Is Houston smarter than Detroit? Big Oil versus Big Auto (and a simple solution for global warming)
Posted by Pratap Chatterjee on February 17th, 2007
US car makers and the US oil industry appear to be speeding in opposite directions in what may seem like a complete paradox. Just as companies like Chevron, Exxon and Shell announce the highest profits of any company in history, Chrysler, Ford and General Motors sales are in free fall. Is the oil industry in Houston is smarter than the car industry in Detroit?
Ford announced a global loss of $12.7 billion last year. The company plans to close 16 plants and cut up to 45,000 jobs in North America. Chrysler made a $1.5 billion loss last year and just announced it will cut 13,000 jobs. General Motors cut 35,000 production jobs last year but is suggesting it might have turned a profit after losing $10.6 billion in 2005. (The company "found" $200 million in earnings previously unaccounted for between 2002 and 2006, according to a Friday filing with the Securities and Exchange Commission. But given that it has restated its results seven times in the last two years, the numbers maybe rather meaningless.)
So it may seem astonishing that the Big Three's twin brother - Big Oil - is making money hand over fist. Chevron profits totaled $17.14 billion in 2006, Exxon made $39.5 billion (the highest any company has ever made in history) and Shell made $25.4 billion.
That adds up to $82 billion, three times greater than the losses of the Big Three car companies!
What's the difference between the two industries? Those of us that live in North America know exactly why: the price of gasoline has soared since the invasion of Iraq, and the oil companies have taken advantage of the high prices to cut themselves a bigger piece of the pie. Consumers don't have a choice as the oil industry is an oligopoly.
On the other hand the car industry is much more competitive, so consumers do have some choice.
Instead of buying giant cars that consume more gasoline than the original Model T Ford made in 1908 (the energy efficiency of a Ford Explorer is 16 miles per gallon versus the 25 miles per gallon of the signature Ford car), US consumers have made the cheaper choice and bought Japanese-made cars.
Japanese car maker profits are in stark contrast with the Big Three. Toyota is expecting a $13.4 billion profit for the fiscal year ending next month while Honda is predicting 2006 profits to come in close to $5 billion.
Ten years ago, General Motors controlled about a third of the U.S. market while Toyota's share was closer to eight percent. As General Motors has lost about eight percent of the market, Toyota has gained about the same.
(Another major difference between the two companies: General Motors expects to pay $50 billion in health care costs for its retired workers, while Toyota's Japanese workers are covered by a government health care system.)
Simple, isn't it? Energy conscious vehicles could turn around the US car makers and government provided health care for workers could cut Detroit's losses.
Yet, that would not solve all our problems. Even if the Big Three are losing market share, U.S. citizens are still buying cars that emit greenhouses gases and contribute to global warming. The latest figures show that U.S. greenhouse gas emissions during 2004 increased by 1.7 percent from the previous year, according to the U.S. Environmental Protection Agency (EPA), which released the figures last April. This was the largest annual amount ever produced by any country on record.
Perhaps the price of gasoline is still far too low? If doubling the price of gas has crushed the once mighty U.S. car industry, what if prices were to double again? People might start shopping close by, taking buses and trains to work. New jobs would be created by small local businesses for all those Wal-Mart employees and out-of-work Big Three employees.
Toyota and Honda might have to give way to a bus system or railways! Gasp! How archaic! How could the U.S. pay for a new mass transit system? Well, I heard some folks in Houston just found $82 billion... and the Japanese car makers have another $17 billion. that could pay for a lot. (That's not their money, its money taken out of the pockets of consumers who had no choice)
The U.S. needs mass transportation - and it needs to stop sprawl - lessons on how to do this can be found anyway outside the borders of this country when people live, work and shop in communities and take bicycles, buses and trains to work.
If commuters in the U.S. were to stop driving altogether, we could slash global fossil fuel emissions by 25 percent. Now that would be a revolution, and it would reverberate through history. How America saved the world it might even surpass Superman as a story for ages to come! If not, there won't be much more history to write. But that final page in human history might record that the U.S. failed to act.
P.S. I hear that Richard Branson and Al Gore are offering a $25 million reward for a solution to global warming. You can write that check out to groups like Smart Growth America and Surface Transportation Policy Project. They have the answers to global warming.
Remembering Oil Spills, Old and New
Posted by Sakura Saunders on February 13th, 2007
The week opened with the start of a four month trial against France's oil giant, Total, by groups like Friends of the Earth France.
The Paris tribunal will examine the 1999 Erika tanker disaster that poured 20,000 tonnes of oil into the sea, polluted 250 miles of coastline and caused $1.3 billion in damage. At least 150,000 seabirds were found dead on the coast and up to 10 times as many were probably lost in the oil-blackened seas. Observers say this may also turn into a trial of the "globalized" international shipping system as the Erika was crewed by Indians, sailing under a Maltese flag, chartered by a shipping company registered in the Bahamas for a French oil company.
Meanwhile, a lawsuit between the state of New York against Exxon and four other companies has recently been announced. This suit addresses an oil spill from the 1950's that was several times the size of the Exxon Valdez oil leak in Alaska, but lay undiscovered until 1978. According to New York state attorney Andrew Cuomo, Exxon has been slow to clean up, with an estimated eight million gallons of oil and petroleum byproducts still underground and toxic vapors from the ground threatening neighborhood health.
