Why Mitt Romney used a Swiss bank account and off shore investments

January 28, 2012

By Steven Greer, MD   BatteryPark.TV

When Mitt Romney was booed during the South Carolina GOP debates for not releasing his tax returns, and then finally released just his 2010 results, the press focused on Mr. Romney’s low absolute tax rate near 14%. However, what interested me as a former hedge fund portfolio manager more was his exceptional rate of return on what he described as “mutual funds and bonds in a blinded trust fund”. That seems pretty like some “plain vanilla” investing, yet he earned approximately a 14% return on investment (ROI), depending on the estimate for “total assets under management” one uses. Many of the best hedge funds in the world did not do that well in 2010, so I became interested and analyzed it in more detail.

I used to run my own small hedge fund, and later became the global healthcare portfolio manager for Merrill Lynch’s internal $10 Billion hedge fund. Mr. Romney’s tax returns demonstrate the sophisticated tax minimizing techniques used by complex hedge funds. He posted five different tax forms from 2010 on his campaign web site. On his joint return with his wife, he reported $21,661,344 in Income. All of that was derived from investment returns, with the exception of $528,871 in publishing and speaking fees. The joint couple paid nearly $3 million in taxes, or less than 14% of their $21.6 million income.

Although Mr. Romney is wealthy, he does have something in common with millions of Americans struggling in this five-year-long depression: he too is unemployed it seems. Mr. Romney cannot call anywhere his place of employment other than his speaking engagement company.

In order to determine the return on investment (ROI) for Mr. Romney’s pool of assets, one needs to know the assets under management to use as the denominator. The tax forms do not list that number, but in an interview, Mr. Romney said that he owns, “Between $150 and about $200 some-odd million dollars, I think that’s what the estimates are.” Aside from the fact that his degree of error in estimating his net worth is far larger than most American’s entire lifetime of earnings, by factors of ten, this means that his 2010 ROI ranged from between 11% and 14%.

How well did Mr. Romney’s stock brokers at Goldman Sachs, where he “prime brokers” most of his equities, do at investing in his “blind trust”? In 2010, some of the smartest hedge fund managers earned well less than 10%, and the overall average was 10.2%. So, his Goldman Sachs money managers beat the hedge funds. However, the overall markets gained 12.8 percent (S&P 500 index). The average long-only mutual fund rose 17.48 percent, according to data from Lipper Inc and Reuters reports. So, Mr. Romney’s ROI was a bit inferior to many mutual funds.

The complex global network of accounts used by Mr. Romney has been criticized in the press since he released his tax documents. Some have also questioned whether he was truly “blinded” and unaware of the investments being made. I spoke with a tax expert at the Georgetown University Law Center, John Buckley, J.D.

I asked him what legitimate reasons an American citizen living in The United States would have for opening a Swiss bank account. He replied “U.S. citizens who do not live in Switzerland, typically have Swiss bank accounts for one reason: to hide assets and/or income.” Recall, in 2009, the Justice Department sued UBS, the largest Swiss bank, to obtain the names of 52,000 names kept secret from the IRS and suspected of tax evasion. Mr. Buckley said, “I do not know whether (Romney) had his account at UBS.” According to the LA times, Mr. Romney failed to report this Swiss bank account in his presidential financial disclosure forms. Even conservative commentator Lou Dobbs could not justify Mr. Romney’s Swiss bank account when asked about it by Bill O’Reilly.

The other complex financial tool used by Mr. Romney to reduce his tax burden was to shield investments in hedge funds from the IRS by using Cayman Island and other off shore funds. These are known as “blocker” accounts according to Mr. Buckley. He explained, “Normal IRA accounts in mutual funds or individual stocks have tax deductions. However, hedge funds that use borrowed margin, or leverage, are not considered tax deducted IRA accounts. Therefore, one can invest in Cayman Island accounts to avoid taxes.” Given that Mr. Romney only released his 2010 tax forms, Mr. Buckley speculated whether the infamous Swiss bank account was listed in previous years tax forms.

The legalities of Mitt Romney’s “blind trust” are also uncertain. Mr. Buckley said that since Romney’s personal lawyer is also the administrator of the blinded trust, it raises obvious questions of the strength of that Chinese wall.

One can imagine now some good zingers that the loquacious President Obama could use this fall on the campaign trial. For example, he might say, “Mitt Romney lives off of his trust fund and does not need to work. He knows nothing about job creation. His Bain capital days caused thousands of people to lose their jobs”. Or, he could say, “Mitt Romney is a Swiss bank account Cayman Island Wall Street loving fat cat. I am reforming Wall Street.”

Any of those comments will score well in Nevada, Ohio, California, and other swing states with double digit unemployment. Mitt Romney would be forced to stutter a defense, such as, “Uggh. Uggghh. President Obama wants to punish success. I earned my money.”

Yes. President Obama could pull a brilliant Jiu-Jitsu move and actually make the bad economy a positive campaign rally if he ran against Mitt Romney.

While all of this shell gaming of assets used by the wealthy to reduce tax burdens is mostly legal, it is very foreign to almost all Americans. Moreover, the use of Swiss bank accounts is flat out tax fraud and illegal in most cases.

The “establishment” Republican party to which Newt Gingrich refers is placing their best bets on Mitt Romney to defeat Barack Obama because the current polls indicate that the two match up evenly in a head-to-head race. Romney is their manifest destiny candidate. They are literally panicked now that Gingrich is viable.

However, the Obama campaign over the next ten months could effectively portray Mitt Romney as an unemployed, out of touch with America, Wall Street loving, trust fund living, tax evader. That could likely be an effective and lethal strategy. Newt Gingrich, on the other hand, being guilty only of taking a few millions (small potatoes) as a “lobbyist”, would possibly be able to portray himself as an anti-establishment Tea Party crusader with an unimportant series personal marriage disasters (with a popular Vice President female running mate).

The same old-school GOP voices supporting Mitt Romney so desperately now in 2012 are the very same ones who allowed Barack Obama to win the 2008 election, and the Democrats to take over the House and Senate. Will Karl Rove, Tom DeLay, John McCain, or Bob Dole come through again and help President Obama win a second term, despite high unemployment and an economic depression? Stay tuned.

(Dr. Greer is a former Wall Street financial “sell side” analyst at Donaldson Lufkin and Jenrette, Credit Suisse, and portfolio manager for Merrill Lynch. He is the founder of The Healthcare Channel, CurrentMedicine.TV, and BatteryPark.TV, and frequently contributes to NPR, The WSJ, CNBC, and Fox News)

Goldman Sachs transforms BPC from a Staten Island annex vibe into the new Tribeca

January 10, 2012 By Steven Greer, MD

Battery Park City, since its formation in the early 70′s, has always been viewed by most New Yorkers as more of a Staten Island annex rather than a true part of Manhattan, and for good reason. With the West Side Highway as a barrier, the place took on a suburban vibe with a surreal David Lynch or Stephen King twist. All of that might change now as the new Goldman Sachs headquarters takes root.

Despite a large residential population with an average income well over $100,000,  Battery Park City has long been underserved by low quality shady restaurants barely meeting health inspection minimums, and has been totally devoid of respectable nightlife venues. After the financial collapse that began in 2007, things got even worse. The one bright spot of BPC, the Ritz Carleton hotel rooftop lounge, closed down, as did The Gate House and several shops in the Winter Garden of the World Financial Center.

The closest source for quality restaurants or entertainment has been in Tribeca with its block of restaurants, such as Nobu and The Tribeca Grill. But even Tribeca was seriously lacking in entertainment. With the housing bubble came $2 Million and up apartments, with owners more typically found in New Jersey or West Chester. As a result, the community board frowned upon 4:00 AM closing times or any noise whatsoever.

Some high-end wine or brandy bars have tried to establish in Tribeca but never flourished. The Tribeca Grand hotel lobby space and the Smyth Hotel venue are all struggling. The demand seems to be lacking. Bankers at nearby Citigroup bolt home after work, and poor management plagues the hotel attempts.

Along comes Goldman Sachs. The new headquarters opened in 2010 at the corner of Vesey Street and West Street, in Battery Park City. The adjacent hotel, also owned by Goldman Sachs, was gutted and converted into the new Conrad Hotel, upgrading it from the old Embassy Suites.

Dino Fusco and his Goldman Sachs team quickly evicted the failing Applebee’s, Chevy’s, and other low quality restaurants, and brought in some much improved establishment at the ground level of the hotel. Most of them are now open for business after more than a year of renovation.

Having been opened for just one week, the social scene has immediately changed for the better in Battery Park City. The crowds inside Mark Maynard-Parisi and Danny Meyer’s Blue Smoke southern cuisine restaurant do not remotely resemble the crowds of the old joints on South End Avenue. The place is packed with young executives who work nearby at American Express, Goldman Sachs, etc, or who live nearby in the newly built green apartments.

In addition to the Shake Shack, the other Danny Meyer establishment in the Conrad Hotel space is the North End Grill that is comparable to his midtown well-reviewed Union Square Cafe and Gramercy Tavern. No doubt, there will soon be seen lines of Maybach’s and limos on the street in front waiting for diners.

For the resident of Battery Park City with high standards, no longer will they need to trek over to Tribeca for decent dining. The entertainment situation might improve as well when the Conrad Hotel opens. A variety of lounges and music venues are rumored to be opening, including an outdoor rooftop space overlooking the Hudson River and New York Harbor. This might fill the void left when the Ritz Carlton gave up on this business. Ideally, residents would be getting a Jazz Standard next to the Blue Smoke, but that is not in the cards (despite BatteryPark.TV trying to convince people).

Due to its superior infrastructure, the Goldman Sachs-led reincarnation of Battery Park City actually has much more potential of becoming a premier Manhattan neighborhood than Tribeca ever did. For starters, there is a marina that can accommodate the largest yachts in the world. The area has an Asphalt Green training facility with an Olympic-size swimming pool and outdoor baseball/soccer fields. There are two newly constructed public schools. The BPCA-managed parks and botanical gardens are better than any others in the city. The high-rise housing is mostly all modern and green. It is easier to own a car and access the tunnels from Battery Park City than in Tribeca, and two of the best hotels in the city are in Battery Park (Institutional Investor Magazine ranked the Ritz as the best hotel in the world in 2007).

