Pentagon Purchasing Counterfeit Electronics Parts from China

Senators want China to assist probe of counterfeit weapons parts

By Bill Gertz-The Washington Times1:14 p.m., Tuesday, June 14, 2011

China's government is refusing to assist Senate investigators probing Chinese firms that are selling counterfeit parts that have been found in high-tech U.S. weapons systems, the leaders of the Senate Armed Services Committee said Tuesday.

Committee Chairman Carl Levin, Michigan Democrat, and Sen. John McCain, Arizona Republican, told reporters that a panel investigation revealed that U.S. defense contractors and government agencies traced the sources of most fake defense parts to Shenzhen, in Guangdong province near Hong Kong.

China has rejected requests for committee staff to visit Shenzhen as part of the probe, Mr. Levin said, noting that investigators are meeting with U.S. officials in Hong Kong to seek help.

“The Chinese have said, well, even if this could be arranged, there would have to be a Chinese official present during the interviews,” Mr. Levin said. “That is a non-starter, somebody looking at our staff while they’re interviewing people who are relevant to an investigation.”

Trade in counterfeit parts “takes place openly in that city and in that province,” Mr. Levin said.

Mr. McCain said he hopes the Chinese will assist in the staff investigation.

A report by the Government Accountability Office published in March 2010 stated that the global supplier network used by the Pentagon provides 4 million parts worth $94 billion.

The parts include fasteners used on aircraft, missile guidance electronics, materials used in body armor and engine mounts.

“Counterfeit parts have the potential to cause a serious disruption to DoD supply chains, delay ongoing missions, and even affect the integrity of weapon systems,” the report said.

It noted that the problem is not limited to weapons systems but includes the National Aeronautics and Space Administration and the Energy Department, along with private-sector producers of software, commercial aviation, automotive parts and consumer electronics and “can threaten the safety of consumers.”

Mr. Levin said counterfeit parts that have “infiltrated” the defense supply chain include microprocessors bought by the Air Force for F-15 operational flight-control computers. Counterfeit microcircuits also were found on hardware of the Pentagon’s Missile Defense Agency.

“In January of 2010, the Commerce Department published the results of a survey of almost 400 companies and organizations in the Department of Defense’s supply chain,” Mr. Levin said.

“Those who were surveyed overwhelmingly cited China as the country suspected of being the source of the counterfeit electronic parts.”

Dale Meyerrose, a specialist with Harris Cyber Integrated Solutions, said the senators’ concerns are justified because threats to critical infrastructure from compromised supply chains are serious and endanger national security and public safety.

“Motivations behind these threats range from the criminally opportunistic driven by profit and greed to state-sponsored seeking an asymmetric advantage over our often superior military or industry entities,” he said.

Chinese officials this month criticized pending U.S. legislation that would continue a ban on Chinese military companies from bidding on U.S. weapons programs.

They told the state-run Xinhua News Agency that the measure is inconsistent with international trade rules and “a distorted reaction arising from U.S. wariness and bias about China’s growing national strength.”

“It shows that the United States worries that China is challenging its global hegemonic status,” the June 2 article said.

The House bill changes language from legislation enacted in 2006 blocking Chinese military companies from contracts by altering provisions that would allow the defense secretary to provide a waiver of the ban if a Chinese company’s products were needed to support U.S. national security.

Obama's War in Iraq: Why Are Young Americans Still Dying in Iraq?

Why is this still happening?

Two U.S. troops killed in Iraq

By the CNN Wire Staff

June 14, 2011 6:31 a.m. EDT

Baghdad, Iraq (CNN) -- Two U.S. service members were killed Monday during operations in southern Iraq, the U.S. military said Tuesday.

There were no further details about the incident, and their names are being withheld pending notification of next of kin.

Violence has dropped dramatically in recent years in Iraq. Under a U.S.-Iraqi security pact, which set a timetable to withdraw American forces, U.S. troops must be out of Iraq by Jan. 1, 2012.

However, U.S. troops have increasingly been targeted by roadside bombings and mortar attacks, largely in Baghdad and southern Iraq -- a Shiite stronghold.

Five American soldiers were killed June 6, the single largest loss of life among U.S. troops since 2009, and the military says that attack is likely the work Shiite militia trying to take credit for driving forces out of the country.

