I took a busload of students to New Hampshire last week to observe the Republican primary campaign process up close and personal.

Alright, alright, I know what you must be thinking: "Damn, Green, you sure must be a dedicated professor to do that!" As it happens, you'd be partly right and partly wrong. In fact, the students are great, the trip is fun and a little unpredictable in nice way, and there really still is a wee bit of genuine candidate accountability remaining in the New Hampshire retail politics process.

That said, however, it's absolutely true that the field of GOP candidates is stunning in its sheer capacity for selfishness, dishonesty, and plain old meanness, and that listening to them for too long without wearing noise-cancelling headphones could surely burn off both of your ears. It's the political equivalent of staring at the sun, and the cult-like gaga-bots one can observe among these audiences seem to have spent quite some time doing just that. If you know just a bit about history, just a bit about context, or just a bit about the dark arts of rhetorical legerdemain, listening to a speech by Rick Santorum or Newt Gingrich or Mitt Romney will leave you wanting to pop up just about every half-sentence and loudly disclaim "That's a lie!", "That's wrong!", or "That's complete bullshit!" It's a truly painful experience in that regard.

Moreover, given that American politics has now been reduced to a 'choice' between two gangs of nearly identical corporate water-carriers, yet still masquerades as a genuine election in a democracy, I feel more than a little complicit in the fleecing of the country just by attending these events and thereby implicitly helping to legitimize this kabuki process. It's not like my individual presence matters a bit, of course. On the other hand, what if no one came, boycotting the entire process as an insult to our intelligence?

In any case, up we went, and we got ourselves an education. A good hot shower upon our return helped a lot at disinfecting the slime factor, as does a creeping sense of hope I've experienced over the last year or so, reinforced by New Hampshire. Indeed, reflecting upon the Republican presidential field does, oddly enough, provide one with reason to think things might actually be looking up a bit in America, notwithstanding the fact that one of the sick puppies we heard up there could actually be the next president of the United States. On reflection after returning from New Hampshire, I see multiple reasons to believe that the GOP - or, since parties can often be quite malleable, let us say the GOP as we know it today - might be headed toward implosion. What's more, only some of that opinion is based on wishful thinking...

The most obvious indicator of the current state of the party is given by a quick look at the presidential field. Even Republicans - even, I think, the vast majority of Republicans - are dismayed by the quality of candidates they have to choose from. You could get several careers worth of stand-up material from the likes of Trump, Bachmann, Palin, Cain, Perry and the rest, but last I checked your party's leading lights are meant for other purposes than cheap comic fodder. But - too bad for the GOP, and too good for the rest of the planet - they are what they are. And what they are is an endless procession of witless buffoons, shoddy charlatans and societal rejects. It goes without saying that you could do better in terms of intelligence and integrity just by randomly choosing ten individuals out of the phone book for any given American city. But I'll go further. I think you could do better by randomly choosing ten individuals from any given sixth grade civics class. Or perhaps even ten crooks from the mellower wings of any given medium security prison.

Nobody epitomizes the scraping of the bottom of the GOP barrel right down through the Earth's crust better than Newt the Gingrich, until just recently the candidate du jour among desperate Republican voters. He's a big beached whale of an alleged humanoid, but it's still almost unimaginable that anyone could've possibly stuffed so much hypocrisy within the confines of a single epidermal sack. One of my favorites concerns Gingrich's recent lament that he was roughed up unfairly by his competitors in Iowa. If one were to make a list of the most destructive politicians and political operatives of the post-war period, Gingrich would certainly be among the top five, along with Joe McCarthy, Dick Nixon, Lee Atwater and Karl Rove. (Note that for all its other pathetic qualities, the Democratic Party can at least rightly claim that it does not begin to compete in that particular ugly contest.) It has therefore been amusing in the extreme to see him turn into a whining crybaby as hardball politics, funded by unrestrained corporate money no less, was used to unravel his presidential aspirations once and for all. Golly, it almost seems like Newt has different ethical standards for the practice of politics, depending on whether he is giving or receiving. But that would be disingenuous.