Good retail clothing shops will follow soon. In 2013, the renovation of the Winter Garden will be completed with numerous new businesses.

Please do not forward this article. A good thing is best kept quiet. We don’t want any riffraff from SoHo coming down here.

The Winter Garden at the WFC: site of new retail stores in 2013

Why News Corp and Disney should merge: A perfect storm is on the way for cable TV

January 3, 2012  By Steven Greer, MD

The cable TV business model is still printing money, despite high user dissatisfaction with the cable delivery companies and the poor quality of content found on most channels. How long will that disconnect last? When will the cash cow dry up?

Last quarter, News Corporation (NWSA) reported record revenue from their largest division, which is cable TV. Fox News (and other European assets) earned $775 Million, up 18% in a global recession. In comparison, the Fox broadcast TV (e.g. American Idol, the Simpsons, etc) pulled in only $133 Million. Multiply all of those numbers by four to get the annual revenue for the calendar year 2011, which computes to approximately $4 Billion from cable TV.

Disney’s (DIS) largest revenue producer, by far, is their cable operation led by ESPN. Last quarter, Disney cable brought in a record $3.5 Billion, up 11%. The next closest money printing machine within Disney was the theme park division, which pulled in $3.1 Billion on the top line. For the full calendar year 2011, Disney will make more than $13 Billion in revenue from cable TV.

The reason TV content creators earn so much more from cable than from broadcast TV, despite many millions more watching broadcast TV, is that the networks charge the middlemen cable providers hefty fees to carry their channels, in addition to charging advertisers to place ads. For CNBC as an example, they get about half their revenue from fees collected from the Cable Guy. ESPN fees equate to nearly a $5 per month charge in each cable TV subscriber’s bill.

The networks keep jacking up the fees and holding the NFL and other content as hostage unless the Cable Guy pays up. Content is King and they know it.

This is why the networks recently agreed to absurdly high fees to the NFL, some $24 Billion over many years, despite the actual revenue to be collected from broadcasting those games to be nowhere nearly enough to offset the fees. In the bigger picture, the premium NFL content allows the networks to have the advantage at the bargaining table.

As a result, cable providers, such as Time Warner, Comcast, or Verizon have been losing those negotiations with the networks and simply passing on the costs to the consumer, amidst the recession. Monthly cable TV now well exceeds $100 per month in most regions.

There are signs of successful pushback from the cable providers. New cable TV channels are failing. The Oprah Winfrew Network (OWN) is struggling to get cable providers to pay the fees and distribute it to viewers. In New York. Time Warner recently cancelled the deal with MSG, so millions on viewers will no longer be able to see Knicks and Rangers games. The Fox Business Network, despite being part of the powerful News Corp family, had trouble getting picked up by cable providers and only recently reported a profit after launching in 2007. Fox Business could actually be considered a success by current standards. It is unlikely that small independent cable channels will succeed as they did decades ago.

What would happen if Americans and Europeans, in droves, suddenly stopped paying $150 or more per month to receive cable TV? What if everyone started using their fancy new iPad or Apple TV screens to watch video content delivered via the Internet, bypassing the Cable Guy?

Ask any cable TV executive the question, “Will people stop paying for cable TV soon?” and all of them will answer, “No way. Content is King. We have the monopoly on content”. But that is no surprise. For any mature industry, the insiders are the last to acknowledge major paradigm changes on the horizon.

A perfect storm is on the way for the cable TV industry, and might hit as soon as Q4 2012 with a salvo from Apple (AAPL). First, the average cable TV subscriber is broke and can barely make ends meet with groceries, mortgages, and gas. High-speed Internet alone costs around $60 per month. However, Internet plus cable TV is a whopping $150 per month when all fees and taxes are added. Is ESPN’s Monday Night Football essential when free broadcast carries the other games? Are MSNBC, TLC, or MTV essential for those families, especially when delayed versions are on the Internet via Hulu and other portals?

Then, add to this perfect storm the appeal of the newer TV interfaces via Xbox or iPad that surpass the 1970′s cable TV remote control by light years. Very soon, the old remote control will simply become unacceptable to anyone under the age of 30 and the important advertising demographics.

Thirdly, there will finally be some easy-to-use solutions for watching Internet video on one’s large living room TV, arriving later this year. Apple TV and a new iPad are the likely forms.

The final fuel to this perfect storm, later on in 2013, will be the original content created directly by new forms “studios” and thousands of smaller independent channels, all delivered via the Internet bypassing cable providers. The hit cable show “It’s Always Sunny in Philadelphia”, now on Comedy Central and FX, started as an online production made by some guys with a digital camera for $85. Google, Netflix, and other larger companies have original content productions in the works.

The cable providers are already seeing reductions in subscribers and are trying to diversify into other businesses. Time Warner wants to offer home security, for example. However, the traditional studios haven’t yet felt the pinch. In fact, they are earning record revenues. This scenario is untenable. The day of reckoning is near at hand.

When industries start to contract, like the pending implosion of the cable TV industry as people cancel their subscriptions, mergers ensue as the best way to cut costs and gain “synergies” (i.e. layoffs). One good fit for a cable TV content creation merger would be News Corp (NWSA) and the larger Disney (DIS).

Disney’s ABC already partners with Fox News given the lack of cable news operations for Disney. The broadcast TV and film studios for both companies would be easy integrations with huge synergies. The News Corp print and Disney theme parks have no overlap and would not create a cannibalizing situation.

Perhaps most pressing for News Corp is the uncertainty created by the ongoing European tabloid scandals and British Parliament investigations. With his son James taking fire, the successor to News Corp’s Rupert Murdoch, now 80 years old, is uncertain. All of these issues would be diminished or resolved if News Corp were folded into Disney.

One could argue that the record revenues of the cable TV content creators is a sign of a viable growing industry. However, financial analysts also know that the bubble is always biggest before it bursts.

Pop culture people who need to go away in 2012

December 31, 2011

If you have found yourself yelling at the TV due to the bad content, or avoiding the movie theaters, you are not alone. It’s not you. The content providers are flailing, desperately and pumping out the worst shows ever.

As fewer people watch free broadcast TV, and even fewer people under the age of 35 pay $150 per month for cable TV, the TV executives have been scrambling to stop the ratings declines. Situation comedies rule the waves, as do multiple versions of the same show, such as the CSI related series. TV news has been the worst hit, and what passes for news now would make Edward R. Murrow gasp if he were alive.

In Hollywood, it is no better. The bad economy, combined with more convenient home theaters and iPads, have caused the box office revenue to decline 11% since 2009. As a result, just as we saw in the music industry, the films are playing it safe, going after the sequel, remake, and family markets.

As a result of these factors, some really annoying people keep showing up on our screens, despite the public not liking them. The following is meant to be constructive for the TV or Hollywood executive. We made a list of the most egregious pop culture faces who need to retire in 2012.

Film Actors

Shia LaBeouf is the product of Steven Spielberg’s hubris. The master of formulaic blockbusters, Spielberg thinks that Shia is someone who females or wimpy males can view and identify with, as he struggles through action packed situations. That might work for films where the special effect robots and Megan Fox are the main attractions, but it does not work in real films. The remakes of “Wall Street” and “Indiana Jones” that starred Mr. LaBeouf were, quite literally, examples of some of the worst casting in the history of modern Hollywood filmmaking. Shia single handedly ruined those films.

January Jones, for those of you who do not know, is the pretty blond who gained fame in the AMC show “Mad Men”. In that limited role, she is sufferable. But placed in larger roles, her lack of acting skills is astonishing. Moreover, she is almost anorexic and simply not appealing as the eye candy that the casting directors seem to think. Her role in “X-men: First Class” was painful to watch. She needs to stick to just the Mad Men series and eat some Big Macs.

Ryan Reynolds began his career in comedic roles. He has a funny looking face with his eyes a bit too close together. He then developed an HGH-like physique, took off his shirt, and casting directors tried to transform into a leading man, to much failure. “Green Lantern” was a bomb. He needs to take 2012 off and try to come back as the principle in the remake of “Saved by the Bell”.

Katherine Heigl was clearly told that she was special by her mother, and seems to have made some good friends in Hollywood. Despite box office bombs one after the other, she keeps getting the leading roles in big budget movies. Maybe Hollywood is finally getting smart and targeting smaller niche markets and that is why they give her the roles? Who knows, but this is certainly an enigma.

Jack Black is clearly the experiment of some Hollywood executives who think that if they push him into the theaters often enough we will like him. It’s not working. “The Big Year” and “Gulliver’s Travels” were money-losers for Hollywood.

Zach Galifianakis and Ed Helms, and other “Bro Film” genre actors who are oblivious to their nerdiness have worn out their welcome. The sequel to “Hangover” was hated by most fans who loved the original. That’s a really bad sign when fans turn on a cast so swiftly. Zach’s HBO show “Bored to Death” apparently bored everyone to death, and was cancelled. Zach needs to retire and possibly try some directing or producing, or anything behind the camera.

Broadcast Television

Ryan Seacrest is everyone’s favorite person to hate on TV. He sticks around thanks to the ratings of American Idol. Not well known, however, is that he is the evil mind behind those Kardashian talentless sisters, producing their reality TV schlock. The geniuses at NBC floated a trial balloon rumor of him becoming the new Today Show host, which was popped instantly. Ryan Seacrest needs to stay on American Idol and punish the viewers for being so stupid as to watch.

Ashton Kutcher took over for Charlie Sheen on CBS’s “Two and a Half Men”, and his lack of charisma is glaring. He could never do 7-gram rocks of crack like Charlie. Also, his stupid hair hats are annoying people. Ashton needs to go away for 2012 and reinvent himself, which will be to do for a former male model with no acting skills.

Seth Meyers somehow kissed Lorne Michaels’ butt enough to become “Lead Writer” for the rarely funny Saturday Night Live. His smarmy act is very uncreative, as are most of his jokes. Seth needs to go away in 2012 mainly because of his annoying “Really?” shtick that he started. Enough!