A Bloomberg article quotes local residents:
"There are people who live above this that still don't know about it,'' said Basil Seggos, chief investigator for Riverkeeper, an environmental group that sued in 2004 to try to force Exxon Mobil to clean up the creek. Others in Greenpoint have become spill experts, according to Seggos, and they say the fumes that rise from basements and sewers are especially bad when the barometer drops before a storm. "The locals tell you they know when it's going to rain because they can smell the oil.''
In other oil spill news, Lagos' Vanguard newspaper reported today that ten Ijaw communities had been displaced and 500 made homeless by a Chevron Nigeria oil spill.
The report quotes Gbabor Okrika, the councilor representing the affected communities:
"Chevron is not bothered about the health of the people they are only concerned about their operations and they have now started a process that can only divide the people and create further division among them."
Also, last month's massive leak in the Chad Cameroon Pipeline caused a storm of criticism regarding the environmental safety of this project. This Exxon-managed pipeline extends from landlocked Chad through Cameroon and extends 11 kilometers off the coast into the Atlantic. This project, which is overseen by the World Bank, has already received much criticism due to money from this project fueling conflict in Chad.
IRIN News quoted Kribi Mayor Gregoire Mba Mba:
"Our town lives on fishing and tourism. If more incidents like this or worse occur it is the economic future of the town that is threatened."
Environmental groups are warning that a similar spill could happen in the Baku-Ceyhan pipeline operated by BP that transports crude 1750 kilometers from the Caspian to the Mediterranean Sea. On Monday, a coalition of Azeri, British and US watchdog groups leaked a report from the U.S. Overseas Private Investment Corporation, which says that cracks and leakages in the coating of the pipeline will need to be monitored closely.
The Fourth Branch of Government
Posted by Pratap Chatterjee on February 12th, 2007
Technology consultants Booz Allen Hamilton may not be on the top of everyone's lists for conflicts of interest, but Congressman Henry Waxman revealed some rather interesting information about this McLean, Virginia, company at last week's hearing on contracting abuse.
Waxman told the hearing that Booz Allen had $97 million in contracts with the Department of Homeland Security in 2005. One job that Booz Allen staff were hired to do was to help plan, award and manage the federal government's SBI-Net program, a high technology security fence between the U.S. and Mexico (Joe Richey wrote us an article on this program - see Border for Sale)
Of the 98 personnel assigned to the SBI-Net project office as of December 2006, 60 work for contractors like Booz Allen. The company that these personnel are overseeing for SBI-Net is Boeing.
What Waxman finds worrying is the fact that Booz Allen has had an ongoing relationship with Boeing since 1993 to assist Boeing in maintaining its market share in the airplane industry, and other extensive relationships with the aircraft manufacturer since 1970.
The question is an important one: how can you be an impartial supervisor over someone who also pays your bills?
Booz Allen is no stranger to the inner workings of government, though. They happen to be one of the largest contractors to the Central Intelligence Agency and the National Security Agency. Tim Shorrock has done some digging into this subject, which you can read in his Mother Jones article: The Spy Who Billed Me.
Contractors supervising their own business partners is fashionable in Washinton DC these days, so we are glad to see that Scott Shane of the New York Times has started a regular series on this subject which he calls "The Fourth Branch of Government". In the first article about this phenomenon he wrote:
In June, short of people to process cases of incompetence and fraud by federal contractors, officials at the General Services Administration responded with what has become the government's reflexive answer to almost every problem.The use of private interrogators at Abu Ghraib another matter we've been tracking, to read more about that, see David Phinney's article: "Prison Interrogation for Profit". To be fair, CACI is no longer in the interrogation business. To find out more about who has this lucrative work, do read "Intelligence in Iraq: L-3 Supplies Spy Support"
They hired another contractor.
It did not matter that the company they chose, CACI International, had itself recently avoided a suspension from federal contracting; or that the work, delving into investigative files on other contractors, appeared to pose a conflict of interest; or that each person supplied by the company would cost taxpayers $104 an hour.
... CACI had itself been reviewed in 2004 for possible suspension in connection with supplying interrogators to the Abu Ghraib prison in Iraq.
U.S. Army takes $19.6 million from Halliburton
Posted by Pratap Chatterjee on February 8th, 2007
Tina Ballard, deputy assistant secretary for policy and procurement for the U.S. Army, told the same hearing that they had taken back $19.6 million from Halliburton for employing private security guards in Iraq, because their contract specifically stated that they could only use U.S. military for security. "We removed the money yesterday," said Ballard (on February 6th, 2007)
Halliburton, a Houston, Texas-based company, has been paid over $20 billion to provide logistical support to U.S. troops occupying Iraq such as building bases, cooking food and cleaning toilets.
Although Halliburton director of security, George Seagle, acknowledged that the company had used Blackwater and other private security sub-contractors in Iraq, he denied that the company was working for them in Fallujah, the day that the four Blackwater men were killed in Fallujah in March 2004, as related earlier. He also told the Congressmen that he did not know what company provided security for their convoys because that was the responsibility of the sub-contractor.
"You should know who you hired, who you sub-contracted to," scolded Republican Congressman Christopher Shays. "You can't be Pontius Pilate and wash your hands of the matter."
Seagle's statement contradicts a 2004 investigation by the Raleigh News-Observer, which unearthed documents that suggest that Blackwater was working indirectly for Halliburton via a complex pyramid of sub-contracting.
