Hastert & Emanuel: Who Made Hay While The Sun Shined?

 “Lobbyists make more money than Congressmen because lobbyists write more laws than we do.â€� – Congressman Ron Paul (TX)

Government work can inspire a certain image, particularly if you are still swayed by idealistic grade-school texts that extolled the work of ‘public servants.’  These are people working not for themselves, primarily, but for a greater good.  Government workers accept a discount from what they could earn in the private sector, because they care about the public.  We owe them our gratitude.

Well, some of them, to be sure. 

In economics, there is a fundamental principle called ‘rationality.’  A lot of students tend to rebel against this notion, and it has some critics from the behavioral finance profession as well.  But I still remember the day one of my favorite professors in economics, facing heat from students on this score, stepped back and defined rationality simply as ‘self-interested, purposive behavior.’  People don’t intentionally try to harm themselves, even if they don’t always make consistent or good decisions.  People try to pursue their own self-interest, to try to make themselves better off.  In a world without significant government intervention, this tendency usually promotes cooperation among buyers and sellers, and the common good as well.

Does public service make for a vow of poverty?  Our public servants are people, like the rest of us.  As a general tendency, we all tend to pursue our self-interest.   And in the public service world, some of the most ambitious, loudest champions about what is good for the rest of us are also intensely self-interested.  When self-interest combines with the pursuit of profit through government intervention, public servants can make themselves better off while leaving the rest of us worse off.

Assuming that policymakers pursue their own self interest is a central tenet of the public choice school of economics.   The “Chicago School� of regulation (the University of Chicago economics department, not the City of Chicago) similarly calls for us to suspend any enduring belief that public servants are always unselfish.  And when public servants serve themselves, well-organized special interest groups can more easily capture regulatory policy and drive it to their own benefit.  In turn, the revolving door, with our servants moving seamlessly between government and the regulated, and back again, can be a very lucrative business.   

Lobbying can also lead government policy to generate results the opposite of what is being advertised.  For example, anti-trust policy can actually make consumers worse off, particularly if well-organized producers run the show.  Government financial regulation can actually destabilize the financial system, if public guarantees spawn moral hazard and gambling with the public purse.  And the resulting crises can become a lever for taking more money from the many, in order to stabilize and cement the positions of the favored few. Read more È

Mainstream Media – Actually On a Case?

In the previous article in this series, we provided a brief review of the long train of corruption cases in Chicago and Illinois, and how they provide valuable perspective for some compelling national and international issues. 
Earlier this week, we had two indications that some elements of the City that Works may actually be working in a good way, and on matters related to international terrorism, drug trafficking, corruption in the city, state, and federal governments, and even the events of September 11, 2001.

On November 1, the Chicago Tribune reported how the City of Chicago’s “Corporation Counsel,� Stephen Patton, responded to a question about a dispute over the authority of the City Inspector General, Joseph Ferguson.  Ferguson has faced noncompliance with subpoenas he has issued to the city.  New mayor Rahm Emanuel’s Corporation Counsel has argued to the State Supreme Court that the city has the authority to enforce these subpoenas, not the inspector general alone, and the city also holds sole authority to hire outside counsel in matters at issue. 

This article did not identify any of the specific cases for which subpoena demands had been rebuffed.  But the fact that the City Inspector General has been issuing them is alone room for optimism. Read more È

The Ultra Secret FBI Criminal Files in the Chicago Field Office

In the first edition of their series of reports on corruption in Chicago, University of Illinois professors Thomas Gradel, Dick Simpson and Andris Zimelis included a good discussion of the evolution of machine politics over time.  They looked at the period with Mayor Richard J. Daley (1955-1976), as well as an equally-lengthy interval with his son, Richard M. Daley, serving as mayor (1989-2011).  The earlier regime drew its authority primarily from entrenched ties with ethnic communities, while the latter evolved a more sophisticated set of relationships with a variety of supporters including unions, corporations, and other special interest groups.  The report from the University of Illinois professors was written in early 2009, on the heels of the indictment of former Illinois governor Rod Blagojevich.  And after listing a long train of successful convictions, they concluded simply that “corruption continues unabated in city, county, suburbs and state today.� 

The authors have gone on to write four more updates to this report, which are all available here.  The fourth edition was released in early 2011, following the last Daley term and the passing of the torch to new Mayor Rahm Emanuel.  This fourth report listed over 340 city officials convicted in public corruption cases in the past few decades, with little sign of any slowing in recent years.  The authors listed cases of “bribery, patronage, contract rigging, conflict of interest, nepotism/family ties, clout, and theft,� noting that they were pervasive across a range of agencies.