Conan O’Brien was a ratings disaster when he was handed the Tonight Show job, as the idiots at NBC demoted the #1 viewed Jay Leno. When NBC then, in turn, demoted Conan to 12:00, the arrogant Harvard grad refused, quit, Fox did not bite, and he ended up on basic cable floundering with less than a million viewers at times. Conan is too old and wrinkled now to be doing his Harvard-dorm-room-style pranks. It is so sad to watch that Conan needs to take himself out to the woodshed in 2012.

Television News

Nancy Synderman, MD has done more to mislead and endanger the American public than anyone else, given her large platform as medical news reporter on NBC Nightly News. She seems to have been demoted recently, with most stories being handled by Robert Bazell or more qualified breast cancer surgeons. Dr. Synderman needs to go away in 2012 and try being a real doctor again.

Christiane Amanpour is one of numerous broadcast TV news anchors who benefited from some executive somewhere thinking that her snooty British accent would fool dumb Americans. ABC’s “This Week” was one of the best Sunday morning shows when George Stephanopoulos hosted it. But ratings tanked after they made Ms. Amanpour the host, and Stephanopoulos is back. Ms. Amanpour needs to move to London and bother the Brits in 2012.

Katie Couric was another disaster as a TV news anchor. After being replaced as anchor of the CBS Evening News, and sparing the public for a while, she is planning to resurface in 2012. Ms. Couric needs to cancel those plans and stay in retirement.

Josh Elliott is ABC’s most recent brilliant idea as a TV news anchor. Within months, he has moved from ESPN, to reading the short news segments on ABC’s Good Morning America, to now being the full anchor on many occasions, leaping over the normal anchor Dan Harris. Likely, the ABC executives mistakenly think that the large ratings and revenue of ESPN had something to do with Mr. Elliott and that he can bring some charm to the shrinking ratings of GMA. Mr. Elliott needs to go back to the cheesy low brow too-costly ESPN in 2012.

Jeff Glor is an unknown Wall-Street-investment-banker-look-alike who recently was given some fill-in work as anchor on the CBS Evening News. He rapidly made this “Go away in 2012″ list of ours due to his bizarre speech. He seems to have his lower jaw wired shut. Make no mistake. This is not an impediment that he had to overcome. This is something that was deemed an asset by CBS and allowed him rise to the crème of the top at CBS. As TV news tanks, no gimmick seems out of line. CBS likely conducted small focus groups and saw that the audience zoomed in on Mr. Glor, like passerby’s rubbernecking a motor vehicle accident.

Trish Regan, the former CNBC “business” anchor, demoted by CNBC, then let go, is reportedly going to be resurfacing on Bloomberg TV in 2012. Ms. Regan made this list because she epitomizes the maddening barrage of clueless business anchors chosen for their looks. Her shtick is wearing skin tight dresses that accentuate her legs and breast augmentations. Enough! Business people need competent business stories, produced by people with Wall Street experience (such, as Stephanie Ruhle on Bloomberg).

Jim Cramer on CNBC has been wrong on major stock calls so often (ala the infamous Bear Stearns calls that got him dragged before the viewers of the Daily Show for a berating), that people are numb to him. He likely has too many crony friends in TV now to be fired by the new owners of CNBC. Mr. Cramer needs to do the country a favor and retire himself in 2012.

Jon Stewart…Wait, this is a mistake. Jon Stewart is great. He is one of the few things to look forward to on TV for 2012.

“Music”

We placed music in quotes. There really is no true music industry any longer. We could have selected almost any pop music performer for this list, but settled on these celebrities who “need to go away in 2012″.

Taylor Swift is not as egregious as some, since she supposedly writes her own songs (with lots of production help), but this act has been bled dry. Enough is enough. Taylor Swift needs to retire and come back as an old lady when she is 24 years old.

Rihanna is attractive, but that synthesized monotonous electronic voice of hers has to go away for a while. Maybe she could try acting and be a robot in a new Transformers movie.

Kanye never had telent and never will. Take a nap in 2012 Kanye. Come on man. You know its the right thing to do.

All American Idol and X Factor contestants need to disappear from the media forever, not just for 2012.

If you find that the offering of content in 2012 is unacceptable, then express your views with your checkbook. Cancel your cable service.

Our Viewership Stats, as of year end 2011

December 29, 2011

The domain of BatteryPark.TV has received approximately 100,000 views since we started counting this year. Of the actual videos, more than 175,000 people have viewed them. (A video of a previous 9/11 police bagpipe parade has more than 100,000 views, but is not part of our current player list). Our most viewed news story video was the exclusive report of the attack on a local resident by the PEP. It was viewed by nearly 4,000 people.

The current monthly viewers are close to 9,000, and growing, with no marketing or promotional efforts to speak of. Please spread the word.

Of note, we have a significant Goldman Sachs viewership due to Google searches for lunch choices. The law firms and American Express across the street also use our sources for food decisions.

Those stats are respectable considering that only 10,000 or so people live in Battery Park City proper, and our stories are focused on local issues for the most part.

Keep in mind that we are not a content aggregation farm like the Huffington Post. We could post others’ stories with mainstream appeal and inflate our viewership, should we so desire. However, maximizing total clicks is not our goal. We aim to build the viewership of the valuable Battery Park demographic, with local purchasing and voting power.

Thank you, and stay tuned for 2012

Steven Greer, MD

Founder/Executive Producer and Editor

Our Best stories of 2011

Our best stories from 2011

December 26, 2011 By Steven Greer, Founder/Editor of the channel

BatteryPark.TV is still a work in progress and labor of love that I started about two years ago. But in 2011, we stepped it up a notch with more (expensive) video productions and muckraking stories that made huge impact on local issues and got results.

We selected a few of our best stories, by category, and hope that you enjoy them. As always, we welcome any of your suggestions or submitted stories. Happy Holidays.

International-level news

New Apple products, Facebook scams, and Wall Street dominated these stories.

Greer v Zuckerberg

Steven Greer, MD discusses with Bill O’Reilly the Japan radiation concern for the US?

Fox Business: Are expert consulting networks legal?

A chat with Russell Simmons at OccupyWallStreet

What Steve Jobs would have invented if he lived longer

Is Facebook overvalued and part of a social network bubble?

Told you so: Apple is making a 50-inch “Smart TV”

As we reported a year ago, New York Times reports that Facebook trends in the U.S. are dismal

The banks are insolvent folks

State-level news

With the help of Sheldon Silver, Mayor Ed Koch, CB1 Chairperson Julie Menin, and others, we made a few interesting stories.

Time lapse of Freedom Tower/Sun Flowers going up

9/11 Memorial Tour hosted by Sheldon Silver

CB1 opposition to Pier A becoming restaurants and bars

CB1 says “Close Indian Point”

Ed Koch: Indian Point nuclear plant should be closed

Ed Koch: Will Governor Cuomo become Obama’s VP?

Sheldon Silver discusses the 9/11 memorial

Thank the 9/11 memorial people for the 100% rate hikes at the bridge and tunnels

City-level news

Mayor Bloomberg provided us with some good topics of humor this year.

Images of devastation from Battery Park City A sarcastic story about “Hurricane” Irene

As predicted, we just got rain from “Hurricane” Irene

ABC News admits they blew it on hyping Hurricane Irene

Hurricane Survey

Exclusive: NYC Taxi companies are double charging credit cards

Busted: Snow plow operators sitting idle

Battery Park-level news

A recurring theme to our hard news stories has been the incompetence and corruption of our landlord, the Battery Park City Authority, which is led by Bill Thompson (wannabe Mayor in 2013 and non-resident of BPC) and his crony minion Gayle Horwitz (also a non-resident of BPC). Thanks to this leadership, BPC residents pay the highest property taxes in the city.

Never before has Battery Park had a news venue like BP.TV, free of financial conflicts and bias, and willing to expose the BPCA, unhealthy restaurants, etc. Our biggest accomplishment this year was in forcing the New York Waterway ferry company to finally renovate their loud polluting boats. The community has tried to get this done for decades. Stay tuned to see whether the company holds their promises.

Update: EPA’s response to our letter on NY Waterway ferry pollution

Community Board 1 discusses NY Waterway ferry boat pollution and the grass field

Polluting ferry boats to get new, less polluting, less noisy, engines

Our second accomplishment this year was in forcing the BPCA to fire numerous bad apples in the ranks of the Park Enforcement Patrol, instill a zero tolerance policy on harassing citizens, and to get the PEP to start patrolling and enforcing as they are supposed to do. It all started with our exclusive story about the beating of Adam Pratt as he walked his dog and dared to speak back to a PEP asking him for ID.

Battery Park City park rangers assault BPC resident

“Nazi-like” behavior by the park rangers

Next, our questions at the Community Board meeting to the Brookfield staff about their bogus self-funded, non-independent, “traffic studies”, upon which they based their plans to demolish the beloved marble stairs in the Winter Guard, were influential in causing Brookfield to back away from those plans.

Tribeca Tribune: Steven Greer questions pedestrian traffic study of Winter Garden

Save the Stairs

Later in the year, the CEO of BPCA was busted by BatteryPark.TV trying to make a secretive culling of the ranks to make way for Bill Thompson cronies to be brought in for his 2013 Mayoral campaign. We had none of it.

Exclusive: Mass firings at the BPCA as Bill Thompson prepares to run for Mayor

Exclusive: The BPCA gives the PEP a $1.5 Million raise, renews contract, all with no public comment

Dog excrement and speeding mopeds dominate BPCA town hall meeting

The BPCA “Town Hall” was a farce

Oh the irony. Leticia Remauro denied access to BPCA offices

Gayle Horwitz avoids the public she represents, a no-show for tree lighting

Gayle Horwitz hides under her desk as CB1 discusses her bizarre culling of the ranks

Along with the delays in Asphalt Green, the bungled construction project of Pier A is becoming the latest scandal from BPCA. The January 2012 meetings will shed more light on this.

Pier A plans are “A slap in the face to Italian Americans”

Gayle Horwitz’s head of the parks., Tess Huxley, who managed the PEPs that were hostile to dog walking pet owners, seems to hate any wildlife in the parks. At the Town Hall meeting, she blamed people feeding the birds as a cause for the rat problem in the park. Say what?

Who killed the Koi?

Did Tess Huxley intentionally drown the ducklings?