Nevertheless, that story is actually small potatoes when it comes to the competition for first prize among the panoply of Gingrich's rampant hypocrisies. My favorite has to be the moral finger-wagging of the candidate directed at the rest of us, while he is on his third marriage (not to mention his third religion, about which we also have to be lectured by the candidate). His prior two marriages crashed over his infidelities. At the same time, of course, that he was impeaching a president of the United States and Leader of the Free World for the heinous crime of - wait for it now - infidelity. That's a good one alright, although taking almost two million bucks from Fannie Mae and Freddie Mac for his services as an "historian" (Hey, you guys, look over here! I'm a really great political scientist, and I'll provide my amazing academic wisdom to you for a mere one million!) while simultaneously lambasting these organizations for wrecking the economy surely rings in at a close second place on the Newtonian Hypocrimeter. And that's just for starters. The truth is that, when it comes to the Gingrich Follies, we could go on and on forever here. There are the bald-faced lies, the government shutdowns, the temper tantrums, the money scandals and more.

But enough said. You can get most of what you need to know about the current state of Republican Party politics just by stopping for a second to realize that a month ago this fool was the favored candidate among GOP voters to be the next president of the United States. Before Rick Santorum, that is, a guy who doesn't have a problem with the government outlawing birth control (no, as a matter of fact, I'm not joking), and who left Congress with no money but somehow miraculously became a millionaire with a couple of years. Now Gingrich came before Santorum, but after Herman Cain - stay with me here - who might have seemed to you a lot like a guy with a severe zipper problem, but of course that critique was just a 'high-tech lynching', don't you know. And Cain's 15 minutes of fame followed that of one Rick Perry, last seen skipping down the Yellow Brick Road whistling a certain tune about cognitive organs on holiday. And, of course, Perry came after Michelle Bachmann, who...

Well, you get the picture. But not quite. A little historical analysis suggests that the tawdry state of the Party's current leadership choices is less anomalous than Republicans might like to believe. Ronald Reagan (The Name Which Must Be Spoken Every Thirty Seconds By Republicans Everywhere), who, like John Kennedy, was a lot less a great president than a subsequent fabricated religious icon for the party faithful, was at least a strong presidential candidate (though not one who was at all above the use of ugly tactics). Look at what the party has thrown up since then: Bob Dole, John McCain, and two guys (Whose Name Must Never Be Spoken By Republicans Anytime Anywhere) who go by the oh-so-appropriate appellation of Bush. Even leaving aside the abhorrent politics, these candidates are to national politics what Reagan was to acting: strictly B-rate.

But let's be bold and actually talk about the Bushes, shall we? It's ever so instructive to do so. Bush the Elder was the first victim of the wholesale sanity purge that has infected the GOP in the Age of Reagan. He broke the cardinal rule - in truth, the very raison d'etre - of the party by raising taxes, and so they turned on him and both destroyed and embarrassed him by helping Democrats show him to the door after a single term. That was Poppy. On the other hand, his son, the Boy Wondering, is actually guilty of precisely the opposite sin. Republicans these days can never stop telling you how conservative they are and how much they revere Ronald Reagan. Conservative, conservative, conservative. Reagan, Reagan, Reagan. Which makes for a bit of a mystery (for six seconds at least): If that's true, how come they never, ever, mention the guy who was the most conservative president in American history, who was more Reagan than Reagan, and who happened to have been in office only just the other day? Hmmm. I wonder why that could be?

