers to her workshop on integrated insect management. They fall in love and Lusa moves to Cole’s sixty acre farm where she finds herself immersed in the Widener family and its many daughters. Cole is the youngest and only son and inheritor of the farm that has been in the family for generations. To make ends meet on the struggling farm, Cole drives and truck and soon dies in a road accident. Cole leaves no will but Lusa as his widow inherits the farm.

The Widener family expects Lusa, the city girl, to pack up and leave but she shows little sign of doing so. The farm house is haunted by friendly ghosts, both Cole and his sister Jewell and, strangely, ghosts from her own family. Lusa decides that since both sides of her family lost their farms, the Jews in the holocaust, and the Palestinians in the settlement of Israel, that Cole was sent to her, not to be her husband, but to deliver to her a farm. She just has to figure out a way to keep it. Lusa’s brother-in-laws arrive to inform her that they will be back on the weekend to plant tobacco. The plants don’t arrive and she is on her own. While tobacco remains the safest way to earn a living in the area, Lusa is glad she will not be growing it.

She notices that the calendar for the year has the Christmas-New Year and Easter Ramadan holidays aligned and the valley has many goats no one seems to be minding. She asks her 17 year old nephew who is one of the only relatives she can talk to about the goats. He says there was a school teacher and 4-H adviser, Mr. Walker, now retired at 80, who got everyone into raising goats for their 4_H projects even though no one in the valley eats goat or uses goat milk. Walker seems to have done this simply to irritate his neighbors. As a result almost every farm now has a few goats no one knows what to do with. Lusa does know what to do with goats, places an ad for free goats, contacts a special butcher in New York, and goes into the goat business. Lusa has seen Coyotes on her property but figures the loss of a kid is a small price to pay and much else can go wrong.

For comic relieve, Kingsolver introduces us to two feuding neighbors, Nannie Rawley, a 75 year old spinster and organic gardener who sells produce at the local Amish market and who sells her apples to an organic apple juice plant in Georgia. Her neighbor is retired widower and goat expert Mr. Walker who never met an herbicide or pesticide he doesn’t love. For some years he has been trying to cross an Asian chestnut with the American to get a strain resistant to the blight that killed almost all the region’s chestnut trees in the 1940s. Walker is real curmudgeon constantly fighting with his neighbor over weeds, fallen trees and other problems. Nannie always gets the upper hand. Since this is a small community we learn that Nannie practically raised Deanna after her mother died, and Mr. Walker’s no good son married Cole’s sister Jewell, gave her two children, then vanished. Mr. Walker has nothing to do with his grandchildren.

A good tale of struggling farm life, what life is like in a small community, and man’s ignorance and impacts on ecological balance. Educational and entertaining. For example, this reader learned that the coyote families we see in the preserve in front of our house consist of multiple female adults, not the male and female we assumed were raising their pups. One Alpha female has her litter and her sisters help her raise the pups and ensure their survival even if something should happen to mom. The male remains a loner. No wonder the coyotes are successfully spreading from their natural home in the West throughout the US. The Indians believe the coyote is more cunning than other animals.

Investigative Reporter and Black Ops

Tuesday, November 8th, 2011

The Room and the Chair, Lorraine Adams, 2009

An enjoyable page turner about modern print journalism (the news room) and CIA black operations (headed by the chair). We have the lightly disguised Washington Post news room with its Watergate famous investigative reporter Woodward (Don Grady), executive editor Adam Sanger, and night editor Stanley Belsen, a raisin passing for white. The three interned together at the paper and we understand Stanley didn’t advance, not because of his color which few even know about, but because he is overly considerate and kind.

A plane or helicopter has just crashed into the Potomac directly across from the Watergate and an anonymous caller from the (Bush) White house has informed someone at the paper that a helicopter with POTUS (President of the United States) on board has gone down. At 2AM Adam and the important editors all converge on the newsroom relegating Stanley to the background. They quickly dismiss the POTUS report but can’t get any more information and are left to run a picture of a fire with the Watergate in the background.

Mary Goodwyn, Air Force Captain, pilot of the F16 Viper, that she has ejected from when the plane stop responding to the controls and heads for the Potomac, awakes in a giant oak. She notices the great view of the Lincoln Memorial and reflecting pool before going into shock. She wakes up later in Walter Reed Hospital. There is no explanation for the plane’s malfunction and she is not charged with pilot error. Soon she is flying again and heading for her second tour of duty in Afghanistan. On her first mission she is directed to a target where she drops a 500 pound pound. Pictures are later released of girls dressed in white who were killed by her bomb. The novel and Mary quickly forget this incident.

The air force admits that it was an f16 that crashed but do not reveal the name or fate of the pilot. The story dies.