An email dated June 3, 2004, produced by Congressman Waxman at the hearing, quotes James Ray, a Halliburton contract administrator, warning the company that they could get into trouble for using Blackwater. "We should not attempt to effect a material change in our contract with the government by hiring a company that we know uses armed contracts. That company is an agent of KBR (Halliburton) and if anything happens KBR is in the pot with them. Even with lipstick, a pig is a pig. Dancing around it will only weaken out position with the government."
Blackwater counsel Andrew Howell says that the men who were killed in Fallujah, were providing security for a company in Kuwait named Regency Hotel, which in turn was employed by a company named ESS in Germany.
Throwing fresh doubt on this matter, was Steve Murray, the director of contracting for ESS, who was also at the hearing says that the four men who were killed that day were actually protecting another major U.S. engineering company named Fluor on that particular day.
But Tom Flores, the director of security for Fluor, who also testified at the hearing, says he was unaware that the Fallujah convoy was protecting his company.
"This tells me that we are not going to have good quality work if neither the government or the contractors can tell us who the subcontractors are," said an exasperated Shays.
Blackwater security shot Iraqi man
Posted by Pratap Chatterjee on February 7th, 2007
Lawyers for Blackwater, the private security company, today publicly acknowledged that one of their security guards shot dead an Iraqi man whom he worked with. "He was off-duty that day," said Andrew Howell, the company's general counsel told a Congressional hearing today. "We brought him back to the States the next day and took him off the contract."
The story of the killing, which took place on December 24, 2006, was first broken by Bill Sizemore of the Virginian Pilot less than a month ago.
The admission by Blackwater's lawyer came at a hearing that was convened by U.S. Congressman Henry Waxman at the House Government Reform Committee.
Blackwater, a North Carolina company, became famous when four of their contractors were shot and killed in Fallujah in March 2003, sparking a massive U.S. military assault on the city in which hundreds were killed. (Excellent accounts of this incident can be found in Robert Young Pelton's new book: "Licensed to Kill" and Jeremy Scahill's forthcoming book: “Blackwater: The Rise of the World's Most Powerful Mercenary Army.” out later this month from Nation Books) The company was back in the news ten days ago when five of their employees were shot down as they accompanied U.S. embassy employees in Baghdad.
The admission by Blackwater confirms worries that armed contractors working directly or indirectly for the U.S. government have been involved in killing Iraqi civilians and that they have escaped the rule of law in Iraq or in the United States.
An article in the Washington Post in September 2005 quoted Brigadier General Karl R. Horst, deputy commander of the 3rd Infantry Division, which is responsible for security in and around Baghdad. "These guys run loose in this country and do stupid stuff. There's no authority over them, so you can't come down on them hard when they escalate force. They shoot people, and someone else has to deal with the aftermath. It happens all over the place."
The article described the shooting of an Iraqi man named Ali Ismael in Erbil, Northern Iraq by unamed U.S. private security contractors.
Nor is Blackwater the only company to have been accused of shooting at Iraqi civilians with an intent to kill.
* In July 2006, two security contractors working for Triple Canopy in Iraq witnessed their boss shoot at Iraqi civilians.
Shane B. Schmidt, a former Marine Corps sniper, and Charles L. Sheppard III, a former Army Ranger, have sued the company, which they say fired them after they filed a report on July 8 that their shift leader fired deliberately and unnecessarily at Iraqi vehicles and civilians in two incidents while their team was driving in Baghdad.
Schmidt and Sheppard's lawsuit claims that the Triple Canopy employee announced that he was ''going to kill someone today,'' stepped from his vehicle and fired several shots from his M4 assault rifle into the windshield of a stopped white truck. The men claim that the truck was not an evident threat and that their team was not in danger. The men say in the suit that the shift leader then returned to their truck and said, ''That didn't happen, understand.'' Later that day, the suit says, the shift leader said, ''I've never shot anyone with my pistol before,'' and then opened the vehicle door and fired seven or eight shots into the windshield of a taxi.
* Custer Battles, another U.S. security company, was accused of shooting at Iraqis in February 2005, in an investigative report by NBC News. Titled "U.S. Contractors in Iraq Allege Abuses." The report quotes four former U.S. soldiers.
"[He] sighted down his AK-47 and started firing," says (Corporal Ernest) Colling. "It went through the window. As far as I could see, it hit a passenger. And they didn't even know we were there."
Later, the convoy came upon two teenagers by the road. One allegedly was gunned down.
"The rear gunner in my vehicle shot him," says Colling. "Unarmed, walking kids."
In another traffic jam, they claim a Ford 350 pickup truck smashed into, then rolled up and over the back of a small sedan full of Iraqis.
"The front of the truck came down," says (Captain Bill) Craun. "I could see two children sitting in the back seat of that car with their eyes looking up at the axle as it came down and pulverized the back."
* CorpWatch's David Phinney was among one of the first reporters to chronicle the infamous "Trophy Video" in Novermber 2005, in which security contractors for Aegis, a British company, in Iraq, were seen shooting at Iraqi civilians.
David Phinney also broke the story of another North Carolina company named Zapata, whose security guards allegedly fired at U.S. Marines in Fallujah in May 2005.