Percentage of Equity in US Homes is the Lowest in 65 Years

Falling home prices have shrunk the equity Americans have in their homes to nearly the lowest percentage since World War II.

Average home equity plunged from more than 61% at the start of 2001 to 38% in the January-March quarter this year, the Federal Reserve said in a report Thursday. That drop comes as home prices in big metro areas have reached their lowest level since 2002.

Prices fell 33% in 20 cities through March from their 2006 peak, reaching their lowest level since 2003, according to the Standard & Poor's/Case-Shiller index of U.S. home prices on May 31. The decline signaled a "double dip" as the index fell below its previous post-housing-bubble low set in April 2009. Prices more than doubled from 2000 to July 2006.

Further declines in home prices are likely.

Robert Shiller, the economist who co-founded the S&P/Case-Shiller index, said a further decline in property values of 10% to 25% in the next five years "wouldn't surprise me at all."


"There's no precedent for this statistically, so no way to predict," Shiller said Thursday at a Standard & Poor's conference in New York.

A backlog of foreclosures poised to hit the market means prices may stay depressed, dissuading builders from starting new construction.

Unemployment, which rose to 9.1% in May, and stricter lending conditions are signs that any recovery in housing may take years.

Shiller's comments paint a more pessimistic possibility for home prices than other forecasts. Additional declines will be "incremental," Bank of America CEO Brian Moynihan said last week..

While it would be a surprise to see prices fall steeply, it's possible for homes to lose more value if inflation picks up, Karl Case, co-founder of the index, said Thursday.

"You could have flat nominal prices but still have it go down 20%," Case said during an interview at the conference.

"If house prices stabilize, they could still go down in real terms. If we had inflation, it'd be great, because it'd mask a 25% decline."

The Fed report showed that household debt fell in the January-March period at an annual rate of 2% from the previous quarter.

That drop was due entirely to a decline in mortgages.

Auto loans, student loans and other consumer credit rose 2.4% — the second-straight gain after nine consecutive declines. ABC News

Netanyahu Beating the War Drums on Iran

Believes each dead Israeli is equivalent to 70 dead Americans

In April of this year the New York Times ran a story By DAVID E. SANGER and THOM SHANKER:
Gates Says U.S. Lacks a Policy to Thwart Iran

:Defense Secretary Robert M. Gates has warned in a secret three-page memorandum to top White House officials that the United States does not have an effective long-range policy for dealing with Iran’s steady progress toward nuclear capability, according to government officials familiar with the document.

That caught my attention because it was an obvious intentional leak designed to focus public opinion on the so-called "existential threat" of a nuclear Iran to Israel. The fanciful threat is ended, of course, by a pre-emptive US attack against Iran. Such an attack is the desired outcome of certain Israeli politicians and their minions in the US Congress (of which there are many). Such a reckless and needless attack against Iran would be the ruin of the US and could not come at a worse time given our existing wars and terrible financial troubles.

Many in Israel and the US are trying to make Iran a US problem. Iran is in many ways a problem for the US but Iran is not a threat to the US. If Israel believes that Iran is an existential threat, that is their problem. Israel is a nuclear power, armed to the teeth with an arsenal that could destroy Iran and every potential ally of Iran. Israeli paranoia should not lead to US folly. There is no US interest served by slavishly following Israel into a such a needless calamity.

If you do not think that this is going on, you are not paying attention. Benjamin Netanyahu is a dangerous demagogue and no friend to the US. Israeli problems are not solved by the US being dragged into another Middle Eastern war.
________________________



Middle East
Jun 10, 2011 ASIA TIMES



False bells on Iran's nuclear program
By Kaveh L Afrasiabi

Confusion over an assessment of Iran's nuclear program by the Rand Corporation in the past week perfectly illustrates the quagmire that anyone has to contend with when sifting through bias on media reports.