Gayle Horwitz was acting in full bureaucratic mode when she refused to allow her parks staff to assume control of the lavish and expensive natural grass West Thames field: a field that any other neighborhood would love to have. It took the exposure from BP.TV to get action.

The Parks Conservancy delays the new sod for the mud field

The people have spoken: No organized sports on the grass field

Halleluiah. Rules for the grass field posted

The problem of the idling tour buses on our streets was single handedly resolved by BP.TV. Then, with the help of CB1′s Linda Belfer, the entire region began seeing the PEP respond rapidly, like never before, to complaints about the buses. Gayle Horwitz is now making this her own “cause” to “make nice” with the public after her series of gaffes and scandals.

Police called to remove tour buses from North End Avenue

Gone in 60 Seconds

Update on efforts to rid BPC of illegally parked tour buses

We noticed this bizarre thing going on

Abandoned bikes

BP.TV shed light on this building owner scam destroying businesses and property values.

The scaffolding scourge: A walking tour

BP.TV kept the farmer’s market honest.

Scammers at the Farmers’ Market?

Lastly, the extremely dangerous streets in our area were featured, and changes have been made.

The death trap at Murray and West Streets

Pedestrian dangers on South End Avenue

Our perilous intersections

Entertainment stories

Finally, so as to not be too depressing, or “Why so serious?”, we made quite a few fluff pieces:

The best photo in the history of Battery Park

New American Youth Ballet

Go Fish

Drawing in the Park

A tour of the new BLT Bar & Grill at the W Hotel Downtown

The Big Toot

Spring sailboat races

The Urban Farm

A Tour of the Battery Conservancy

The 2011 9/11 Memorial Police Bagpipe Parade

No sex in the Champagne room: Pussycat Lounge and sex shops by Ground Zero closed

Our resident wild turkey flies in from Staten Island

The NYMEX has removed onerous security screening stations after businesses close

The Christmas Tree Lighting in Battery Park City of 2011

Too many Fuddy-duddies stifle entertainment Downtown

How to cut your cable bill in half

The BatteryParkTV Directory of Local Businesses

Why Facebook does not want to reveal its books in an IPO

Update: December 13, 2011

As we first reported a year ago, the U.S. usage rates of Facebook is way down, per the New York Times article. This is very bad for the hyped valuation and why they shunned the openness of the IPO process.

The article reads, ”

But the figures on growth in this country are stark. The number of Americans who visited Facebook grew 10 percent in the year that ended in October — down from 56 percent growth over the previous year, according to comScore, which tracks Internet traffic.

Ray Valdes, an analyst at Gartner, said this slowdown was not a make-or-break issue ahead of the company’s public offering, which could come in the spring. What does matter, he said, is Facebook’s ability to keep its millions of current users entertained and coming back.

“They’re likely more worried about the novelty factor wearing off,” Mr. Valdes said. “That’s a continual problem that they’re solving, and there are no permanent solutions.””

Update: August 20, 2011

In our previous February article, below, on why Facebook does not want to go the traditional SEC-regulated IPO route, there is a related story about Groupon that supports our thesis. Groupon is struggling to go public after its shaky financials were made public during its attempt to go public. Here’s the story.

We continue to believe that many of the claims about Facebook’s true number of users, whether that number is decreasing, and the true profitability of Facebook, are metrics that the company does not want to reveal in an IPO process.

Update: June 19, 2011

We previously reported (below) that Facebook executives might be reluctant to take the company public via a normal IPO because the disclosure process would reveal truths about decreased usership that would damage the hyped valuation. A recent report by an Internet marketing firm that tracks Facebook users claims that Facebook lost 6 Million users in the U.S. in May. Growth for Facebook is coming from non-U.S. countries late to adopt. This is consistent with our own experiences.

BatteryPark.TV recently implemented a password-protected homepage that allowed Facebook users to login with their existing Facebook account. The residents of Downtown Manhattan revolted. Almost no one seemed to be a Facebook user. In addition, anecdotal feedback indicates that Facebook is not cool any longer with the youngest users. The Facebook overload phenomenon, see below, is genuine.

We continue to believe that Facebook missed the best window of opportunity to go public in 2007. Social networking IPOs LinkedIn and Pandora have both faired poorly this year. With the end of QE2 and the worsening economy causing the markets to correct, a successful IPO window is closing rapidly.

Update: March 8, 2011

CNN just posted a story “How much is Facebook really worth?”

At the time of our story on February 1, the entire mainstream media was doing nothing but positively hyping the potential and valuation of Facebook. Unique points made in our story back in February were that the parameters that would be used to value Facebook, that would have to be made public if they went IPO, might not support a $50 B valuation. Specifically, do Facebook users stop “clicking” after the initial excitement, due to Facebook overload? Are there really 500 Million ACTIVE users? If Facebook can no longer sell your personal information due to new laws or backlash, is Facebook worth anything more than a Huffington Post model? Was Goldman Sachs trying to sell yet another dog of an investment to its clients, ala Abacus?

February 1, 2011

Facebook recently tried to raise a reported $15 Billion in capital via a novel private offering of stock underwritten by Goldman Sachs. Goldman was then planning to sell those shares to select banking clients in a manner that would somehow not violate the SEC’s 499-shareholder limit and trigger a mandatory IPO.

The whole convoluted scheme became too controversial and Goldman Sachs cancelled the offering to U.S. buyers. Instead, non-U.S. buyers received shares, raising more than $1 Billion for Facebook.

Related, Groupon, Demand Media, and LinkedIn also backed away from planned IPOs. The full disclosure process of going IPO revealed that the companies were in fact losing money rather than profitable, as they claimed using clever accounting afforded to private companies.

Why is Facebook so reluctant to go the normal IPO route? What parameters on revenue, number of users, and clicks per month would stand up to GAP and Sarbanes-Oxley? Did Facebook miss the best window for IPO back in 2007?

If Facebook does not have a true active user base of 500 million people, a claim that would be scrutinized in public offering documents and have to be personally approved by the CEO Zuckerberg, that would indeed be a powerful reason to avoid an IPO. Likewise, for an advertising revenue model company such as Facebook, the unique user “clicks” per month is a crucial parameter that drives future revenue estimates and stock valuation. If the rate of active logins per Facebook user has peaked, that too would be a serious blow to the company valuation.

Many users of Facebook, of all demographics, will explain that they initially login and “click” around on Facebook far more in the beginning, then cool off. In fact, there might be a new burnout psychiatric syndrome called “The Facebook effect”, as reported on ABC news, whereby users start to dislike the Facebook experience.

Social networking, as a whole, is a new phenomenon that has come to mainstream only within the last three years. The Time Magazine 2010 “Person of the Year”, Facebook CEO Zuckerberg, was a choice recognizing that 2010 was the year social networking gained critical mass. As Saturday Night Live noted, even many “mothers” and grandparents are using Facebook.

Will the generations that use Facebook the most, those who collect hundreds of “friends”, suddenly tune out and make Facebook yesterday’s fad like sacral tattoos and Paris Hilton? Already, an ABC interview with the actors nominated for Academy awards this year revealed that none of them are on Facebook.

Is social networking really this vastly untapped mysterious space in which to invest? The major competitors to Facebook are not doing well. MySpace, owned by News Corporation, is laying off half of its staff and rumored to be on the selling block. Google and Apple both tried to start social networking sites and failed. If the social networking space is so wildly profitable, as Facebook claims, why have these otherwise successful companies failed?

The biggest threat to the entire class of “social network” companies is whether public outrage will grow over the egregious violation of privacy that is essential for the business models of the companies. The Wall Street Journal launched a series of “What they Know” stories exposing how Facebook collects personal information of users and then sells that to advertisers. The FCC has already introduced regulation to limit this activity, and congress might pass new bills with more teeth. That would be the death sentence to Facebook revenue.

More evidence that Facebook might be desperate to inflate “clicks” and daily activity is that it allows for countless bogus “celebrity” pages to exist. The young naive user who is accepted as a “friend” to a bogus impostor Gossip Girl actor page, for example, becomes excite and starts to use the site more. Facebook has sophisticated tracking algorithms and could shut down all of the bogus sites if they wanted to.

When Goldman Sachs first announced the plan to raise $15 Billion for Facebook via a private offering, the New York Times and Wall Street Journal calculated that the entire company was receiving a $50 Billion market capitalization value. The WSJ compared Facebook parameters to other companies such as Yahoo and Google and found major disconnects between the fundamental drivers of valuation and the actual valuation being assigned.

If Facebook was wildly overvalued at $50 Billion, why would Goldman Sachs sell shares to its most important clients? To answer that, one needs to look way back in history to 2010 and the congressional hearings whereby the Fabulous Fab sold “shitty investments” called Abacus to clients, while Goldman was internally shorting Abacus. Goldman Sachs partners are under extreme pressure to perform. Failing to do so means that they lose Partner status. Given that there were no consequences to any individual at Goldman Sachs, and the CEO Lloyd Blankfein is now attending White House State Dinners, it is quite likely that the way of doing business at Goldman Sachs has not changed at all.

Let them eat cake. Sell them overpriced Facebook.

Too many Fuddy-duddies stifle entertainment Downtown

December 9, 2011

The Financial District, Tribeca, and Battery Park City have few places for the citizens to enjoy good music, drinks, and New York class society. The main problem is that the local press consists of Fuddy-duddy people who have zero interest in promoting this culture. As Mayor Bloomberg progressively required earlier and earlier closing times as a condition for liquor license renewals, this all went unreported for the most part.

An example of this pro-boring reporting was in a local throw-away today. The W New York Downtown and their Living Room bar attempted to throw a Rock and Roll style party with art. The paper focused on the noise and nuisance to the city, see below. The W Hotel is a few feet from the massive noise of the World Trade Center construction site and anyone living nearby should be quite accustomed to noise.