Meet the Wizard of Oz
Posted by Pratap Chatterjee on February 5th, 2007
Paul Bremer, the U.S. envoy who ran Iraq for over a year, will testify before the U.S. Congress on Tuesday, February 6th, 2007. This rare opportunity to see what the man we call the Wizard of Oz is rare, so CorpWatch plans to attend. Why do we call him the "Wizard of Oz", you may ask? Well, for those of you who remember the children's book by L. Frank Baum, the man who ran the land of the Munchkins, was protected from his subjects by special soldiers in the Emerald City.
And "Imperial Life in the Emerald City" is the title of a simply incredible book, that every member of Congress and the public at large, should first read to understand why Iraq is such a mess today. Rajiv Chandrasekaran, the bureau chief of the Washington Post in Baghdad for almost two years, published an account of the so-called Green Zone, the six square miles that the new rulers of Iraq have lived in ever since they occupied the country in April 2003.
This books lays out in hilarious detail the adventures of Paul Bremer, protected by his private security detail from Blackwater, and two of the three other men who testify on Tuesday: Tim Carney and David Oliver.
Tim Carney has just been appointed by Condoleeza Rice to oversee U.S. reconstruction and development projects in the country. Chandrasekaran tells us that Carney, who was in charge of the ministry of industry and minerals, was also a big game hunter who has hunted elephants, cape buffalo, giraffes, warthogs and two species of zebra, but sadly had no experience in either industry or minerals. (He was however a personal friend and ex-deputy to Paul Wolfowitz) In "Emerald City" we learn about his disastrous attempts to privatize Iraq's industries.
David Oliver, was Bremer's budget chief in the Emerald City. He first drew up a plan to fix Iraq that would have cost $60 billion. Bremer asked him to cut it to $18 billion and Oliver obligingly slashed the budget to ribbons.
Chandrasekaran's book is easily the funniest in what is now a library of books on the U.S. in Iraq, although ultimately it tells a tragic tale. The stories he tells reveal an incompetent and ideological group of inexperienced people. He lets us know that the nickname for the first group of advisors - Office of Reconstruction and Humanitarian Assistance or ORHA - was the "Office of Really Hapless Americans" and that the organization that Bremer ran - the Coalition Provisional Authority or CPA - was also known as "Can't Produce Anything."
Some gems from his book:
- An exchange between, Bernard Kerik, the New York cop who was put in charge of the Iraq police, in conversation with Robert Gifford, his predecessor, about a group of Iraqi judges who came to visit him.
"Bob, who are these people? Who the fuck are these people?"
"Oh, those are Iraqis"
"What are they doing here?"
"Bernie, that's the reason we are here.
- John Agresto, the director of St John's College in Santa Fe, New Mexico, who was a friend of both Donald Rumsfeld and Dick Cheney's wife, was put in charge of Iraq's university system.
He left the country after saying to Chandrasekaran what must be one of the most compelling confessions of failure by a Bush supporter: "I'm a neoconservative who has been mugged by reality."
And Chandrasekaran has a wonderful description of life inside the Emerald City aka the Green Zone, catered by Halliburton.
"You could dine at the cafetaria in the Republican palace for six months and never eat hummus, flatbread or a lamb kebab. The fare was always American, often with a southern flavor. A buffet featured grits, cornbread and a bottomless barrel of pork, sausage for breakfast, hot dogs for lunch, pork chops for dinner. There were bacon cheeseburgers, grilled bacon-and-cheese sandwiches and bacon omelets."
"Hundreds of Iraqi secretaries and translators who worked for the occupation authority had to eat in the dining hall. Most of them were Muslims, and many were offended by the presence of pork. But the Americans running the kitchen kept serving it. The cafeteria was all about meeting American needs for high-calorie, high-fat comfort food."
Chandrasekaran, who had first hand access to Paul Bremer, provides a delightful antidote to the more ponderous and self-important book by his chief subject: "My Year in Iraq" (Simon and Schuster, 2006). Although it should be said that Bremer's book is an important insight into why the U.S. failed in Iraq, chronicling in minute detail how he worked to manipulate Iraq's politics by creating the Iraqi Governing Council.
But read Bremer's book only after you read Chandrasekaran, and another book that I also heartily recommend: "Babylon by Bus" (Penguin, 2006) by two young volunteers from the United States named Ray Lemoine and Jeff Neumann, who worked under Bremer, who were put in charge of non-governmental organizations in Iraq.
The book, which is a modern day equivalent of Jack Kerouac's "On the Road" consists of them boasting about their complete lack of qualifications for the job and the chaos that they took advantage of by getting stoned on Valium, drive around rip-roaring drunk, helped soldiers get illegal steroids. The book, which is alternately funny and horrifying, explains that they did what they thought was best under the circumstances but admitted freely that they had no idea what they were doing.
"Babylon by Bus" concludes with the person that they selected to take over their job being targeted and killed in June 2004 and an apology to the people of Iraq:
"(W)e apologize for the reckless, unplanned, understaffed, corrupt, and wasteful way in which our country occupied and failed at rebuilding your shattered nation. For every innocent (person) who was killed, tortured, or injured by our country, we extend our deepest sympathy."
But back to the hearing on February 7th, 2007, in Washington DC. The fourth man that will testify is also a staunch friend of the administration: Stuart Bowen. There the similarity between the four men ends, because Bowen is honest and competent, and has dedicated his last three years to uncovering fraud in Iraq.