When the Republican-leaning New York Post says history may well mark United States President Barack Obama "as the leader who let Iran get the bomb - and so doomed the Middle East to a new Dark Age", it based its assertion on a report it attributed to Rand Corporation analyst Gregory Jones.
"Using the latest data from the International Atomic Energy Agency, he recently concluded that, if Iran's centrifuges continue to produce enriched uranium at current capacity, the regime will have 90% of the 20 kilograms it needs to produce a nuclear weapon within two months - certainly by summer's end," the Post said in an opinion piece. [1]
The Post report was at least an accurate reflection of Jones'

calculations in a report dated June 2, but inaccurately reported that it was published by the Rand Corporation, when it was in fact from the Non-proliferation Policy Education Center. [2] Jones has written for Rand, but his last report for the non-profit policy and research think-tank was published in 2009.

Yet the New York Post was not alone. A deluge of commentaries took it at face value that Rand was alleging with iron-clad certainty that Iran was "two months away from making nuclear bombs". Media sources who attributed the report to Rand included Israel's Ynetnews, the Daily Mail in the United Kingdom, the Weekly Standard and American Thinker, the latter under the headline, "RAND Corp: Iran 8 weeks from the Bomb". [3]

The Rand Corporation's own report, Iran's Nuclear Future: Critical US Policy Choices, financed by the US Air Force and published on June 7, contained no such timetable and is about policy alternatives for the United States and urges greater engagement. [4]

The study's lead author Lynn E Davis, a senior political scientist at Rand, summed up the report in a statement saying, "The challenge for the United States is to influence how the Iranian leadership pursues [national security] interests, for they could provide reasons for acquiring nuclear weapons."

For all it is worth, the Rand report failed to mention that the US intelligence community has yet to revise its December 2009 finding that Iran as of early 2003 has stopped its nuclear weapon program. Nor does it mention that the IAEA despite its expressed concerns about the "possible military dimension" of Iran's nuclear activities has repeatedly stated that after extensive inspections it has found "no evidence of diversion of declared nuclear material".

Close scrutiny of the study shows repeated references to "considerable uncertainties" regarding Iran's nuclear program and, on page 14, it states categorically that "Iran is likely in the near to medium term to strive to stay within the bounds of international norms and laws established by the NPT [nuclear Non-Proliferation Treaty], while continuing with uranium enrichment and warhead experimentation."

This is hardly an affirmation of an Iranian march toward nuclear weapons, unless the scope of outside inspections of Iran's nuclear activities by the International Atomic Energy Agency (IAEA) is considered irrelevant. The IAEA's surveillance cameras at Tehran's enrichment facility in Natanz can easily detect any diversion of nuclear material.

A report by investigative journalist Seymour Hersh titled "Iran And The Bomb - How Real is the Nuclear Threat?" and published in the June 6 issue of The New Yorker magazine quotes former IAEA director general Mohammad ElBaradei as saying he didn't see "a shred of evidence" in 12 years in charge to suggest Iran is building nuclear-weapons facilities and using enriched materials.

"I don’t believe Iran is a clear and present danger. All I see is the hype about the threat posed by Iran," ElBaradei, a likely candidate for future Egyptian president, told Hersh in the interview. An abstract of Hersh's piece says:
There’s a large body of evidence, however, including some of America’s most highly classified intelligence assessments, suggesting that the U.S. could be in danger of repeating a mistake similar to the one made with Saddam Hussein’s Iraq eight years ago - allowing anxieties about the policies of a tyrannical regime to distort our estimates of the state’s military capacities and intentions. The two most recent National Intelligence Estimates (N.I.E.s) on Iranian nuclear progress have stated that there is no conclusive evidence that Iran has made any effort to build the bomb since 2003.

Yet Iran is heavily invested in nuclear technology. In the past four years, it has tripled the number of centrifuges in operation at its main enrichment facility at Natanz, which is buried deep underground.

International Atomic Energy Agency (IAEA) inspectors have expressed frustration with Iran’s level of cooperation, but have been unable to find any evidence suggesting that enriched uranium has been diverted to an illicit weapons program. [5]
Such frustration was in evidence on Monday when Yukiya Amano, ElBaradei's successor at the global nuclear watchdog, told the IAEA board the agency had acquired new "information related to possible past or current undisclosed nuclear related activities that seem to point to the existence of possible military dimensions to Iran's nuclear program".

The disclosure of new information came as Iran announced it would enrich nuclear fuel at an underground facility whose function had been secret until 2009, boosting its production of enriched uranium in spite of UN sanctions over its refusal to halt the enrichment program, according to a report in the Wall Street Journal.