Chicagoans can be thankful for some prosecutors, but the “City that Works� and the state and federal government functions dealing with it haven’t earned a presumption of innocence.  A careful, cautious and even cynical perspective is warranted when considering the prospects for reform under new Mayor Rahm Emanuel, especially in light of the strong ties that helped lay the basis for his political career in recent decades.

And while thinking about the Chicago political environment and its relevance for the case of Sibel Edmonds, it is useful to be careful about distinctions between the two main parties in our political system.  We have Democrats and Republicans, on the one hand, and the rest of us, on the other hand.  The long train of scandals and convictions such as those laid out by the University of Illinois professors have entrenched bi-partisan roots, with Democrats as well as Republicans breeding disenchantment and suspicion.  The Edmonds case reaches across party lines, as well. Read more È

Burrowing Into Some Rabbit Holes

Chicago has a lot of strengths, along with a deserved, well, reputation. The City of Big Shoulders?  Perhaps.  But legal and illegal corruption have long greased the wheels in the City That Works.  Chicago is joined at the hip with the State of Illinois, with no shortage of its own symptoms.  Paul Powell, an Illinois Secretary of State who passed away while in office in 1970, just before $800,000 in cash (nearly $5 million in today’s dollars, given the inflation since then) was found stuffed in a shoebox and other places in his hotel room, along with 49 cases of whiskey.  George Ryan, a former governor still in jail on corruption convictions.  And they don’t seem to learn.  Rod Blagojevich was elected to the governor’s seat after Ryan, and Blagojevich now stands to be sentenced following his conviction on corruption charges earlier this year.

The longer-term financial consequences arising when public institutions are used to fleece the public can be seen in the fiscal status of the City of Chicago, as well as the Land of Lincoln.  Last year, interest rates and credit default swap costs for Illinois state debt climbed above California, suggesting the market considered Illinois the worst credit quality among the 50 United States.

The latest nasty recession hasn’t helped, but long-festering inefficiency and corruption have been a major factor in financial deterioration.  A recent study led by Dick Simpson of the University of Illinois/Chicago estimated costs of $350 million a year in Chicago arising simply from waste, theft, patronage, nepotism and contract rigging.  And speaking of waste, an illuminating symbol comes from the cost of garbage disposal in Chicago.  A recent Wall Street Journal article reviewed the city’s finances, and found Chicagoans paying far higher costs per ton of garbage disposed than any other city in the country, nearly twice as much as the second highest.

 

In light of the environment, and the seeming inability of public institutions to reform after scandal after scandal, the prospects for ethical and cultural renewal in Chicago in the new administration led by Mayor Rahm Emanuel might best be viewed cautiously. 

Here’s another reason for caution on that score.

A 2009 article/interview published in The American Conservative summarized some of Sibel Edmonds’ testimony in a court case in Ohio.  This venue allowed her to speak about topics where this former FBI translator had been silenced by a dubious legal constraint called the ‘state secrets privilege.’  The 2009 article included shocking material about corruption and influence peddling.  And the city of Chicago was surprisingly prominent, given the scope of her material. 

Edmonds closed her 2009 article / interview with the following observations:

As soon as Obama became president, he showed us that the State Secrets Privilege was going to continue to be a tool of choice. It’s an arcane executive privilege to cover up wrongdoing—in many cases, criminal activities. And the Obama administration has not only defended using the State Secrets Privilege, it has been trying to take it even further than the previous terrible administration by maintaining that the U.S. government has sovereign immunity. This is Obama’s change: his administration seems to think it doesn’t even have to invoke state secrets as our leaders are emperors who possess this sovereign immunity. This is not the kind of language that anybody in a democracy would use.