To learn about his work you need to check out the website of the Special Inspector General for Iraq Reconstruction (SIGIR) although I dare say that you will find it rather dry reading, being composed of serious audit reports and project assessments.
If that does not draw your fancy, check out a sobering and well written book by T Christian Miller, titled "Blood Money" (Little, Brown 2006) that portrays Bowen, a former fund raiser for George Bush in Texas, as a man who is a mix of "professor, political junkie and prosecutor." And also read a series of articles by Ed Harriman of the London Review of Books, who has been following SIGIR's work in detail. Another journalist who has tracked the work of SIGIR practically daily is James Glanz of the New York Times.
Back to Miller. Some more gems from his excellent book, which members of Congress and the public really should read, to get an adequate picture of what went wrong in Iraq's reconstruction.
- "A nation-building process crafted with the care of a sand castle."
- "The rebuilding process was like an enormous bulldozer with a cinder block on the gas pedal, grinding blindly forward but accomplishing little." " Achievements were tallied like body counts: another 100 schools painted, another clinic opened, another 1000 Iraqis employed - statistics that said little about the reality on the ground. It was rebuilding without a foreman or blueprints"
(Miller is perhaps one of the best investigative journalists who has tracked infrastructure and corruption projects until the Los Angeles Times put him on the environment beat. His work is as relentless as Chandrasekaran's is humorous, although both do an excellent job of explaining why the U.S is failing so badly, with their intimate portraits of the real heart of the occupation.)
He interviews Douglas Feith, the under secretary of defense for policy, at his home in Washington about the infamous Halliburton no-bid contracts and Dick Cheney. He tracks down the failure of Halliburton to fix Iraq's oil fields and restore the natural gas supply, perhaps one of the few detailed accounts available in print on what has really happened to Iraq's main source of revenue.
Miller visits Parsons engineering at the company headquarters in Pasadena, California, and at the Green Zone in Baghdad, and tells how they botched the job of fixing Iraq's infrastructure. "Fear and confusion were better reasons than greed for explaining the way that the company acted the way it did." The company was "caught in a crossfire between customer satisfaction, profit and death."
The book tells the sad tale of Colonel Ted Westhusing, who reportedly committed suicide (a matter of some dispute) soon after discovering allegations of fraud by a Carlyle Group subsidiary that was training Iraqi commandos.
And lastly, but not least, it also has excellent descriptions of how David Oliver and Paul Bremer botched the plan for Iraq's reconstruction.
Our next posting, hopefully, will come from the inside the Throne Room, where Henry Waxman, playing the role of Dorothy Gale, will attempt to uncover the real story behind the Throne of the Wizard of Oz.
Beyond We Told You So
Posted by on August 24th, 2006
John Kenney, a former advertising guy, wrote an op-ed entitled "Beyond Propaganda" last week in the The New York Times about his disillusionment upon finally accepting that the new company name and identity for BP he helped create – "Beyond Petroleum" to replace "British Petroleum"– has turned out to be just so much bunkum designed to make a dirty oil company look environmentally friendly on TV, while it's busy drilling for ever more petroleum and spilling billions of gallons all over Alaska.
Its nice to know there are (or were) still idealists in the ad business, people who believe their job can be something noble instead of public deceipt and manipulation. And kind of sad he was so naive.
We at CorpWatch, however, have always been cynical enough to see through obvious rebranding. Way back in 200, we wrote this about BP's new image: "British Petroleum: Beyond Pompous, Beyond Protest,
Beyond Pretension, Beyond Preposterous, Beyond Platitudes, Beyond
Posturing, Beyond Presumptuous, Beyond Propaganda... Beyond Belief."
Entergy Still Asking for Handouts and Putting Screws to Ratepayers
Posted by CorpWatch on August 23rd, 2006
The Times-Picayune has followed up on an issue that CorpWatch broke back in May, namely, how the people barely scraping by in New Orleans are being asked to foot the bill for the private utility's recovery from Katrina. Now it seems ratepayers, who are dealing with higher rents and fewer jobs to begin with, will be paying electricity bills 50% higher than before Katrina. Not because Entergy can't afford to fix its own infrastructure, but because doing so would bite into profits.
Rita J. King, author of our report "Big, Easy Money: Disaster Profiteering on the American Gulf Coast," noted four months ago that Entergy's corporate structure deliberately shields it from most risk associated with doing business in Hurricane Alley. Although Entergy New Orleans is a wholly-owned subsidiary, it is fiscally independent of its massive parent. Therefore, the larger Entergy doesn't have to make up its losses in case of, say, a major natural disaster. What Entergy N.O.'s insurance didn't cover it is demanding from the state government in the form of a block grant. The rest will come out of the pockets of it's customers, many of whom will be unable to pay, and therefore unable to stay.
This is a evilly clever arrangement. Entergy has New Orleans over a barrel. Ratepayers will complain to their lawmakers, who will be motivated to favor directing a massive public grant to a private corporation in order to keep rates down and taxpayers and voters happy and, more importantly, in Louisiana at all.
The Times-Picayune notes that the latest proposed hike is being justified as a "fuel adjustment charge." Which is a time-honored and now again fashionable way to raise prices for just about anything without looking greedy.
How High Can the Katrina Price Tag Go?