It is ironic, albeit understandable from the prism of the US Air Force, which is in competition with other branches of the US military and has a vested interest in promoting itself by getting ahead in the "war-games", that the Rand report on Iran's nuclear program pays scant attention to the actual program and, instead, focuses on various potential scenarios and the policy implications for the US, Israel, and Iran's neighbors in Persian Gulf.

Although maintaining that "different future Iranian nuclear postures are possible", it nonetheless takes for granted Iran's evolution of a nuclear weapons program that allegedly could be either "virtual", ie fully developed short of building the actual bombs", or "ambiguous" or "declared". The reason for the multiple authors' collective certainty that Iran is acquiring a nuclear weapon capability is that "Iran's national security interest could be served by nuclear weapons".

Not so, and in fact the Rand study itself provides several clues that contradict its abstract generalization on Iran's national security interests, such as the implication of Iran's Arab neighbors being spurred to emulate Iran and build their own bombs and thus hurl the oil region into a costly nuclear arms race, to US playing nuclear shield for the supposedly vulnerable Gulf Cooperation Council (GCC) states indefinitely, etc. As the authors concede, "expanded US conventional activities could be counterproductive" and "heighten Iranian threat perception."

In addition to a distorted understanding of Iran's national security interests and priorities, the report also has a distorted view of how Iran's neighbors view the Iranian nuclear threat, claiming that none of the Gulf Cooperation States (GCC) states support "an approach that seeks to reduce the threat posed to Iran".

In fact, the myth of a monolithic GCC bloc with a unified voice on Iran needs debunking, and following the report's own line of argument, the GCC states should logically support a more congenial security environment with reduced risks for Iran that could, in turn, keep Iran's nuclear potential just that; potential rather than actual.

Interestingly, the Rand report's release coincided with a Washington conference on the changing Middle East and future of US-Iran relations on Tuesday, featuring the former head of US Central Command, Admiral James Fallon, who told the audience that there was very little chance of any US and or Israeli strike on Iran and that the US and Iran should pursue the path of comprehensive dialogue and engagement in light of their shared concerns in the region.

Unfortunately, instead of giving coverage to such voices of reason, the US media and others opted to give prominent and erroneous billing of alarming new information about Iran's nuclear program; yet another example of Chomskyan "manufacturing consent".

Good News Photo of Gabrielle Giffords

The Wienie Weasel

Congressman Weiner seeks treatment after sex scandal

WASHINGTON | Sat Jun 11, 2011 4:24pm EDT

(Reuters) - Democratic Representative Anthony Weiner, under pressure to resign after being snared in an online sex scandal, is seeking professional treatment and requesting a leave of absence from the House of Representatives, an aide said on Saturday.

Weiner's office announced the development shortly after top House Democrats publicly called on the 46-year-old lawmaker to step down.

In a brief statement, the congressman's spokesperson, Risa Heller, indicated that Weiner would remain in office at least until he receives unspecified professional help.

"Congressman Weiner departed this morning to seek professional treatment to focus on becoming a better husband and healthier person," Heller said in the statement.

"In light of that, he will request a short leave of absence from the House of Representatives so that he can get evaluated and map out a course of treatment to make himself well."

Fanniegate: Gamechanger For The GOP?

Fannie Mae’s headquarters, in Washington, D.C. From left: former Fannie C.E.O. Jim Johnson, Congressman Barney Frank, former OFHEO director Armando Falcon, former Fannie C.E.O. Daniel Mudd, President Bush, Treasury Secretary Henry Paulson, former Fannie C.E.O. Franklin Raines, and Alan Greenspan. Photograph by Cameron Davidson.

The chairman of the universe.” , “Washington, D.C.’s Medici.”, “The face of the Washington national establishment.”, “One of the most powerful men in the United States.” All those phrases were used to describe a man you may never have heard of: Jim Johnson, the C.E.O. of mortgage giant Fannie Mae in the 1990
______________________________________________

Walter Russell Mead

Democrats, watch out.

The Republican Party and especially its Tea Party wing have just acquired a new weapon of mass destruction — and it has nothing to do with any of Congressman Wiener’s rogue body parts. If they deploy this weapon effectively in the next election cycle — a big if — then they have the biggest opportunity to move the country rightward since Ronald Reagan took the oath of office back in 1981.