The answer, of course, is that Bush's rodeo clown presidency demonstrates precisely what are the fruits of pursuing conservative (actually, kleptocratic) policies. Those choices were disastrous, and we are only beginning now to even realize how much damage was caused. So today's Republican Party candidates have to pretend that Bush never happened, and that we've never had a very good and very recent empirical test of what would happen if we followed their identical policy prescriptions. Someday, of course - perhaps in a decade or two - they will try to give W the same makeover they've given to Reagan, but right now even the otherwise all too idiot-prone American public can't yet be fooled into remembering how much they liked 9/11, Afghanistan, Iraq, Katrina, No Child Left Behind, global warming, global hatred, torture, Constitution shredding, polarized politics, doubling the national debt, massive wealth concentration, global depression and TARP - all the gifts of a single president.

If I could put the current crop of Republican presidential candidates on the spot and ask them a single question, I would have them rate the Bush presidency and indicate how theirs would be different. They're all slick as an oil spill, of course, so they'd find a way to finesse the question. Surely they'd say that they'd balance the budget, but of course, so did Reagan and so did W. It turns out that trying to do so while cutting taxes, spending more on the military, and without borrowing is ... what did that one guy call it? ... voodoo economics. But here's the central point, even if it requires multiple iterations for Americans to learn it: The so-called conservative policies advocated by the Republican Party today are manifestly disastrous. They have been precisely so under every president - most definitely including Clinton and Obama - since Reagan, and they will continue to be so in the future. Even KenDoll Romeny knows that tax cuts for billionaires, war with Iran, environmental destruction and putting Christ back into Christmas won't revive the country. It's just that he doesn't give a shit. Getting to be president is all he cares about.

Beyond this nightmare of its pathetic leading figures, the GOP is also in trouble demographically. It has painted itself into a narrow corner such that its primary appeal is to pretend pious old white men who are fearful of everything (and thus constantly act as though they are fearless), but most especially afraid of independent women. It's funny to watch these guys rail against Muslim religious fanatics in Saudi Arabia or Afghanistan, without the slightest sense of irony or recognition of who they're looking at in the mirror each morning. No matter. They're finished. The young generation coming up in America today is far less sexist, far less homophobic, far less racist, far less xenophobic, far less religious, far less conservative and far less Republican than the ones headed for P.T. Barnum's "This way to the Egress" sign over the next couple of decades. The GOP will face some wrenching choices as it becomes increasingly unelectable with time. Likely there will be a civil war between those who demand ideological purity and those willing to compromise for electability. Quite probably the Romney-versus-the-rest motif we're witnessing in the current cycle is already the opening salvo in that war.

One could argue that Republican Party orthodoxy is already under assault from the Ron Paul campaign. It's truly amazing what Paul is saying on questions such as the astonishingly destructive war on drugs campaign, or American foreign and military policy, which he rightly describes as imperial in nature. He's far to the left of any namebrand Democrat, let alone compared to the chickenhawk cowardly hypocrites (as he himself accurately calls them) of the GOP, like Bush, Cheney, Gingrich, Romney and all the rest. More importantly, much of what he says on the campaign trail is jarringly truthful for any prominent American politician circa 2012. If only his economic prescriptions weren't so dishonest and just plain bizarro (and if only he didn't have that stinky racist, Bircher, background), I could honestly get excited about Paul, despite even his party affiliation. But Ron Paul is far more a strange mutant aberration in the Republican Party today than the leader of one of the warring camps likely to define the party in the coming decades. That battle will be between (alleged) moderates and hard-liners - between Bush 41 and Bush 43, if you will - and Paul is neither. He is far more a Libertarian than a Republican, but he's also strategically smart. Millions more people are being exposed to the Republican candidate's radically heterodox and absurdly truthful critiques of American government than would never hear them if he was running instead for the Libertarian Party's nomination. In any case, by telling such truths right in the belly of the beast, and by attracting so many votes, Paul makes life that much harder for an already besieged Republican Party.