Posted by CorpWatch on August 22nd, 2006
It is Katrina anniversary week, and news outlets are abuzz with stories probing why, 12 months after the worst natural disaster in American history, so little progress semms to be made. USA Today notes that the price tag for recovery and reconstruction stands at $122 billion, and shows no signs of slowing its ascent.
That's still much less than half of what the war in Iraq has cost the just the United States so far; the amount spent on that conflict recently surpassed $300 billion. And more than twice as many Americans have died in Iraq.
It is important to note that the war in Iraq is very much man-made, and was very much voluntarily created.
We at CorpWatch strive to put numbers like these into perspective. Our new report, "Big, Easy Money: Disaster Profiteering on the American Gulf Coast" explores where all of that money appropriated to Katrina relief so far has gone. And the answer is: into the same pockets as much of the money appropriated for the war. Huge multinational corporations such as Halliburton, Bechtel, AshBritt and CH2M Hill (who have well-documented ties to the Bush Administration and/or members of Congress) have made a fortune from no-bid and contingency contracts to rebuild Afghanistan and Iraq, and have also received similar contracts to clear debris and rebuild the Gulf Coast. And the very same problems have emerged: overcharging, underperformance, and a near complete lack of accountability.
Posted by Brooke Shelby Biggs on August 21st, 2006
Paul Krugman today has an interesting take on yesterday's news that the I.R.S will be outsourcing the collection of back taxes to private debt collection agencies today.
"It’s an awful idea. Privatizing tax collection will cost far more
than hiring additional I.R.S. agents, raise less revenue and pose
obvious risks of abuse. But what’s really amazing is the extent to
which this plan is a retreat from modern principles of government. I
used to say that conservatives want to take us back to the 1920’s, but
the Bush administration seemingly wants to go back to the 16th century.
And privatized tax collection is only part of the great march backward."
Creating a profit incentive for debt agencies to go after taxpayers is just another step – in concert with wiretapping, for example – in institutionalizing the corporate-government war on the individual. And in handing over "public good" duties to corporations, to whom the very concept of public good runs counter to the profit motive at the center of their identity. Of course the biggest tax cheats in America are corporations and millionaires with abusive tax shelters and the means to exploit every loophole available to them. Will the collection agencies turn on their fellow corporations?
Krugman notes what CorpWatch has been tracking for years: that we are already outsourcing the dirty bits of war to private security contractors (or "mercenaries"), seriously considering privatizing Social Security, handing contracts out for public infrastructure and utilities, and otherwise privatizing some of the most basic responsibilities of government.
But the potential for abuse is staggering. Imagine the collection agencies that win these contracts - certainly, in keeping with the pattern established in federal contracting in Iraq, Afghanistan and the American Gulf Coast. They will be overwhelmingly those that have been profligate in their financial support of the campaigns that won their new bosses office in Washington. So is it much of a stretch to imagine that those same agencies might single out of aggressive collection those individuals and organizations who criticize and challenge the same administration?
Get Hoffa Into Hair & Makeup, Stat!
Posted by Brooke Shelby Biggs on August 10th, 2006
When employees of the show America's Next Top Model walked out and began picketing the production, we had a real-life labor struggle, right there in Hollywood!
The Writer's Guild of America has been trying to unionize reality TV for two years, arguing that staffers who concoct challenges and situations in which the "real" drama unfolds and then patch hundreds of hours of footage into a compelling episode, are in fact storytellers in a sense, and should thereby be represented by the WGA.
Some of the models on the show have joined the picket lines in sympathy. Unsurprisingly, they are getting a lot more attention than most picketers we ever see. Those Chilean miners just don't look as good with pluging necklines and empire waists.
A Monkey Could Hack That Voting Machine
Posted by Brooke Shelby Biggs on August 1st, 2006
The Open Voting Foundation has discovered that those notorious Diebold electronic voting machines can be made to behave in a completely different manner than the tested and certified models with the flip of a simple switch.
If you have access to these machines and you want to rig an election,
anything is possible with the Diebold TS -- and it could be done
without leaving a trace. All you need is a screwdriver.” This model
does not produce a voter verified paper trail so there is no way to
check if the voter’s choices are accurately reflected in the tabulation.
You will recall that the CEO of Diebold, Wally O'Dell, pledged millions to the Bush campaign ahead of the 2004 election and told the president that he was "committed to helping Ohio deliver its electoral votes to the president next year," just as the company was pushing its paperless voting system on the state oh Ohio - a crucial swing state.
The machines have had spectacular failure rates, and Diebold has repeatedly resisted calls for it to supply a paper trail for its systems, so votes can be verified in the case of a dispute. O'Dell has since left the company, but there is reason for cynicism still - Diebold controls half the market for electronic voting machines and in the wake of the 2000 fiasco in Florida (think butterfly ballots), Congress is pushing states to invest in computerizing elections.
Concerns have resulted in more careful testing and certifcation of the machines to prevent errors, but this new discovery makes the entire certification process moot. A simple flick of a switch makes the machines eminently hackable and elections supremely fixable. Be afraid.
(Thanks to BoingBoing.)
Murdoch Censors MySpace?
Posted by Brooke Shelby Biggs on July 17th, 2006
We knew no good could come of Rupert Murdoch's acquisition of MySpace, the popular community web space, and of course we were right.