The other thing I noticed is how Chicago, with its culture of political corruption, is central to the new administration. When I saw that Obama’s choice of chief of staff was Rahm Emanuel, knowing his relationship with Mayor Richard Daley and with the Hastert crowd, I knew we were not going to see positive changes. Changes possibly, but changes for the worse. It was no coincidence that the Turkish criminal entity’s operation centered on Chicago.

In our coming series, we are going crawl into a few of these rabbit holes.

# # # #

This site depends exclusively on readers’ support. Please help us continue by subscribing .

The Boiling Frogs Presents Bill Bergman

Bill Bergman joins us to discuss compelling financial irregularities and cases involving pre-9/11 money transfers, suspicious activity reporting, and informed securities trading, all of which remain uninvestigated and unanswered to date. He provides us with his analyses of the extraordinary surge in currency shipments and significant increase in the number of suspicious activity reports filed by financial institutions in the summer of 2001, the long history of currency shipments in U.S. covert operations, documented false statements and conclusions by the 9/11 Commission regarding the National Money Laundering Strategy Report from the Department of the Treasury in 2001, and the performance of the ‘market fear index’ in the weeks before 9/11. Mr. Bergman discusses obstacles and climate of fear faced by public servants, the city of Chicago as the major hub for money laundering, narcotics and corruption, and more!

Bill Bergman has 10 years of experience as a stock market analyst sandwiched around 13 years as an economist and financial markets policy analyst at the Federal Reserve Bank of Chicago. He earned an M.B.A. as well as an M.A. in Public Policy from the University of Chicago in 1990. His research work at the Fed included writing the Chicago Fed contribution to the Federal Reserve “beige book.” Some recent issue areas he has worked on include the implications national emergency and war powers pose for the Federal Reserve, money laundering, and wholesale payment system design, risk, performance and pricing. Mr. Bergman is currently working with Social Movement Sciences LLC, a new enterprise developing evaluation and funding services for not-for-profit organizations.

Here is our guest Bill Bergman unplugged!

This site depends exclusively on readers’ support. Please help us continue by subscribing .

Fierce Competition Between Two Jewish Candidates in Chicago

According to the latest reports the degree of allegiance to Israel and its lobby has taken center stage in two Chicago election campaigns for a congressional seat. As far as the two candidates, the incumbent Jan Schakowsky and the Republican Joel Pollak, are concerned, this race and the issues are not about the tanking economy, over a trillion of dollars in deficit or unemployment, neither it is about our disastrous state of civil liberties, quagmire state of our wars, or speedily declining foreign standing and dignity. No.  The number one issue for both candidates is the level of allegiance to the State of Israel, the approval rating from Israel’s number one US lobby AIPAC, and the degree of religiosity in Judaism. The main question and top competition arena in Schakowsky v. Pollak is ‘Who does and will do more and better to represent and protect the Jewish interest?’ And so far our current representative, Ms. Jan Schakowsky seems to be way ahead (the emphasis are all mine;-):

Pollak tends to carry a map of the Middle East with him on the campaign trail, and to present it to the voters. Last week he visited the reform synagogue of B’nai Jehoshua Beth Elohim in Deerfield, Illinois, which hosted a debate between the two candidates. He spread the copy of the Google map in his possession and announced to the audience: “My focus tonight will be Israel.”

…

Pollak’s main obstacle is that Schakowsky was labeled ‘kosher’ by the pro-Israel community, and the American Israel Public Affairs Committee, a prominent lobby group, has praised her work.

…

I’d say Schakowsky is way ahead since her closeted ties and certain long-term commitments go beyond AIPAC, and extend to other Israeli and Turkish subsidiaries all operating under the main lobby’s umbrella.

Do you remember the cover-page story on Jan Schakowsky’s questionable loyalties and skeletons last November? Don’t be hard on yourself if you don’t have a clue since the Israel-Loving mainstream media made sure it stayed quiet and censored. The AmCon Magazine dared to explore the topic after my under oath testimony in Schmidt v. Krikorian case:

So the FBI was monitoring these connections going from a congressman to a congressman’s assistant to a foreign individual who is connected with intelligence to other intelligence people who are located at different embassies in Washington. And all of this information is in an FBI file somewhere?
EDMONDS: Two sets of FBI files, but the AIPAC-related files and the Turkish files ended up converging in one. The FBI agents believed that they were looking at the same operation. It didn’t start with AIPAC originally. It started with the Israeli Embassy. The original targets were intelligence officers under diplomatic cover in the Turkish Embassy and the Israeli Embassy. It was those contacts that led to the American Turkish Council and the Assembly of Turkish American Associations and then to AIPAC fronting for the Israelis. It moved forward from there.