In addition to its candidates and its demographics, the GOP has another problem, as well: Itself. I'm shocked that anyone else is shocked at what's going on within the party right now as the various candidates scramble for advantage. Of course Gingrich and Perry and the others are saying anything in order to take down the front-running Romney. What the hell else would you expect from an ideology which has been peddling extreme individualism, unfettered greed, filthy campaign practices, and endless deceit at least since the era of Joe McCarthy? Of course they are eating their young. Why wouldn't they? Because of moral qualms? Concerns about integrity? Putting the needs of the many ahead of the needs of the one? Very funny, people. Very funny.

The reaction to those Republican candidates criticizing Romney for his career as a vulture capitalist is extremely telling, of course, just as was the Catholic Church putting Galileo under house arrest. In neither case did the offended institution bother asking whether the ideas being floated had any merit to them. No, my friends, neither the Catholic Church nor the Republican Church have any interest in the dissemination of truth. Quite to the contrary, their interest is precisely the opposite. Hordes of Republican blowhards (pardon the redundancy there) have been savaging Gingrich and Perry for mounting 'Democratic-style class warfare' critiques of Romney, never stopping to actually inquire as to what Bain Capital actually did under his stewardship. Of course, they don't need to ask. They already know. What's critical is that you never do.

All in all, the GOP is in deep trouble, at least over the long haul. I think they know it, too. They're all standing around at this point waiting for a Reagan to come rescue them. That's not gonna happen, not least of which because even Reagan was never "REAGAN!". Like Bernie Madoff, the Party's lies and schemes are beginning to catch up with it. And as with Madoff, it is the rest of us who will principally pay the price. The real questions are why this hasn't happened sooner, why the party was able to resuscitate itself relatively unscathed from the disaster of actually governing under its avowed principles this last decade, and why it has a good shot at the White House this year?

Those are, of course, easy questions to answer. If the top ranks of the Republican Party are of a quality that would be considered pathetic anywhere outside of Zimbabwe, the leading lights of the Democrats are equally dismal. You have Barack Obama and Hillary Clinton, and then there's... Joe Biden? Harry Reid? Andrew Cuomo? It's quite amazing really. Add up all the prominent Democrats in Congress, in the cabinet and in statehouses, and there isn't a single one - regardless even of their politics - who remotely inspires. Moreover, if we're honest about Obama and Clinton, it's patently obvious that they are almost entirely notable for who they physically are, not what they've done or where they stand. Take away his skin tone and her genitalia, and you're left with a pair of two-dimensional cardboard B-rate political nothingburgers. History will record Obama's sole claim to fame as getting elected. No one will ever know what he really stands for, other than maintaining the status quo so that he can comfortably tuck the one percent into bed each night. Her only genuine political commitment in life (at least, that is, before she and her husband were completely coopted by the plutocracy), seems to have been a devotion to the controversial idea of taking good care of our children. Wow. Now that's bold.

Obama and his party are failures for the same reason the GOP has been failing for so long. They all serve the same master, and I got news for you, pal: It ain't you, me, or the 300 million people in America's 99 percent. This isn't complicated stuff. You can put away your slide rule. It's simple: If you are governing to advance the interest of predators, and doing so at the expense of the people, the predators will prosper and the people will suffer. By design. What, you don't like that? No problem, you can simply vote for the other party, the one that's not in office. Just one problem, though. They have exactly the same economic policies as the one that is.

We live in the strangest of times. Our politics have hardly ever been more strident, and yet we fight over almost nothing. We have enormous problems facing us, ranging from rampant and structural unemployment to broken empire to climate holocaust, and yet we're consumed with trivia. Our candidate running on the platform of hope and change could not possibly be more beholden to the special interests who have robbed an entire global economy of hope in order to prevent change and fatten their already bulging wallets. The political party that led the country and the world over the cliff for a decade came back to win a stunning victory just two years later, and is poised to possibly win another one again. The people who created a massive national debt can somehow plausibly score endless political points complaining about that same debt. One of the worst things you can be accused of is trying to turn America into a 'European socialist state' at exactly the moment when the true European socialist states are precisely the countries providing the best quality of life, most economic security, and the most stable economies for their citizens of any in the world. Here at home, we have very clear empirical evidence from two post-war periods - one each of liberal and conservative economic policy prescriptions - of what happens when you go either of those directions, and no one recognizes that the experiment was even conducted. The list goes on. Rod Serling, you're way overdue on the set, baby. Dee dee dee dee, dee dee dee dee...