Last week, following the sad demise of the net neutrality amendment at the hands of Big Telecom and Big Media, the web was alive with the video of Sen. Ted Stevens of Alaska explaining why equal access to the Internet is bad, because it clogs the system. He explained how it took him a long time to get an email (Stevens called it "an internet") from his staff because it was getting tangled up in all of the stuff on the web.
Apparently feeling the American people did not understand what the Internet is and needed to have it explained to them by an expert such as himself, Stevens described the netwrk as a "system of tubes." His jolly cluelessness has made for tons of fun for bloggers and other web denizens, including a MySpacer who put Stevens' embarrassing video on his page, along with a groovy backbeat.
The page was exceedingly popular. Too popular apparently. MySpace deleted the user's page and all of its contents. MySpace spokespeople have since claimed the enitre incident was the result of a glitch. Uh huh.
Funny, That Wasn't in the Manual
Posted by Brooke Shelby Biggs on July 17th, 2006
The least they could do is improve the healthcare coverage, then:
ST-JEAN-SUR-RICHELIEU, QUE. — Managers at a local
Wal-Mart forced employees to search the store after it received a bomb
threat, Radio-Canada reported Monday.
Some 40 nervous employees searched the store for an hour last
Thursday, said Mailie Fournier, a former employee of the store. They
were accompanied by six police officers.
Several employees, whose jobs don't include security, found the experience traumatic, said Mr. Fournier.
The incident prompted Quebec workplace health and safety board to investigate.
Wal-Mart said it simply wanted to help police conduct the search.
Iraq Wounded Fight for Insurance Coverage
Posted by David Phinney on July 12th, 2006
CBS Evening News and ABC Nightline are both working stories about wounded civilian contractors fighting for insurance coverage from their employers.
It's a very rich story. The Pentagon's privatizing of military support services may or may not save money, but it certainly does privatize the human toll of war.
Civilians are coming home by the thousands with injuries sustained in Iraq. Whenever the Pentagon and the news media report US casualties -- the 500 dead (or more) working under US contractors are ignored.
The story is also a nightmare for many civilians serving in Iraq. A good number of them went to Iraq because they were making good money -- and, as the president told them, "major combat is over."
Thousands are suffering from battle fatigue -- once known as soldier's heart and now even more widely known as post-traumatic stress disorder (PTSD).
Veterans struggled with the Pentagon and Department of Veterans Affairs for years to get the acknowledgement and support for the debilitating condition. PTSD is one reason for the huge homeless problem among Vietnam vets.
Now civilian contractors are fighting the same battle -- not to mention the struggle to get coverage and disability benefits for physical injury.
(The first story to tackle the issue of civilians fighting for their insurance payments, Adding Insult to Injury, appeared under my byline. Just one of many stories framed by me that set the tone for major news organizations to follow. Anytime you guys want to send a check or share some credit, please do.)
My understanding is that both CBS and ABC are relying heavily on two fabulously strong sources for their insurance angles: Jan Crowder and Houston attorney Gary Pitts.
Jana runs several Web sites to help support contractors working in Iraq and their families, most notably Contractors in Iraq. Gary Pitts represents dozens of clients suing companies for their coverage. Jana, me and CorpWatch regularly refer potential clients to him.
While ABC and CBS will undoubtedly focus on KBR truck drivers (some riveting amateur video of insurgent attacks shot by truckers is available -- and in the hands of CBS), there are plenty of other companies in the same pickle, including Titan, which provides translators to the Army in Iraq. The San Diego Union ran an excellent series on the issue.
Ding Dong ...
Posted by Brooke Shelby Biggs on July 6th, 2006
I admit when I heard that Ken Lay had died, I sat bolt upright in bed and then wondered what to think. No more. The bastard flipped America - and especially the thousands of peniless ex-Enron employees, and the entire state of California - a final bird. Not a day in jail. Not another penny to the people he stole from.
Perhaps what shocked me most was the discovery that the convicted felon was at home in Aspen, Colorado when he died, out on a $5 million bond while awaiting sentencing. How, I wondered, could this little man who claimed to be $250,000 in debt, be living so high, just a month post-conviction? Ah, the American legal system. Had Lay been, say, an African American looter in New Orleans, he'd have died in a rat-infested cell.
And, lookee here: poor, poor Kenny-Boy had a Goldman Sachs investment account worth over $6 million when he died. Woe was he, indeed.
Now we learn that the civil suits aimed at collecting some of Lay's ill-gotten assets for the benefit of those bilked by his scheming may be dropped. Lay's wife, who stands to inherit the estate, will likely keep it all. This is the woman who staged the most grotesque PR stunt ever when she opened a second-hand store (called, repulsively, "Jus' Stuff" to sell of trinkets from the Lays' 15 homes, claiming she was destitute.
It is infuriating, particularly if you don't believe in karma, or hell, or any other means of divine retribution available after the grave. It almost makes you believe he died on purpose.
Is Wal-Mart Good for You?
Posted by Brooke Shelby Biggs on June 27th, 2006
"Progressive" economist Jason Furman and Barbara Ehrenreich are currently engaged in an eye-opening dialogue over at Slate. He presents the old red-herring argument that boils down to "What do you elitist liberals have against saving working people money?"