The Tea Party WMD stockpile is currently stored in book form:

Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon.

By Gretchen Morgenson, one of America’s best business journalists who is currently at The New York Times, and noted financial analyst Joshua Rosner, Reckless Endangerment gives the best available account of how the growing chaos in the mortgage and personal finance markets and the rampant bundling of dubious loans into exotically toxic securities plunged the world, and millions of American families, into the gravest financial crisis since World War Two.

It is gripping reading as well, and its explanations are clear enough that readers without any background in finance will have no trouble following the plot.

The villains?

An unholy alliance between Wall Street, the Democratic establishment, community organizing groups like ACORN and La Raza, and politicians like Barney Frank, Nancy Pelosi and Henry Cisneros. (Frank got a cushy job for a lover, Pelosi got a job and layoff protection for a son, Cisneros apparently got a license to mint money bilking Mexican-Americans of their life savings in cheesy housing developments.)

If the GOP can make this narrative mainstream, and put this picture into the heads of voters nationwide, the Democrats are toast. The party will have to reinvent itself (or as often happens in American politics, be rescued by equally stupid Republican missteps) before it can flourish.

If Morgenstern and Rosner are to be believed, the American dream didn’t die of old age; it was murdered and most of the fingerprints on the corpse come from Democratic insiders. Democratic power brokers stoked the housing bubble and turned a blind eye to the increasingly rampant corruption and incompetence at Fannie Mae and the associated predatory lenders who sheltered under its umbrella; core Democratic ideas may well be at fault.

This is catnip to Republicans, arsenic to Dems. If Morgenson and Rosner are right, there is someone the American people can blame for our current economic woes and it is exactly the cast of characters that a lot of Americans love to hate. Big government, affirmative action and influence peddling among Democratic insiders came within inches of smashing the US economy.

The Morgenson/Rosner story is a simple and easily grasped one. It is made for campaign ads. The Great Villain, the man who almost ruined America according to the book, is James Johnson, long one of the most important members of the Democratic establishment. He ran Walter Mondale’s campaign. He chaired John Kerry’s search for a vice-president — the brilliantly executed search that chose the revered anti-poverty warrior John Edwards.

Barack Obama, impressed by this track record of discernment, reportedly asked him to lead Obama’s search in 2008 — though Johnson withdrew when word got out that he benefited from the disgraced and disgusting Angelo Mozilo’s corrupt program of ‘special’ mortgages for political friends. (Mozilo was the head of Countrywide, a massively fraudulent and predatory lender which benefited hugely from its business connections with Fannie Mae.) He is a director of the much hated Goldman Sachs, a former director of Lehman Brothers, has chaired the board of the Brookings Institution, is a major Democratic Party fundraiser who bundled several hundred thousand dollars for President Obama, helped bring old Clinton friends into the Obama organization, and has been at the center of Democratic finance and politics for a generation.

Named CEO of Fannie Mae (a government backed mortgage corporation) Johnson decided to make untold wealth by making and securitizing junk housing loans and by massaging the financial reports to ensure that he qualified for the obscenely generous maximum bonus no matter what was actually happening to the company under his care.

Fannie Mae, a historically staid and predictable government linked company, needed to turn into a cutting edge speculative growth engine to make the hundreds of millions Johnson wanted. Since taxpayers stand behind Fannie Mae’s debts, Johnson needed to get the politicians to back his desire to turn this milkwagon into a Porsche. Fortunately for him — and unfortunately for the country and the world — he found a way.

Fannie Mae would adopt the goal of increasing the percentage of Americans who owned their own homes, targeting the inner city poor who, allegedly, were blocked from home ownership by racial discrimination. (A bogus study to this effect was widely circulated; devastating criticisms and rebuttals quietly ignored.) This is where such luminaries of the American political scene as ACORN and La Raza get into the act. They served as cheerleaders for Johnson’s self-enrichment plan, camouflaging a Wall Street rip-off by hymning its benefits for the poor.