We meet the chair, Will Holmes, CIA black ops, former military, current head of MECS Media Exploitation Component Services housed in an unmarked office in Vienna Virginia. His group has originated a technology to remotely take control of a fly by wire modern plane such as a commercial airliner (or an F16) The program is code named “Potomac Pilot”. No more need for the VP (who Will call the Mean Man) to order the shooting down of hijacked commercial airliners. The CIA can just bring any plane down at will once the technology is fully deployed.

A secret document the Sissy (Senate Select Committee on Intelligence) report is leaked to the competitive paper who publish a report of surveillance of the President. There is great embarrassment in the news room and heads will roll. Don has had a copy of the Sissy report all along but is saving it for his next book, unknown to Adam. When reports don’t appear, another copy is leaked to Don’s wife Mabel who is a columnist for the paper. She attempts to deliver it to Adam but he is too busy to see her so he puts it into Stanley’s mail slot at home. Only Stanley among all journalists at either paper who seems to have actual read the report where he finds buried the “Potomac Pilot” program.

Stanley has assigned a black reporter, Vera, on the metro police beat to investigate the F16 crash. She finds a 14 year old street prostitute, Baby, who was on Roosevelt Island when the crash occurred and saw the pilot in the tree and her rescuers (dressed in black). Vera finds a sign on the Island saying he park is closed. Implausibly the Letters MECS are on the bottom of the sign. It later transpires that the newly promoted Managing Editor of the paper is a regular customer of Baby and other underage prostitutes. No consequences for the Managing Editor – some tale huh! Now Stanley gives Vera the Sissy report so she can wrap up her story of the “Potomac Pilot” program and the crash. Vera never uncovers Mary. The VP gets the paper to kill the story. The end? Not quite.

Now a side plot in the already thin tale; In a previous incarnation, Will ran spies and his highest value recruit was Persian Nuclear Scientist Hoseyn who supposedly died but recent intelligence reports indicates may be alive. Will conceives a plan right out of the Carter administration to go into Iran snag Hosein and fly him in a stolen commercial airliner to Iraq. He picks Mary as his pilot and they will disguise themselves as Kurdish peasants until the snatch.

The book is filled with overly smart and sometimes incomprehensible language and expressions. It is best on the inner dynamics of the news room where the author worked for several years and where no reporter or editor reads the paper any more. The expose on the almost total absence of investigative reporting, the repression of news, the new focus on writing books as opposed to reporting the news sounds about right. Disappointing in that nothing is ever resolved, or reported, or corrected. Life at the paper blunders on. It is not only the Internet that is killing print journalism.

Greed Hall of Infamy

Monday, November 7th, 2011

Age of Greed, The Triumph of Finance and the Decline of America, 1970 to the Present, Jeff Madrick, 2011

Madrick begins his account around 1970 when CEOs made an average of 12 times the compensation of the average worker and bankers were paid less than the CEOs of major non banking corporations. Today the CEOs make 200-300 times the average worker and CEOs of finance companies can join the ranks of the top 400 wealthiest Americans, far outreaching the wealth of the average CEO. This 40 year period also saw the greatest decline in American industrial innovation and research in history. He tells the story of this decline through the careers of the most notorious characters of the period.

Citigroup’s Wriston, Inventor of Too Big to Fail

He starts with Walter Wriston, who headed what later became Citigroup from 1967 through 1983 as it became the first “too big to fail” financial institution. Writon worked tirelessly to undermine, eliminate, or circumvent all banking regulation while repeatedly requiring the Federal government to come to his rescue when his bank got into financial difficulties. During his tenure, state usury laws were eliminated, the limits on interest banks could pay depositors were eliminated, and the prohibition against interstate banking were eliminated. Both Carter and Reagan were responsible for these banking changes.

Pickens, Greenmail specialist and Milken, junk bond specialist

He then moves to the aggressive acquisitions and mergers period of the 80s highlighting such innovations as insider trading (Ivan Boesky), greenmail, the launching of a fake bid to buy a company to induce other bidders to enter a bidding war. T Boone Pickens repeatedly used greenmail launching bids without ever completing a company purchase building enormous wealth in the process. He uses GEs Jack Welsh to illustrate that acquisitions with no strategy other than maximizing profits and driving up the price of the company stock. Welch perfected the art of manipulating accounts to show increased profits every quarter for 13 straight years. In the process GE shed hundreds of thousands of jobs, closed countless divisions, and moved GE steadily toward becoming a financial giant accounting for more than half of GEs profits. To provide money for all these acquisitions, Michael Milken perfected the junk bond, a way to raise money from investors outside normal financial regulations. Milken was brought down, not from abuses in junk bonds, but because he began to illegally “park” stock purchases for those quietly buying stock in a target company above the 5% disclosure limit.