The Battery Park Broadsheet article read, “W New York — Downtown, the hotel located at the intersection of Washington and Albany Streets, made W history with its first-ever rock concert on Wednesday evening, but raised more than a few hackles among local residents kept awake by noise levels during sound testing on Tuesday and the concert on Wednesday. The event — which celebrated ROCKED, a photo exhibit of cutting-edge musical talent featured in W Hotel concerts — took place in a temporary, plastic tent behind the hotel without more than a few hours advance notification….Lucas Visser, a resident on West Street, said that the W hotel alerted his building manager at 4:30 p.m. on the day of the concert. “During the day on the 6th and 7th they were blasting music so loud that my windows were shaking badly. It was loud enough that talking on the phone was near impossible. The actual event began last night at 6:00 pm and lasted until midnight, and again the windows were shaking. My children were up later than usual, though amazingly they were able to get to sleep. My wife and I weren’t as fortunate,” wrote Mr. Visser in an e-mail…..Noise concerns were not as important as the lack of advance notification for Esther Regelson, a 26-year resident of Washington Street. “That space behind the W Hotel was supposed to be public space, and that space lay fallow until suddenly they have a party to pat themselves on the back. It seemed outrageous! They should be having a party for the neighborhood. It just smacks of being a bad neighbor,” she said.”

W Hotel Living Room

Our Person of the Year

December 4, 2011

By Steven Greer, MD

Our selection for Person of the Year won’t surprise you, but our runner up might. The question used for selecting the Person of the Year was, “Who will people, ten years from now, remember the most from 2011?”

Osama bin Laden was killed, but 2011 was not the year of OBL. That was really 2001.

Muammar Qaddafi (or numerous other spellings have been used) was a consideration. He personified the Arab Spring.

Penn State coaches Joe Paterno and Jerry Sandusky were candidates, as was Rep. Anthony Weiner. But the two biggest names of the year, in our opinion, were Steve Jobs and Charlie Sheen.

We almost selected Charlie Sheen because his mental breakdown, subsequent firing from the CBS #1 show Two and a Half Men, and comedy tour, became a true phenomenon. He developed millions of Twitter followers faster than anyone before, and proved that “new media”, via his Ustream home broadcasts, had finally arrived. TV executives took notice.

Our selection for Person of the Year, however, is Apple founder Steve Jobs. His death was the most memorable event of the year related to any single person. Jobs died at the peak of his career, at a time when his devices like the iPad were still transforming society.

After his death, the summaries of his life made people remember that he was not just a guy who got rich off of one big idea. He did it over and over with Apple, then Pixar, then Apple again. He transformed the music and movie industries. He did not live to see it, but he put in place the ability for Apple to soon transform the home entertainment system when Apple makes a large screen TV with a computer inside.

TV “News” hits a new low with the 60 Minutes Madoff family interview

October 30, 2011

By Steven Greer, MD

CBS’s “60 Minutes” has long been one of the most respected and trusted “TV News” sources. Now, even that bastion is crumbling as the old media world slowly becomes more obsolete and viewers switch off.

The interview with the Madoff family tonight has generated plenty of outrage. But the bigger story is how poorly CBS and 60 Minutes handled the opportunity.

CBS gave two con artists, Ruth and son Andrew, the biggest forum of its kind in the world to spew poorly told lies and distortions in an attempt for Andrew to regain some form of a normal life. Andrew is clearly peddling a book that his bizarre “fiancé” will profit from, as she serves as a money laundering mule and shield from the bankruptcy lawyers.

Morley Safer and the 60 Minutes producers made very little attempt to question the accuracy of any of the Madoff claims. Ruth claims that she was never the bookkeeper of the Ponzi scheme after 1960, for example. There are plenty of experts who could offer evidence refuting that. The son claims he knew nothing about the Ponzi scheme, a virtually impossible reality, and Morley Safer barely questioned him.

There were no experts, like Harry Markopolos or the bankruptcy lawyers, to offer a counterpoint and blow the Madoff lies out of the water. This would have been like shooting fish in a barrel for Markopolos.

60 Minutes clearly lowered their standards and cut some form of a deal to get the exclusive for interview with the Madoff’s. As rating in TV slip, the networks are lowering their standards.

It’s tough to interview a dead woman: The Avastin controversy

November 19, 2011

By Steven Greer, MD

The mainstream TV news is botching the coverage of the decision to revoke Roche’s Avastin to treat breast cancer. Most of the TV reports all started the same way, by interviewing a breast cancer survivor who swears that Avastin is the reason she is alive.

Of course, it is a well studied phenomenon for patients to incorrectly attribute cause and effect of therapies, and that is why scientists attempt to conduct more objective clinical trials. In doing so with Avastin, multiple studies revealed that Avastin not only was ineffective at prolonging life, but also increased death and serious adverse events related to blood clots and hypertension caused by Avastin.

If a terminal breast cancer patient has just a few years left to live, is it ethical to risk debilitating stroke in exchange for no survival benefit? Moreover, the $100,000 or more annual cost of Avastin causes many families to lose a significant amount of their savings and wealth, even if they have insurance. After the breast cancer patient passes away, the hospital bills keep coming to the next of kin.

It is tough to interview the women who have died from strokes and heart attacks related to Avastin. However, the TV news could at least mention that the adverse events outweigh the benefit. Only CBS’s Dr. LaPook did a good job at stating these risks. ABC has an excellent doctor on staff, Dr. Besser, but he was not assigned to this story, and the ABC coverage was subsequently egregious, beginning with the scenario described above (i.e. highlighting the Avastin survivor myth). NBC benched Dr. Nancy Snyderman and used Robert Bazell and a breast cancer expert.

To learn more about the actual clinical study data that do not support using Avastin for breast cancer, we refer you to our 2007 WSJ video and companion text.

What Steve Jobs would have invented if he lived longer

October 8, 2011

By Steven Greer, MD

We have gained exclusive access to Steve Jobs’ personal journal (not really). In it, he wrote down some thoughts about his future plans and inventions. Based on these, we have created an estimated timeline of what Steve Jobs would have accomplished had he lived longer.

The year 2012, age 57, AAPL at $400: Home media centers inside a 50-inch TV display. The current system of crude remote controls, CD discs, DVDs, confusing stereo systems, etc. are replaced by the Apple-simplicity design called the iHome. It then becomes apparent why iCloud was developed. Apple begins to encroach into Netflix’s territory.

2013, age 58, AAPL at $450: Corporate computing. Apple, via the popularity of the iPhone and iPad, creates such demand by executives that the enterprise computing market is cracked and Apple computers proliferate throughout companies around the globe.

2014, age 59, AAPL at $460: Steve Jobs visits the University of Miami’s stem cell program for mysterious reasons.

2016: The global depression persists as world leaders failed to address the fundamental banking problems that caused the collapse of 2008. Nevertheless, people keep buying Apple products.

2016, age 61, AAPL at $560: Apple Movie/TV studios. Just as HBO morphed from a mere portal for movies to became an original content creator of shows like the Sopranos and Entourage, Steve Jobs revisits Hollywood and creates original movies and shows to be aired on the Apple home media centers. He changed the industry in the 1990′s with Pixar and digital animated movies went on the become the biggest box office earners. He does it again now decades later. Apple Studios, based in Cupertino and not Hollywood, bypasses the cable and broadcast middlemen and is seen via Internet streaming. Stock prices for Disney, CBS, Comcast/NBC, Time Warner, etc, all tank.

2017, age 62: Apple buys an obscure Japanese electronics company. No one knows why.

2018, age 63, AAPL at $750 and the largest company in the world by far: Apple buys medical device company Medtronic for $60 Billion. Steve Jobs is not on the conference call and the rationale for the acquisition does not satisfy an outraged investor base. CNBC commentator Melissa Lee criticizes Steve Jobs’ judgment as she did the iPad in 2010.

2020, age 65: Steve Jobs announces the iRobot, which is a product much like the 2004 Will Smith movie. The rationale for the Japanese electronics acquisition three years ago is now clear.

2021: As world population grows and fresh water becomes scarce, global leaders become wary of the iRobot fearing that it will take jobs. Also, Steve Jobs’ control of the media now has the United States Senate investigating Apple business practices. Steve Jobs is chased out of the country by onerous regulations placed on Apple and he takes up headquarters in a remote forested area of China. He is rumored to be dead at age 66.

2025, age 70, AAPL at $1,900: Clean energy. Steve Jobs controls most of China’s manufacturing sector now. The air pollution in Beijing that year caused 5 Million deaths over the summer. After failing at developing clean energy on their own, the Chinese government gave Apple full rights to the solar panel plants in hopes that Apple could save their cities. Using the efficient technology developed by the iPad plants, Apple makes cheap solar power available to the world. Solar panels the size of an iPad can power a home.

2030, age 75, AAPL at $4,000: Brain computer interface and implants. The much-criticized acquisition of Medtronic becomes yet another genius decision by Steve Jobs. Using Medtronic’s deep brain stimulation technology, Apple masters the ability to interface computers with the brain. The iBrain augmentation takes off in Japan and China. Five years later, the third-world country called the United States approves the devices for use. Soon afterward, all special-ops soldiers are implanted with brain computers that guide iRobots into battle.

2050, age 95: The secret to Youth. After nearly dying from cancer decades ago, Steve Jobs has proceeded to live to age 95, and still looks like a 60-year-old man. It is revealed that he has been reinfusing stem cells harvested from him at The University of Miami back in 2014. The stem cells have the longer telomeres of a 59 year old man.

2060, age 105: Space travel. With private space travel and space stations a reality, Steve Jobs developed a 5-man space capsule able to travel to a relatively nearby star that was discovered to have an earth-like atmosphere. With a crew, he embarks on a 20-year journey to the planet.

How the GOP’s addiction to Wall Street money will get Obama re-elected

October 11, 2011

By Steven Greer, MD

As we first predicted, The OccupyWallStreet protests have grown to a critical mass and are now a legitimate movement satirized on Saturday Night Live and seriously discussed in the media by elected officials. In fact, President Obama and the DNC seem to be effectively using the anti-Wall Street sentiment against the GOP who are caught flat footed trying to ignore the legitimacy of the protests and label them as irrelevant anarchists wanting.

The Republicans will lose this debate and allow the Wall Street issue to become a major scoring point for the Democrats in 2012 if the GOP does not quit its addiction to Wall Street money.

In the video below, top-advisor to the president, David Plouffe, regurgitates prepared talking points aiming to portray President Obama (POTUS) as a fierce Wall Street reformer. In fact, The POTUS is very vulnerable on this issue and the GOP could turn this around and make POTUS seem to be a man who has alienated his liberal base yet again in favor of special interest lobbyists. In reality, the Democrats are as corrupted by Wall Street influences as are the GOP.