The purpose of no doc, no money down loans wasn’t, Heaven forbid, to generate rich fees and high interest rates for mortgage brokers and Wall Street. No, the smarmy defenders of the Great American Rip-off told us, those features were necessary to make sure that poor people (so cruelly, unfairly locked out of mortgages because they didn’t qualify for the stuffy old-fashioned kind) could participate in the American Dream. Anybody who opposed Jim Johnson’s get rich scheme was a racist who hated the poor. Political correctness married Wall Street chicanery as Maxine Waters, Chris Dodd and Barney Frank led the band; crooked accountants and clueless rating agencies performed the ceremony; big government dowered the couple with a debt guarantee and bankers dressed as flower girls showered the happy pair in a confetti of junk mortgages and junk bonds.

Fannie Mae and the housing market were off to the races — and where Fannie Mae led the way, the financial markets followed. Regulators were captured by the interests they were supposed to regulate; favors were dispensed with a lavish hand; taxpayer-provided money was used to assemble a vast lobby focused on extracting more money from hapless taxpayers to make James Johnson even richer. In the process, millions of financially unsophisticated low income people were stuck with obscenely unfair mortgages, honest whistle blowers were subjected to savage personal attacks, home prices lost all touch with reality, taxpayers were stuck with losses that may approach one trillion dollars, and financial markets were poisoned almost beyond repair.

House in Foreclosure, 2008 (Source: Wikimedia Commons)

But there’s a bright side. Mondale-Kerry-Obama confidant Johnson made a boatload of money, and Fannie Mae was able to pay many of his personal bills — at least until it went broke.

That at least is the story of Reckless Endangerment. No doubt Johnson’s memoirs will tell the story in a different way. The housing bubble and the financial market meltdown were very complex phenomena, many cooks were required to spoil this broth and the arguments over what caused the crash may never end.

Truth is one thing; politics is another. Politically, this story is a killer app for the GOP. It demonizes Dems, lends itself to attack ads, divides Democrats between their Wall Street and union bases, and combines GOP hate figures in ways calculated to unify the GOP and heighten the intensity of the faithful.

The story illustrates everything the Tea Party thinks about the corrupt Washington establishment and the evils of big government. It demonstrates the limits on the ability of government programs to help the poor. It converts a complicated economic story into a simple morality play — with Dems as the villain. It allows Republicans to capitalize on public fury at the country’s economic problems. It links the Democrats to Wall Street — the one part of the private sector that the Republican base loathes. It exposes that mix of incompetence and arrogance that is the hallmark of the modern American liberal establishment and links this condescending cluelessness to the real problems of real American families. It links President Obama (through appointments, associations and friendships) with the worst elements of the Clinton legacy and it blunts some key Democratic talking points.

The story can also be a devastating wedge issue. The Democratic Party today is a fragile coalition of elite liberals, traditionally Democratic ethnic blue collar whites, African Americans and Hispanics. The Fannie Mae story is essentially a story of how liberal Wall Streeters raped every one else — and how the organized leadership of the other groups colluded in the attack. Hammering this picture home will demoralize and divide the Democratic Party, reducing enthusiasm among minorities and pulling swing white ethnic votes toward the GOP.

The story builds GOP unity even as it divides the Democrats, allowing GOP populists and establishment figures to find some common ground. For one thing, it builds the idea that Wall Street is a liberal Democratic institution rather than a conservative Republican one. In fact, Wall Street is in love with power and cuts deals with whoever can make them, but for years Democrats have prospered by making running on Franklin D. Roosevelt’s platform against ‘the malefactors of great wealth’. There are many powerful Wall Street figures who are closely linked to the Democrats, however, and the James Johnson story puts a face on that alliance. Socially and culturally, most of Wall Street stands closer to the Democratic establishment than to the Republican Party these days; linking the Democrats to Wall Street, teacher unions and race hustlers is an easy and compelling way to push the Democrats closer to the cliff even as it allows GOP candidates to lace their speeches with populist anti-Wall Street rhetoric without embracing anti-business policy.

The story doesn’t just attack a failure of Democratic policy execution; it exposes a key flaw in New Democratic thinking. The Third Way as dreamed up by Bill Clinton and Tony Blair sought to harness the power of financial markets to a public service agenda. Old style command and control liberalism believed in directly mandating business to do what politicians thought should be done. AT&T had to serve rural communities, but in exchange it had a phone monopoly and regulators made sure that it made a good profit. The airlines and bus companies had to service unprofitable routes, but regulators made sure that their route networks as a whole were profitable.