Hunter Thompson was certainly right. When the going gets weird, the weird turn professional. But we're beyond all that now. America has fielded its All-Century Team when it comes to nutty politics. The good news, though, is that some people are finally starting to wake up to what we're facing, and just who is diddling whom.

That can't be good news for the Geriatric Obfuscating Pathology otherwise known as the Republican Party.
(c) 2012 David Michael Green is a professor of political science at Hofstra University in New York. He is delighted to receive readers' reactions to his articles, but regrets that time constraints do not always allow him to respond. More of his work can be found at his website, www.regressiveantidote.net.

"SHINING TORCH" sounds like the name of a Red Indian (or should I say Native American?) chief. In Hebrew, it is the literal meaning of the name of our latest political sensation: Ya'ir Lapid.

This week, he announced his intention to enter politics and set up a new political party.

Hardly a surprise. For many months now, speculation has been rife. Lapid has hinted more than once about his intention, giving the impression that he would act on it only close to election time. That was clever, since he was the most popular news anchorman on the most popular TV channel. Why give up a post that gives you unique public exposure (and pays a handsome salary to boot)?

Now he has been told by his employers, probably under political pressure, to choose: either/or - TV or politics.

Some 2061 years ago, Julius Caesar crossed the little river Rubicon to march on Rome, exclaiming "iacta alea est" - the die has been cast. Lapid is no Caesar and does not speak Latin, but his feeling must have been much the same.

A day later, another well-known personality, Noam Shalit, threw a second die. The father of Gilad, the captured soldier who was exchanged for 1027 Palestinian prisoners, has announced that he will run for the Knesset on the Labor party list. After five years leading the immensely popular campaign for his son's release, he has decided to put to political use his rise from anonymity to celebrity status.

A whole series of exes - ex-generals, ex-Mossad chiefs, ex-CEOs - are waiting for their turn.

What does that mean? It means that the smell of elections is in the air, though elections are officially due only a year and a half from now, and there are no signs that Binyamin Netanyahu and his far-right partners intend to bring them forward.

THE ATTRACTION of a Knesset seat is hard to explain. Most Israelis despise the Knesset, but almost everyone would sell their grandmother to become a member.

(A Jewish joke tells about a stranger who comes to the shtetl and asks for directions to the home of the synagogue manager. "What, that scoundrel?" exclaims one of the passers-by. "That bastard". "that son of a bitch", "that miser," respond others. When he finally meets the man and asks why he clings to the office, he answers: "Because of the honor!")

But that's beside the point. The question is: why do so many people believe that a new party has a good chance to win seats? Why does Ya'ir Lapid believe that a new party, headed by him, will become a major faction in the Knesset and perhaps even propel him into the Prime Minister's office?

There now exists a gaping black hole in the Israeli political system, a hole so huge that nobody could fail to notice it.

On the right is the present government coalition, consisting of the Likud, the Lieberman party and various ultra-nationalist, pro-settlement and religious factions.

What is there on the Left and in the Center? Well, next to nothing.

The main opposition party, Kadima, is in a shambles. It has failed miserably to establish a role for itself. Tzipi Livni is incompetent, and it seems that the only merit of her party rival, a former army Chief of Staff, is his Oriental origin. (He was born in Iran.) The latest polls give Kadima half the number of seats it holds now.

Labor, which seemed to rise when Shelly Yachimovich was elected chairwoman, has slid back in the polls to where it was before. Nor has the stock of Meretz gone up. The same goes for the communist and the Arab factions who vegetate on the fringes of the system, if not outside. All of them together could not unseat the Right.