He makes some points I'll concede that I think critics should internalize: it isn't the low prices we object to, it's the way Wal-Mart treats people. If anything, the efficiencies that allow Wal-Mart to have such low prices do not require that the company abuse its employees, fail to provide a living wage or the most basic benefits, or to source product from factories that abuse people oversees. Wal-Mart's low prices, and its low regard for its own employees has been proven to depress wages in the communities where it operates. If Wal-Mart is so clever, why doesn't it innovate when it comes to how it treats human beings? Why doesn't it spend as much money actually improving communities as it does telling us about how it improves communities?
How We Got Here: Post-Doctoral Division
Posted by Brooke Shelby Biggs on June 16th, 2006
The New Left Review will either excite or exhaust your brain. But if you want to see the rise of capitalism on a global scale through the eyes of an economist who speaks economese, this is your guy: Robin Blackburn. I'm not saying I understood the whole thing (I wonder if many outside the ivy-clad ivory towers could), but the whole issue of how corporations came to be the driving force in almost everything in the world, and how money became both the ends and the means to all things, is somewhere here between the lines.
The NLR summarizes the piece thusly: "The concept of alternative futures, banished from postmodernity’s
eternal present, flourishes on the financial summits of the global
economy. Robin Blackburn argues against a neo-Luddite dismissal of the
new financial engineering techniques by the Left, while coolly
assessing the economic and social costs of their current configurations."
Uh-huh. I almost said that.
The gist is, once you see everything - people, the environment, cultures - as commodities, it all makes perfect sense. Of course, money doesn't have a soul.
Therefore, this begins to appear to be a genius corporate philosophy:
In the years 2001–03 about three million jobs were lost in the United
States. By the turn of the century Enron’s managers had become famous
for a regime in which each employee knew that one tenth of the staff,
those who failed to reach trading targets, would be sacked each year,
no matter how good or bad the overall performance. Many of the most
powerful corporations today do their best to avoid having a workforce;
instead they out-source and sub-contract.
We've seen see how well that works.
Ultimately, the soveriegnty of financial institutions that make this entire "financialization" thing work, actually causes corporations and the system they have creates, self-destruct (see Enron, WorldCom, Delphi et al):
[F[inancial profits over the last
decade have mainly taken the form of the cancellation of promises made
to employees—exploitation over time—the erosion of small capital
holdings by large and unscrupulous money managers and the swallowing of
shoals of tiny fish by a shark-like financial services industry. Few of
the gains from the reallocation of capital through superior risk
assessment have been channelled to production. Financial profits have
instead prompted a surge in upscale real-estate prices and the turnover
of the luxury goods sector. The mass of employees and consumers have
sunk deeper into debt. Yawning domestic inequalities have been
compounded by escalating international imbalances, with an inflow of
foreign capital covering a deficit on the us
current account. With a sagging dollar, an oil price shock and rising
interest rates, American households—the consumers of first and last
resort—are likely to find the strain of carrying the world on their
shoulders ever more difficult. Financialization promotes such a skewed
distribution of income that it ends by undermining its own
Took the words right out of my mouth.
Don't Let the Door Hit You on the Way Out ... Wait ... In?
Posted by Brooke Shelby Biggs on June 15th, 2006
Thank you PR Watch for noting, via O'Dwyer's PR Daily, the increasingly obscene revolving-door scenarios in Washington:
Former U.S. Attorney General John Ashcroft's lobbying firm, the Ashcroft Group, has been hired by General Dynamics to represent it on "trade and defense issues," reports O'Dwyer's PR Daily. Working on the account are Juleanna Glover Weiss, Vice-President Dick Cheney's former press secretary; Lori Day Sharp, who worked under Ashcroft at the Justice Department; and Willie Gaynor, a former Commerce Department official who was western finance director for the 2004 Bush campaign. The Washington Times reports that General Dynamics "received a $30.7 million U.S. Navy contract last week and was selected -- along with Lockheed Martin in Bethesda -- to submit a bid to design and implement part of the government's Integrated Wireless Network. ... The steady stream of orders from the U.S. Army -- which now total about 25 percent of the company's sales -- provides a solid base that will continue for years. ... The defense contractor's net sales have more than doubled since 2000 to $21.24 billion last year."
Seducing Kids with Smokes, Gambling, and Booze
Posted by Brooke Shelby Biggs on June 11th, 2006
Back in the day, tobacco companies used quaint tactics to hook kids on their deadly wares: cartoon character spokescamels and candy-flavored tobacco. The former, being rather blatant, was outlawed - the latter is still considered a stealthy way to capture a youth market, especially in the developing world.
R.J. Reynolds, of spokescamel fame, has come up with a new way to tap into kids' yearning to seem grown up: booze-flavored cigarettes with a gambling theme. Part of its new line of "Exotic Blends" are flavors such as "Screwdriver Slots," "Blackjack Gin," and "SnakeEyes Scotch." A trifecta of dangerous legal addictions.
Of course, Reynolds claims it is only aiming for the "young adult" demographic, but I can smell the cigarette smoke and mirrors as well as the next guy. This Italian blog has a great graph that shows that children aged 17 (who are not allowed to buy cigarettes legally in all 50 of the United States) like flavored cigarettes almost as much as young adults 18-20 years old. After 20, the taste for novelty smokes appears to wear off as the addiction sets in.
The malignant shamelessness on display here is nothing new. Let us not forget the days when cigarette companies actually talked up the health benefits of their products. Some things never change, they just put on new thin veils.