However, The GOP cannot pounce on this opportunity because the Republican party is still run by the same imbeciles that led the GOP to defeat in the 2008 elections and created a total Democrat-run congress and White House. Wall Street bailouts under George Bush and the bad economy caused by Wall Street risky trading in mortgages led to McCain losing in 2008. The Wall Street issue will very likely allow President Obama to keep his job in 2012 despite high unemployment because the Republicans are hard-core junkies when it comes to Wall Street campaign donations and the promise of lucrative private sector jobs after public service.

If the GOP went to rehab and kicked the Wall Street addiction, and threw the bankers under the bus, they would be able to reply to the David Plouffe talking points in the following manner:

• In the GMA video, Plouffe claims that POTUS is a Wall Street reformer: In fact, the Dodd Frank law has been allowed to be stalled and very little of the law has been enacted. POTUS could have been vocal and challenged the GOP in congress on this matter but he has not.
• It has been Obama’s hand-chosen Secretary of the Treasury, Tim Giethner, who has been the biggest supporter of Wall Street banks, allowing them to remain “Too big to fail” and to not lend out billions of dollars they have sitting around.
• The “Volcker Rule” that would limit Wall Street banks from making risky trades, such as the ones that led to the market collapses of 2008, has been watered down and is delayed until July 2012, at the earliest.
• Plouffe mentioned that The Obama administration has championed consumer banking protection laws. In fact, POTUS did not support Elizabeth Warren, the champion of consumer finance protection laws.

The Republicans will not be able to use Jiu-Jitsu and turn the tables on the Democrats, using rage toward Wall Street against POTUS in 2012, because the party is still run by the old school led by Carl Rove and Reince Priebus. The Tea Party has been hijacked it seems. Look for more TV appearances by President Obama and his team, like the one in the video below, to effectively score points against the GOP, all because the Republicans are addicted to the revolving door to Wall Street.

Talking Points for Wall Street protestors

Update: October 6, 2011

It is becoming more apparent that the intentions of the protestors are not “noble” as we first wrote. The majority of the mob are run-of-the-mill anarchists who flock to any situation around the world allowing them to cause trouble and feel important or a brief amount of time.

If any impact to Wall Street practices will come of these protests, the few in the crowd who truly care about reducing financial corruption and improving democracy will have to take charge. The Beatles’ George Harrison said it best. When he was leaving his LSD-marijuana “mysticism” phase and visited the Haight-Ashbury protestors of the 60′s, he said “I got out of there fast…They were just smelly bums.”

October 1, 2011

The NY Times beat me to the punch and made their own list of talking points to help educate the kids who have encamped near Wall Street in protest of something. It is painfully clear that many of the protestors do not really understand how Wall Street caused the global depression. However, their intentions are noble, and with some leadership and basic guidance, they can possibly alter the debate ahead of the 2012 elections and get congress and The White House back to focusing on Wall Street reforms that are much overdue.

As a former Wall Street and hedge fund executive, I know better than most just how corrupt our financial systems are. Here are some basic talking points that I would suggest for all of the protestors to learn and use in slogans:

• First of all, stay peaceful. Your message will be marginalized if you turn violent. Emulate Mohandas Gandhi methods.
• Do not let the organized unions hijack your cause. They are as corrupt as Wall Street bankers and you will be marginalized, categorized, and dismissed
• Understand how the Federal Reserve, led by Ben Bernanke, has infused more than a trillion dollars of “free money” to Wall Street in the form of “Quantitative Easing or “QE2″, etc, and in the form of almost zero interest rates to banks. QE2 did nothing but prop up the stock markets briefly, feeding Wall Street. It is well recognized now to have done nothing beneficial to the economy.
• The “free money” at zero interest rate given out by Ben Bernanke and the Fed has made the U.S. Dollar weak compared to other currencies. This directly causes the price of gasoline, food, and other commodities to go up since those items are priced on the U.S. dollar. Therefore, in the Fed’s plan, it is more important to help big corporations export their products than to help the Average Joe have more buying power with their wallet.
• Understand that the Treasury Secretary Tim Geithner, or whom I have coined as Timmy the TARP Man (A new Marvel Comics super hero perhaps?), was directly responsible for bailing out the Wall Street banks in 2008, before he was Treasury Secretary. Then, under the Obama administration when he became the Treasury Secretary with his name on our dollar bills, he and super genius Larry Summers (The guy fired from his job as President of Harvard for making sexists comments) has persuaded the President to back down on tougher Wall Street reforms and to continue to allow the largest banks to exist as “Too big to fail”.
• Understand that some advisers to President Obama, like Paul Volcker (Federal Reserve Chairman under Reagan and critic of Wall Street) and Sheila Bair, Chairwoman of the bank regulator FDIC, tried to liquidate Citigroup, the largest bank and also one with so much toxic debt related to those infamous subprime mortgages instruments called “CDO’s”, but Timmy the TARP Man won the day and bailed out Citigroup with tax payer’s dollars.
• Know that none of the fat cats on Wall Street, who acquired trillions in risky debt via the CDO’s and who directly caused the global financial meltdown, economic depression, and real unemployment around 20%, none of these men have been arrested, yet thousands of protestors on Wall Street have been bused to jail.
• A “Most Wanted” list of Wall Street criminals should be memorized, starting with Stan O’Neill, former CEO of Merrill Lynch who ignored internal risk managers and loaded up with toxic debt CDO’s, and walked away with almost $100 Million in severance pay after he was fired. He drove Merrill Lynch into insolvency and the bank had to be saved by TARP and by being acquired by Bank of America. Other executives with similar stories who’s names should be mentioned on protest signs and to the media include Angelo Mozilo (former CEO of Countrywide who oversaw predatory subprime mortgages being given to millions who could never afford the homes), Dick Fuld (former CEO of now defunct Lehman Brothers), Jake DeSantis (former head of derivatives unit at AIG who took on ultra-risky credit default swaps insuring CDO’s. AIG gave out hundreds of millions in bonuses to employees in 2009 using federal bailout money in a deal approved by Timmy Geithner), Robert Rubin, and others.
• Robert Rubin was the Co-Chairman of Goldman Sachs before being appointed as the Treasury Secretary by Bill Clinton. After his Treasury Secretary post, he went back to Wall Street and ran Citigroup as it accumulated countless levels of toxic CDO’s that caused Citigroup to become insolvent. He walked away, after being forced out, with a reported $126 Million severance package.
• Understand that Wall Street banks became “Too big to fail” as a result of actions by the Clinton administration. In 2000, under the guidance of Larry Summers and Robert Rubin, Clinton signed the of the Financial Services Modernization Act of 1999 (also known as Gramm Leach Bliley) that repealed the 1933 Glass-Steagall Act and allowed wall Street banks to merge with regular consumer banks and insurance companies. Behemoths like Citigroup, JP Morgan Chase, and Bank of America were born.
• Understand that the Wall Street banks make most of their money on the backs of the masses. The banks get money at no interest rate from Ban Bernanke’s Federal Reserve, and turn around and loan it to consumers through credit cards or other loans for more than 12% interest.
• Understand that “derivatives” are unregulated financial instruments that have ballooned into such a global problem that famed investor Warren Buffet called them “Weapons of mass destruction“. Some estimate the value of derivatives at more than $700 trillion. Translation: there is no way the global economy could ever in a million years pay off these debts should they turn into bad deals like the CDO’s of 2008. Wall Street lobbyist money has effectively thwarted any attempt by congress to regulate derivatives.
• After the Wall Street collapse in 2008 through 2009, the only legislation that was passed to attempt to reform the “moral hazard” of Wall Street taking risks knowing that the government will bail them out was the Dodd-Frank law (also known as Wall Street Reform and Consumer Protection Act). The lobbyists watered down the law and the law has not been enacted yet as details still need to be addressed. The vast majority of Dodd-Frank is being stalled in congress.
• The most important provision of Dodd-Frank yet to be implemented is the Consumer Protection aspect via the Bureau of Consumer Financial Protection. This was championed by a Harvard professor named Elizabeth Warren. The Wall Street lobbyists were so effective that they made it impossible for President Obama to appoint her as the leader of the very agency she created. Elizabeth Warren is now running for Senate in the state of Massachusetts.

There are two tangible political goals the protestors should have. The “Occupy Wall Street” camps and others around the country might help Elizabeth Warren get elected to the Senate (not that Scott Brown is a bad person). Also, the fate of the Dodd-Frank law is another outcome that mass protests can influence going into the 2012 elections.

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The GOP is tone deaf and clueless

September 29, 2011

By Steven Greer, MD

The current Republican (GOP) strategy for the 2012 elections will lead to President Obama being re-elected despite high unemployment and low job approval. Compared to the numerous GOP presidential candidates, most Americans will view President Obama as the sanest smartest person to lead the country.

Every GOP presidential candidate placed in the lead position so far has quickly been exposed as a either a nut job or incompetent. Why has the GOP bungled so badly?

The answer is simple and obvious: our political system is corrupted to the core and big-money special interests control the process. By definition, the leaders of these special interests are out of touch with the majority. The GOP is tone deaf and clueless right now.

How should the GOP change strategy and better appeal to the masses who will vote in November of 2012?

The first and foremost concept that the GOP strategists need to realize is that the voters are pissed off and either unemployed or in deep debt. The 13-day-long Wall Street protests that have taken root in Liberty Park near Wall Street are the manifestation of unemployed young people needing a sense of purpose. These protests will spread across the country. Look for Vietnam-era-style protests next year. The Tea Party of older Caucasians will expand to include younger more radical constituents. The young kids gathered on Wall Street do not realize it, but they are the same as the Tea Party.

None of these disgruntled masses want to hear GOP presidential candidates or conservative pundits defend millionaires against the “Warren Buffet plan” tax hikes. President Obama will win that battle. He is pulling off a brilliant Brazilian Jiu-Jitsu move and the old schoolers in the GOP like Carl Rove and Reince Priebus are falling for it.