…
GIRALDI: So the investigation stopped in Washington, but continued in Chicago?

EDMONDS: Yes, and in 2000, another representative was added to the list, Jan Schakowsky, the Democratic congresswoman from Illinois. Turkish agents started gathering information on her, and they found out that she was bisexual. So a Turkish agent struck up a relationship with her. When Jan Schakowsky’s mother died, the Turkish woman went to the funeral, hoping to exploit her vulnerability. They later were intimate in Schakowsky’s townhouse, which had been set up with recording devices and hidden cameras. They needed Schakowsky and her husband Robert Creamer to perform certain illegal operational facilitations for them in Illinois. They already had Hastert, the mayor, and several other Illinois state senators involved. I don’t know if Congresswoman Schakowsky ever was actually blackmailed or did anything for the Turkish woman.

…

I think it would be wise to also concentrate on Rep. Jan Schakowsky’s convicted husband, Bob Creamer. After all, this is Chicago! The following is from what I wrote a while back titled ‘Chicago! Not the Musical, but the Action-Suspense Docudrama!’

In March 2004 Schakowsky’s husband, lobbyist Robert Creamer, who was also executive director of the Illinois Public Action Fund, was indicted in federal court on 16 counts of bank fraud involving three alleged check-kitting schemes in the mid-1990s, leading several banks to experience shortfalls of at least $2.3 million. Later he pleaded guilty to tax violations and bank fraud for writing rubber checks and failing to collect withholding tax from an employee. Here is a report in USA Today:

Creamer, 58, a prominent Chicago political consultant, was accused of swindling nine financial institutions of at least $2.3 million while he ran a public interest group in the 1990s.Creamer told reporters Wednesday there was “no doubt that my actions a decade ago were very foolish and placed myself, my family, the organization and many of those who worked with me at considerable risk.”The indictment alleged Creamer caused a series of insufficiently funded checks and wire transfers to be drawn on accounts he controlled as executive director of the Illinois Public Action Fund. According to the indictment, he allegedly then used the inflated balances to pay the group’s expenses and own salary.

And here is more:

The husband of U.S. Rep. Jan Schakowsky (D-Ill.) will spend five months in prison for committing bank fraud as part of his efforts to keep afloat a nonprofit group that he ran. U.S. Senior District Judge James Moran handed down the punishment on Wednesday to Robert Creamer, who also will serve 11 months under house arrest.

The sentence fell far short of the three-year prison term that prosecutors were seeking for Creamer, who pleaded guilty last year to writing a series of bad checks worth millions of dollars to numerous banks to generate cash — a scheme known as check-kiting.

…

Now, Rep. Schakowsky served on the organization’s board during the time the crimes occurred. She happened to sign all the IRS filings along with her husband during this almost decade long of … basically embezzlements. She was fully aware of her husband’s additional income of $100,000 from these fraudulent funds. Yet, this woman, who happens to be a Representative, claimed she had no idea, that she had not noticed, that she had not known or suspected.

I don’t know about you but no matter under which one of the two scenarios – she didn’t know or she knew and went along – this woman should have been kicked out of her congressional seat. Let’s take the first scenario:

If she is so dumb and stupid as to sign all these joint IRS documents and it doesn’t register that there are unaccounted for millions of dollars, she is not competent to be a congresswoman. PERIOD! If she is so irresponsible and intelligence-wise challenged to serve on this organization’s board, sign all the minutes and papers and bank dealings, and yet doesn’t realize millions of dollars are coming out of nowhere, then she is not capable and mentally unfit to occupy her current congressional seat, and should be removed. PERIOD! So here is the question for Schakowsky’s constituents: If she is telling the truth shouldn’t they be voting this uber gullible, stupid woman out of office? Read more È

The Star Power of Chicago: A President, a Chief of Staff, a Governor, a Mayor, a Criminal Convict Creamer, a Dumb or Charlatan Congresswoman, a Political Fundraiser, a Political System Termite…What a Play this would make!