Welch strips GE and exports jobs

He illustrates how destructive acquisitions have become to the companies involved and to the overall economy. The goal is to become the dominant player in a field after which reducing labor and research (innovation) can be used to drive profits without fear of competition. The consumer and the economy as a whole suffers. The biggest example comes out of the mergers in media, cable, and entertainment with the mergers of Warner, Time, Turner, and AOL which destroyed enormous wealth and turned the unique 24 hours news CNN network into a news-less shell.

After junk bonds became a dirty word and helped to bring down the entire S&L industry, the new hot investment vehicle became the hedge fund. Hedge funds are limited to 100 very wealthy investors. He uses George Soros, who claims he never broke the rules with his investing then admits that there were no rules, and John Meriwether of LTCM who introduced the VAR volatility measure and hiring of mathematical “quants” to the business of risk managed investing. LTCM collapsed in 1998 but Soros is still going strong.

Weil Too Big to Manage

He returns to Citigroup with CEO Sandy Weil, illustrating the nutty progressing of acquisitions and divestitures. Weil came by way of Shearson merging with AMEX who when acquired by Prudential. Weil then bought back Shearson from AMEX and bought Travelers. Weil then merged with Citi to form Citigroup. The only problem was the Glass-Steagall separation of investment from retail banking. Weil approached Alan Greenspan who offered a two year waiver to allow the merger and a year later Glass-Steagall was history. Citigroup continued its various flirtations with disaster, coming to the brink of collapse time after time only to have the government rescue it. An early colleague of Weil, Jimmy Dimon followed his own circuitous route to eventually head JP Morgan.

He then leads us through the corrupt world of stock analysts, featuring Frank Quattrone, and IPOs leading to the dot com crash of 2000. By 2000 virtually every analyst was recommending buy or strong buy for every new stock issue. A hold or sell meant simply that the analysts company had been cut out the commissions involved in the IPO. Allocations of IPO shares was a rewards – punishment labyrinth of conflicting interests. Hundreds of billions were lost as the companies folded in the crash. Similar things happened in communications with analysts like Jack Grubman pushing Worldcom, Global Crossings, Tyco, and Adelphia stocks ever higher. To add to the mix, accounting giant Anderson, was approving the crazy accounting of companies like Worldcom and Enron. Banking giants were also using “creative accounting” to show profits and hide losses or risky exposure.

Finally he turns to the current mess featuring Bear Stern’s Jimmy Cayne, Lehman Brothers’ Richard Fuld, Merrill Lynch’s Stan O’Neil, and Citigroup’s Robert Rubin. Derivatives for currencies, commodities, and other securities have been around since the 1960s and were applied to mortgages by Fanny Mae in the 1980s but for conventional or conforming loans only. Dividing securities into tranches or slices to tailor risk and insuring derivatives have also been around a while. What was new after the dot com crash was that mortgage backed derivatives became the new best way for financial institutions to earn huge fees. Everyone from Freddy and Fannie, to Wall Street, to the banks, to the hedge funds all jumped on board, creating an enormous demand for new mortgages. The only way to meet this demand was to create new types or mortgages (ARMS, interest only, pay what you can) and sell them to an ever wider collection of consumer. Enter specialized mortgage firms like Countrywide under Angelo Mozilo. When the quality of mortgages started to get B ratings, ever creative geniuses of finance created the CDO 2 which was made up of B rated derivatives somehow magically transformed into AAA instruments.

Masterminding the big crash

Estimates put the federal exposure to mortgages backed by government guarantees at $12 Trillion, too big to fail on steroids. Despite TARP and institution bas debt writedowns in the hundreds of billions, we still don’t know the extent of toxic assets still sitting on the books. Madrick is particularly critical of the failure of government not to insist that the books be cleaned and the institutions forced to lend to business and consumers as a price for the bailouts. He also thinks the government should have been better compensated for the extreme risks the public took. He doesn’t however call for a breakup of the too big to fail finance organizations.

There are excellent books covering specific periods and incidents covered here but the primary benefit of this work is to pull together a 40 year overall look at the transformations of American business and finance. His conclusion is that the entire period is one of wasted opportunities and massive loss of wealth that could have been used to build a better, sustainable America. From the Latin American loans in the 1970s to the destructive acquisitions binge of the 1980s via junk bonds and the collapse of the S&Ls to the telecom bubble of the 1990s to the technology bubble of 2000 to the mortgage crisis of 2008, trillions of investment dollars were simply flushed down the toilets. Some of that enormous investment found its way into the pockets of a handful of very wealthy investors which was the driving motive for all the investment activity in the first place. In the process, finance became the new way to wealth in America, replacing entrepreneurship and innovation. He sites a study that shows that Harvard graduates now going into finance can expect to earn three times more than their classmates.

In a heavily and properly regulated environment, none of this need have happened but every President from Carter on has led to more and more deregulation. Obamas efforts at reform fall far short and Madrick is pessimistic that government is up to the task to putting into place an adequate regulatory environment.