The Republicans, however, can tap into this populace rage and win 2012 in a landslide if they change tack. (But don’t hold your breath)

Michele Bachmann rocketed to the lead in the polls (briefly, before she continued to open her mouth on HPV, etc) by simply stating in a debate that the Wall Street bailouts were a bad thing. However, like a bunch of Vicodin and crack addicts, the GOP is addicted to Wall Street campaign donation money and is perversely supporting the very same institutions that caused the 5-year-long-no-end-in-sight global depression that has created real unemployment in excess of 20%. Supporting tax loopholes that allow Connecticut billionaires to pay only 15% federal tax will not resonate very well with voters.

The GOP should throw Wall Street under a bus and leverage the populace rage into a winning strategy, stealing it from the Democrats. Former federal attorney Chris Christie, or Rick Perry, or whomever is the GOP candidate, should promise to make a “10 Most Wanted” list of people to arrest who caused the global depression. On that list would be Merrill Lynch’s Stan O’Neill who ignored internal council and loaded up on toxic debt that ruined the company (now Bank of America) yet walked away with almost $100 Million in severance pay. Others on the list who would make for good visual “perp walks” would be Angelo Mozilo who oversaw Countrywide Financial and all of the fraudulent predatory mortgages, Dick Fuld of Lehman Brothers, heads of Fannie Mae and Freddie Mac, etc.

The GOP should continue to attack the actions of Ben Bernanke’s Federal Reserve (which are blessed by President Obama) of printing money in QE1 and QE2 as nothing more than welfare to Wall Street traders. The various actions of the Fed have not helped the economy and have only devalued the dollar reducing the purchasing power of Americans (low dollar means higher gas, food, commodity prices). Rick Perry scored points by saying that if Bernanke created a QE3 it would be “Almost treasonous”.

The GOP should abandon this defense of low tax rates on millionaires as “Class warfare” by the Democrats. That is an ineffective strategy. Instead, the GOP should state that the problem with the federal budget lies in an addiction to spending, and one does not give an addict an ounce of the drug they seek until they have been rehabbed. Taxes on millionaires will be raised, but only after $4 Trillion in spending cuts.

The GOP should take the golden opportunity created by The White House proposals to cut Medicare and propose their own cuts to entitlements. When Paul Ryan hinted at Medicare cuts earlier in the year, he was demonized. Obama has now created cover with his own Medicare cuts. Cutting entitlement spending is the only way to truly solve the root cause of the depression and to spur confidence in the American economy.

The GOP should support the Elizabeth Warren Consumer Financial Protection Bureau. It would resonate well on the campaign trail and eliminate her as a threat to Republican Senator Scott Brown if she were to head up that agency. Defending predatory credit and debit card practices by Too Big Too Fail banks will not be a winning strategy for the GOP.

If the GOP made these tactical changes now, not only would they win over the millions of outraged silent mobs in America, but the GOP would expand its base. The college kids, traditionally in the Democrats’ base, would be inclined to vote Republican given that they are unemployed an unhappy with the incumbents. The kids camped out on Wall Street (of all races) are not exactly chanting pro-Obama slogans. There are no pro-Obama signs at all. They are ripe for the taking if the GOP wised up.

If the GOP continues with its current strategies, and ignores the voters as they reject one presidential hopeful after another, then President Obama will be the first president to be re-elected with a job approval in the 40%-range and unemployment above 9%. The GOP ought to be very very concerned right now.

Why the Volcker Rule needs to be enacted now, without delay

September 17, 2011

By Steven Greer, MD

Since first writing about the “Volcker rule” almost two years ago, the problem of risky in-house betting by hedge funds masquerading as “banks” has hit the headlines once again. Most recently, the Swiss bank UBS will lose at least $2 Billion from what UBS described as a “rogue trader” making large derivative bets.

The Dodd-Frank law was passed creating the Volcker Rule banning this in-house trading, or “prop-trading”, but the Volcker rule has been successfully delayed again by the banking lobbyists. Moreover, the regulation of derivatives never made it into the final Dodd-Frank law at all. Financial “derivatives” are the same “weapons of mass destruction” that have cost UBS and Société Générale tens of billions in losses and were at the root cause of the global financial collapse that has caused the persistent global depression and high unemployment. (Elizabeth Warren, who championed Dodd-Frank and was supposed to head up the newly formed Consumer Financial Protection Bureau which she created, was never appointed to this post and is now trying to run for Senate in the State of Massachusetts.)

To learn more about the perils of risky prop-trading conducted by incompetent bankers, please refer to the January, 2010, article, below.

A Case for Banning Prop Trading

Op-Ed January 24^th, 2010

By Steven Greer, MD

President Obama surprised the markets last week by proposing new regulations that would ban proprietary trading by commercial banks (as opposed to “Wall Street” broker dealers) and limit the size and market share of these banks. In the wake of the Massachusetts election of a Republican Senator, the President was clearly changing focus to the more popular topic of attacking “fat cat” bankers.

Advising the President was Paul Volcker and Bill Donaldson, among others. Mr. Volcker has not had much of a voice in policy until recently. Proponents of the ban on prop trading say this risky investing is what caused the financial crisis and that it should not be allowed to happen again.

Prop trading is the practice whereby units of banks use bank capital to borrow more cash in order to invest in stocks and derivates for the purpose of making a profit for the banks, not for the clients of the banks. Prior to 2008, it was common for banks to borrow ten to thirty times their own assets and risk this highly leveraged money on complicated financial instruments including common stock, options, CDO’s, etc. Leverage like this makes any loss in the investment portfolio magnified.

There are other less appreciated reasons that prop trading could be considered bad for the health of the financial system. The people executing the actual trades for the “prop desks” often either sit amongst the traders executing trades for clients, or are a short walk away. Prop traders have been accused of “front running”. The newest way that a large bank can essentially front run clients is by using “high-speed trading”.

One of the most common and riskiest investment styles within prop desks is called quantitative trading, or “Quant” for short. Wall Street Journal reporter Scott Patterson has a new book, “Quant”, that describes the risks of this style and how it brought down the financial system. The programmed selling by quant desks can trigger excessive stock declines, such as was seen last week, or on a grander scale in late 2008. Moreover, it is these quant trading desks that are now doing the high-speed trading which Senator Schumer wants to ban.

Perhaps least understood by outsiders is the level of incompetence among some of the senior directors of prop desks. Within banking culture, loyalty and cronyism are often rewarded more than competence and honesty. For examples, it is now clear that Stan O’Neal, the former CEO of Merrill Lynch, or Ken Lewis, former CEO of Bank of America, or even Robert Rubin and Sallie Krawcheck of Citigroup, all had little understanding of their respective banks prop trading portfolios and risks.

Lower in the ranks, the actual prop traders are frequently people who have never worked outside of the bank on the “buy side” amongst real investors in hedge or mutual funds. Quite often it is a case of, “Hey Joe over in fixed income, wanna manage a billion dollars trading equities even though you have never done it before?”

The weak job security of prop trading attracts the lesser valued within the banks willing to gamble, or former failed buy-side money managers who took bad risks in previous funds. A stint on a prop desk not uncommonly is the last stage a banker goes through before being fired. Of course, successful prop traders profit well, but they usually leave the bank for the higher pay of external hedge funds.

Even skilled prop traders are handicapped in many ways from being able to make optimal investments. The banks usually do not give them a staff of analysts and they are relegated to sitting on a noisy desk just day trading, rather than making long-term fundamental investments. Because the cash at risk is so leveraged, any small downturn in the portfolio causes the bank to force liquidations from the portfolio. This makes smart investing almost impossible and contributes to a riskier investing style.

A case study on prop trading was found within the Merrill Lynch Strategic Investment Group, a $10 Billion in assets prop trading outfit set up in 2004. Director of daily operations was Sudeep Gupta: someone with little to no experience at a buy side hedge fund or mutual fund, and limited experience at prop trading. However, Mr. Gupta was a loyal soldier for the head of trading, Rohit D’Souza. Both Gupta and D’Souza left Merrill Lynch approximately three years after joining from Morgan Stanley and the prop trading operations were shut down shortly afterward. Mr. D’Souza held a brief position at hedge fund Citadel before leaving there as well.

One could argue that the Obama proposals are too watered down. They would only ban commercial banks from prop trading and not the broker dealers. Goldman Sachs, for example, could easily divest its small $36 B bank division and still be a large prop trading organization. Bank of America could spin off Merrill Lynch as well, etc. The systemic risk of prop trading would remain under the current regulation proposed by President Obama, albeit shifted away from federally insured commercial banks into pure broker dealers.

This report was written with the assistance of multiple former senior executives within proprietary trading desks.

Survey: Your opinion of the 9/11 memorial ceremonies

September 11, 2011

Please take our survey on the 9/11 memorial ceremonies. We will post the results on Monday.

September 12, 2011

The results of our survey were:

76% of the responders were from Battery Park

100% liked the design of the 9/11 Memorial. 34% strongly approved.

76% thought that the tight security measures were appropriate

74% agreed with Mayor Bloomberg in not allowing various religious leaders to make speeches

However, 76% disagreed with the Mayor’s decision to not allow living firefighters and policemen to make official speeches.

How the FDA could rapidly generate 100,000 jobs in NJ and NY

By Steven Greer, MD

September 4, 2010

The Commissioner of the FDA, Margaret Hamburg, could become the single biggest job creator in the Obama administration and generate hundreds of thousands of  jobs in the New Jersey and New York areas. How?

FDA Commissioner Hamburg

Pharmaceutical and medical device manufacturing, as well as clinical trial development, have been outsourced to China, India, Ireland, and other countries, taking with it the jobs required to do these functions. According to the Bureau of Labor Statistics, there were 300,000 jobs involved in pharmaceutical manufacturing alone back in 2008. Data are not readily available on the number of people employed in non-U.S. drug and device plants, but the FDA tracks more than 100,000 international facilities. Therefore, the number of jobs that are outsourced to manufacture drugs and devices, which are then imported to the U.S., seems to be well into the hundreds of thousands.

Monitoring safety is the primary mandate for the drug and device divisions of the FDA. It has become increasingly more difficult for the FDA to properly monitor all of these overseas plants. We recently spoke with the Commissioner of the FDA and the Director of CDER about this.