Chicago’s governing style and practices have been consistently characterized as criminal and corrupt since the days of the prohibition-era gangster, Al Capone. Last year Daniel Elgber wrote an interesting piece on this same topic titled ‘Why is Chicago so Corrupt?’

Former Illinois Gov. George Ryan received a sentence of six and a half years in prison on Wednesday, after being convicted on charges of racketeering, mail fraud, filing false tax returns, and lying to investigators. The Chicago Sun-Times reports that in the last three decades, at least 79 local elected officials have been convicted of a crime, including three governors, one mayor, and a whopping 27 aldermen from the Windy City. What makes Chicago so corrupt?

Elgber then goes on to provide some context, historical background, and past parallels with other cities. He points to a few possible factors behind this windy city’s continuous struggle with chronic political corruption:

In Chicago, corruption persisted, to some degree because the city never had the benefit of a reformist mayor like New York City’s Fiorello LaGuardia, who had political ties to FDR. Instead, Chicago moved towards a one-party system that made it even more vulnerable to corruption: The city’s last Republican mayor left office in 1931. Today, not even the Democratic primaries are competitive—for the most part, once you’re in office, you stay there. The weak campaign finance laws in Illinois probably helped to stave off competition in recent years.

The star power of Chicago politicians may also contribute to the city’s continuing problems with corruption. Incumbents tend to be big personalities who get celebrity coverage in the local papers—which sometimes translates into ethical leeway from voters. (In cities like Los Angeles and New York, local politicians take a back seat to the media celebs.)

Lastly, Elgber talks about corruption measurement and relevant points. This is a very interesting and obviously still relevant and applicable piece, so I suggest you read it in its entirety here and check out the links provided.

The media has long been reporting on Chicago’s corruption related scandals, and the intensity and frequency of these stories have increased tremendously in the last few years. So why am I so interested in this windy city of Bears?

Those of you who know me and/or are familiar with my case know the answer: Could it be the Political System Termite Dennis Hastert? Could it be the case of still under question marks Jan Schakowsky and the clear-cut record of her convicted husband? Could it be the Turkish criminal operatives with their HQ in Chicago since the early 90s? Could it be that Chicago was one of the two centers of the FBI’s nearly decade-long espionage and criminal investigations?

Well, the answer to all those ‘could it be’s is a firm yes, with more answers still buried somewhere in Chicago…For now let’s look at a small gallery of a much bigger gallery on recent key political personalities who happen to be connected to each other in more than one way and with more than a tie or two. Treat it as you might an exhibition room in a museum showcasing a series of relevant portraits all set against the same windy city background. Or if you wish, which I hope you do, go even further and add your points and possible interpretations for each portrait.

White House Chief of Staff Rahm Emanuel

I am starting with Rahm Emanuel since he prompted this piece on Chicago Politics’ Figureheads in Corruption. I know what you’re thinking, and no I am not going to walk down the same path and talk about the creepy odd personalities making even a creepier and odder couple. Catch my drift? While the outcome of that marriage may end up interestingly, the marriage is not as advertised. It is not far left with far right, but purely and simply a good example of in-breeding: when the byproducts of the same establishment couple with each other…In ordinary life the off-spring sum up the result. In the murky, smoke and mirrors, basically plain swampy and dirty world of partisan politics the outcome is what you watch on Fox TV, or the like.

Okay, so while the latest with Rahmie prompted this piece, the reasoning and the points herein have nothing to do with that. After all, Rahm Emanuel’s past record has always been out there for anyone who wanted to look, to see, to know about: his father’s Ziono-Terrorist background, his own active duty with Israel’s military, his dual citizenship, his highly questionable loyalties, his even more questionable financial gains from swampy financial institutions’ practices, his connections to the corrupt and criminals, his dirty mouth, his dirtier deeds in the campaign finance area…That’s right. All this has been known for quite a while. Somehow, the far left, while advertising for and promoting Obama, chose not to see their man’s choice of White House Chief of Staff, and worked very hard to hush anyone who did. Now that their con man of choice is secured in place, combined with only God knows what agenda, they choose to mumble about him. Read more È