As competition became more global and the inflexible regulations of the old liberalism proved less workable, a new and updated liberalism appeared. Instead of old fashioned mandates, liberals would use new approaches that capitalized on the power of the market. Use cap and trade schemes rather than command and control to control carbon through the market — and by creating an international market that will make money for financial firms. Tweak the mortgage regulations to spread home ownership to the poor. Both Britain and the US are looking at fun new ideas like ‘infrastructure banks’ that can fund projects that liberals like without putting large new debts on the public accounts. Private profits can grow even as the public interest is served: this was the Clinton-Blair dream that was billed as liberalism’s response to the Thatcher revolution. Additionally, liberal politicians like Al Gore and James Johnson were well placed to capitalize on the new arrangements. Bill Clinton and Tony Blair have both become much wealthier after leaving office than old style liberals like Harry Truman ever could.

The story also undercuts what little is left of the credibility and the moral authority of the American establishment. What is especially shocking in this story is that the higher up and more powerful people are usually the most venal and corrupt. Low level researchers and bureaucrats are constantly raising questions and preparing devastating reports that expose the flawed premises behind Fannie Mae’s policies. They are being constantly slapped down by the well connected and the well paid. The American establishment does not have the necessary moral strength and intellectual acuity to run the affairs of this country; Tea Party believers will find much in this book that confirms their worst fears.

Republicans of course have a few financial scandals of their own that Democrats can take out and rattle. But because Fanniegate offers a clear storyline, identifiable villains linked to specific disasters that have hit tens of millions of Americans in the pocketbook, and is overwhelming a story of Democratic abuses of Democratic ideas, it is potentially a game changing event. It is also an issue that a GOP candidate for the nomination can use to break away from the field; it is an issue a contender could ride all the way to the White House.

Paul Krugman once told me that he thought that Enron would have a greater impact on American politics than 9/11. He was wrong about that scandal, but if the GOP plays its cards right, Fanniegate could push this country into a new political era.

Opie Outs Weiner's Weiner

Weiner's Weiner

The devastating photo -- allegedly obtained from a woman Weiner corresponded with online -- surfaced yesterday during Breitbart's morning appearance on Sirius XM's "Opie & Anthony" show.

Breitbart, who had published other suggestive Weiner photos, had already warned that he was hanging on to one more snapshot "of an X-rated nature."

He called it an insurance policy, but said Tuesday, "I don't think I want to put his family through that type of thing."

That all fell apart during the radio show, when co-host Gregg "Opie" Hughes convinced Breitbart to pass around the shot on his iPhone, and secretly took a picture of it.

"We prodded him to see the 'pic' that was rumored to be out there. He finally passed his phone around to show a pic of repweiner's -- well -- 'weiner," ' Hughes tweeted later on his Twitter account.

Breitbart told Fox News he was "mortified" at the turn of events.

"This is a complete breach of our arrangement that the photo would not be made public," Breitbart said. "It was a complete violation of trust."

He said the show's co-host, Anthony Cumia, would issue a statement saying he is "horrified" by the development. Instead, Cumia tweeted, "I'm horrified by the PENIS."

Also horrified were Democrats from coast to coast.

Read more:
Opie Outs Weiner's Weiner

Weiner has said nothing publicly since his latest vow not to resign, which he made Tuesday outside his Forest Hills home.

His contrite silence is a far cry from his carefree chats with porn star Ginger Lee in the days after the scandal broke.

"BTW, I'm sponsoring a line of twitpic undies," he wrote Lee as he coached her on how to make the scandal go away. "I need a name."

"I want twitpic ready undies," she wrote back, according to TMZ.com. "Hook a bitch up. I never get cool s- - -t. Just sayin.' "

Last night, reports of still another on-line flirtation surfaced. It was revealed that Weiner had communicated via Facebook with Traci Nobles, a 35-year-old physical-education teacher from Athens, Ga. The Las Vegas Sun reported that she called him "sexy" and he called her "sugar" during an August exchange. But with all his problems, Weiner has managed to hang on to some supporters.

A source close to Weiner said, "He's actually getting calls in his district offices saying stay and fight."