The FDA recently added a fee to the drug industry to allow the FDA to hire more overseas inspectors in the wake of numerous drug safety horrors, such as counterfeit Chinese-made heparin that killed hundreds and resulted in the execution of the director of China’s equivalent of the FDA. However, the new number of FDA inspectors will still only inspect a small fraction of the overseas plants, according to the GAO.

A much more effective solution would be to mandate that the majority of drugs and devices be made right here in the United States. How many jobs could be rapidly created in the Tri-State area by such a decree? One can easily imagine 100,000. When Roche assimilated Genentech like a Star Trek Borg, it eliminated as many as 8,800 employees at just one plant in Vacaville, California when it outsourced the biologics manufacturing to Singapore. We also know that tens of thousands of jobs were lost after the Pfizer/Wyeth and Merck/Schering Plough mergers. Many of those jobs were replaced by China and India plants. It is reasonable to assume they would return if the FDA mandated U.S. drug and device manufacturing.

Making drugs meant for Americans in American plants is the only sensible thing to do from a safety standpoint, but the financial power on K Street of the drug industry has allowed the rules to become relaxed so much that we now have the vast majority of our pharmaceuticals being made in China and India. Never before would it have been conceivable to change this practice, but with the prolonged economic depression and 10% unemployment for the foreseeable future, the political climate might just allow such a bold regulatory change.

Of course, such a radical change by the FDA would require presidential and congressional support. This could be the most effective and bipartisan popular move the President can make. Governor’s Cuomo, Christie and the various Senators/congressmen of the states could also help out.

Waste, fraud, and cost overruns at the 9/11 Memorial

9/11’s White Elephant

By JOE NOCERA New York Times

There is nothing wrong — and much that is right — with building a national monument to memorialize the nearly 3,000 people killed in the 9/11 attacks a decade ago. The awful events of that day traumatized the country — and changed it. The dead deserve to be remembered. Far be it from me to suggest otherwise.

What I do want to suggest, though, is that what’s being built in the name of 9/11 — a staggering $11 billion worth of government-sponsored construction on the 16 acres we now call ground zero — is an example of just about everything wrong with modern government. When the World Trade Center site is finally completed, it will include a state-of-the-art train station whose cost overruns have surpassed $1 billion. The 9/11 memorial itself, which covers the footprint of the former twin towers, was so far behind schedule that it is now being hastily constructed, out of sequence, so that it will be ready by the 10th anniversary of the tragedy.

And then there’s 1 World Trade Center, scheduled to be completed in 2013, which will add 2.6 million square feet of office space in a city that doesn’t need it, at a cost so high that it will be a cash drain for decades to come. Where’s the Tea Party when you need them?

Last year, I wrote about 1 World Trade Center, pointing out that its $3.3 billion price tag made it, by far, the most expensive office building ever constructed in America. At the time, Richard Gladstone, the project manager for the Port Authority of New York and New Jersey, which is in charge of rebuilding ground zero, told me point-blank that despite its costs, the new skyscraper would not affect the commuters who pay the tolls to cross the six bridges and tunnels the agency operates.

But, on Friday, that statement was shown to be — how to put this nicely? — untrue. The Port Authority, with the complicity of Andrew Cuomo and Chris Christie, the governors of New York and New Jersey, who oversee the agency, approved a series of toll increases so onerous that by 2015, a typical commuter who uses the George Washington Bridge will have to pay $62.50 a week to get to work.

What has been especially galling has been the cynicism surrounding the efforts to get the toll increases. First, the Port Authority said that unless it could increase the tolls, it would have to “slow or stop” the construction of 1 World Trade Center. Though this scenario was highly unlikely, it got the construction unions duly aroused, as it was intended to do. They began calling in favors among the politicians.

The Port Authority was originally going to propose two increases of $2, spaced a few years apart. But the politicos in both Cuomo’s and Christie’s offices suggested that the agency come forth with a much higher initial toll increase — thus allowing the two governors to look like heroes when they “persuaded” the Port Authority to lower the increases. The governors also railed on about waste and fraud at the Port Authority, while knowing full well the real problem was the fact that $3.3 billion — money that could have been spent on needed infrastructure improvements — was instead diverted to a white elephant at ground zero.

I understand that it’s hard, even for a blunt-talking fiscal conservative like Christie, to openly criticize 1 World Trade Center. For many people, its rebuilding has enormous symbolic importance. George Pataki, the former New York governor, who pushed hardest for the rebuilding, originally named the building Freedom Tower. Recent editorials in the New York tabloids objecting to the toll increases nevertheless tiptoed gingerly around the outrageous costs of 1 World Trade Center.

But despite the shroud of patriotism that its supporters have always cloaked it in, it’s really just a big, fancy office building. An office building with such poor economics that it will soak New Jersey and New York commuters for decades to come. An office building only the government could love.

Lately, supporters of the project have begun saying that its economics have improved. They point to the fact that Condé Nast, the publishing giant, has agreed to be the anchor tenant. What they fail to point out is that Condé Nast’s rent is less than half the break-even cost of the 1 million square feet it will occupy. In other words, a company that publishes high-end magazines aimed at rich people will be getting an enormous government subsidy for the foreseeable future.

And who will be paying for that subsidy? The mailroom attendants who use the Lincoln Tunnel to get to work. The middle-class New Jersey-ites who use the George Washington Bridge. The firefighters and police officers who live in Staten Island. Thus, in the name of 9/11, does New York and New Jersey place another economic burden on the already overburdened middle class. How sad.

The false debate over stimulus: there never was actually a stimulus package.

By Steven Greer, MD  August 16, 2011

The political left and the political right have been debating whether the Keynesian $787 Billion “stimulus package” (The American Recovery and Reinvestment Act of 2009 or ARRA) signed by President Obama in February of 2009 was effective. After passage, the unemployment got worse, surpassing the promised 8% maximum, and the country is now heading for a double dip depression. Based on that, the fiscally conservative right claims that ARRA was a failure. The fiscally liberal left, led by people such as Princeton economist Paul Krugman, asserts that the stimulus failed to lower unemployment because it was too small, and that a hypothetical worse economic situation was averted.

Meanwhile, Standard and Poor’s downgraded the U.S. Treasury credit worthiness by one notch (to AA+) due to the deficit and long-term forecasts of an even larger debt-to-GDP ratio. For the first time since ratings began, the U.S. does not have the best possible rating.

The debate over whether more stimulus should be tried has been muted somewhat by the S&P downgrade, but those in scholarly circles still talk about printing more money to spur the economy. The conservatives do not think this would work and point to the supposed failure of “Stimulus 1″.

This is all a debate based on a false premise. There never really was a stimulus package at all. Almost all of the money from the ARRA was essentially hijacked by the states in order to pay for pension benefits, union healthcare costs, and other expenses causing massive state budget deficits. Admittedly, there are little data to support this assertion that the funds were diverted because the government will not release the necessary information, but state and local leaders know. New York Mayor Mike Bloomberg acknowledged as much on Meet the Press (click here for the video clip).

The “stimulus” was a complicit handout to the same unions that got President Obama elected. Most of the ARRA money went to pay bloated benefits packages.

Recall, back in early 2009, President Obama was still riding a wave of popularity and momentum. The bad economy was still viewed as George Bush’s fault. Rahm Emanuel and Nancy Pelosi were rewarding the victors of the 2008 election and pushing for radical healthcare overhauls while they still had the momentum. The deficit was of little concern.

As 2010 turned into 2011, and the unemployment persisted and worsened, idiotic signs sprouted up along on our highways touting “A shovel ready job made possible by the ARRA”. President Obama made one public relations photo-op stop after another at small business supposedly hiring thanks to the ARRA.

Yet unemployment rose. The bulk of the $787 Billion was confiscated by state governments in the biggest heist in the history of the world, breaking the previous record for theft set by the bank bailout TARP of 2008 (The ARRA would never have been politically feasible if it were not for the George Bush’s, Hank Paulson’s, and Ben Bernanke’s TARP that desensitized us to such large spending numbers). The money was not getting to the companies that could actually hire employees. Almost exclusively, the “jobs created” were state highway or airport jobs. Small businesses “need not apply” for ARRA funding.

It gets worse. The ARRA was not the only “stimulus package”. The lesser known stimulus has come from Federal Reserve Chairman Ben Bernanke in the form of quantitative easing, better known as “QE1″ and “QE2″. The Fed created new electronic money from thin air to purchase long-term Treasuries, thereby reducing the yields and keeping interest rates low.

The net effect of QE1 and QE2 was an artificially inflated inflow of money into the equities markets and “free money” for the Wall Street banks. The banks take the almost-zero-interest money, turn around and loan it out to consumers at much higher rates, making an arbitrage profit of hundreds of billions. The Wall Street lobbyists are pleased and the campaign donations flow back to the elected officials. In turn, laws like Dodd-Frank get watered down and neutered.

QE1 and QE2 also deflated the U.S. dollar. Presumably, President Obama and his economic team believe that a cheap dollar will spur exports and help the economy. Whether that works is debatable amongst economists. One thing that is certain about a cheap dollar, however, is that it directly translates into lower purchasing power for the average consumer. Oil, gasoline, food, cotton, gold and other commodities are priced in U.S. dollars, therefore the prices for those go up as the dollar goes down.

This impact is not captured in the rigged government metric for inflation, the CPI, because oil and food are not part of the equation intentionally. Ben Bernanke and Treasury Secretary Giethner publicly claim that the various stimulus packages and subsequent printing of money have not led to inflation. This is a ruse. The real purchasing power of Americans has diminished as gasoline, food, etc. have spiked.

QE1 and QE2 were nothing other than a welfare stimulus plan for Wall Street banks and union pension funds that hold trillions of dollars in stocks, designed to be so complex as to be incomprehensible to the public and dodge the Tea Party outrage that exists over TARP and the ARRA. GOP Presidential candidate Rick Perry recently called these actions by Ben Bernanke “Almost treasonous”.

If Obama wanted a real stimulus plan that would create real jobs, he could give tax breaks or grants for new hires. He could give grants and loans directly to small businesses. But he has chosen the aforementioned strategies. In other words, a true job stimulus package was never really attempted and debating whether the ARRA worked is a false argument.

Steven Greer is a financial analyst and portfolio manager, and former Wall Street sell side analyst.