The gap is glaring. It cries out for a new force that can fill the void. No wonder that the various messiahs in waiting hear an inner voice telling them that their time has come.

The trouble is that none of these pretenders comes with a message. They appear on the scene with a cookbook mentality: Take a few popular phrases, add 3 celebrities, 2 generals, 4 women, 1 Russian, and with the help of a clever PR expert and two "strategic advisers" you are on your way.

For Lapid, the three popular phrases are now: take money from the irresponsible tycoons (Who are they? Are there also responsible tycoons?), take money from bloated government departments (which ones? Do they include the Ministry of Defense?), take money from distant settlements (How distant? What about all the other settlements?)

There seems to be no one around who comes with a deeply held conviction, a message that "burns in his bones," as you say in Hebrew. Shelly of Labor has a serious social message, but refuses adamantly to speak about anything else, especially about such unsavory subjects as peace and the occupation. Kadima is wish-washy about everything. And Lapid?

AH, WELL - that depends on the polls. Lapid is a prolific writer with many books to his credit and a weekly column in the mass circulation Yediot Aharonot. But even with a microscope one cannot detect the trace of a serious answer to any of the country's burning national or social questions.

That may be clever. If you say something that is outside the consensus, you create enemies. The less you say, the less trouble. That is a basic political truism. But not the stuff great leaders are made of.

It has often been said of Lapid that he is the man every Jewish mother dreams of as her son-in-law. He is tall, very handsome, looks much younger that his 49 years, and has a movie-star quality. He also had a famous father.

"Tommy" Lapid was a Holocaust survivor. He was born in the Hungarian-speaking enclave of the former Yugoslavia and spent World War II in Adolf Eichmann's Budapest. He became a feuilleton writer (though less successful than his fellow Hungarian, Ephraim Kishon), but made his name as a TV panelist who introduced a completely new style of aggressiveness, some said vulgarity. Example: when a poverty stricken woman complained about her abject condition, he shot back: "So how did you pay your hairdresser?"

Lapid Sr. had a split personality: in personal relations he was easy-going, even charming. His public persona was pugnacious and abrasive.

So was his political message. He was famous for the intensity of his hatred of the orthodox Jews. He was also a rabid ultra-nationalist, who even defended Slobodan Milosevic. But in domestic affairs he was a true liberal.

Almost by accident he became the leader of a moribund party and led it to an astounding election triumph, amassing 15 Knesset seats and becoming a good Justice Minister. The party then shrank again as rapidly as it had grown.

All this tells us little about Lapid Jr. What kind of political program will he represent, once he is compelled to provide answers? Contrary to his father's aggressiveness, he preaches conciliation, togetherness, moderation. He positions himself in the exact center and clings to the widest possible consensus. His chances seem to be excellent.

However, from now until the elections - whenever they are held - can be a very long time. Israel is a cruel country, popularity can fade quickly. The first political test of Lapid will be whether he can keep the public's interest for long without his TV pulpit. I believe that his entrance into the political scene is a good thing. Our political system is in dire need of new blood. And I can hardly line up with those who say that journalists should not enter politics.

WHAT ARE his chances? Impossible to foretell. It will depend on many factors: when will the elections be held, what happens before then, will there be a war? (Lapid was not a combat soldier, a serious flaw in the eyes of many Israelis.) And first of all: who else will join the fray in the meantime?

I fervently hope that a different kind of new political force will emerge - a center-left party with a clear and inclusive message: social reform, narrowing the gap between rich and poor, the two-state solution, peace with the Palestinians and the end of the occupation, equality between all citizens (irrespective of gender, race, ethnic origin and beliefs, total separation between state and religion, human rights safeguarded by strong and independent courts - all this enshrined in an iron-clad written constitution.

For this you need leaders with strong backbones, ready to fight for their convictions.

Perhaps Lapid will, in the end, fit this bill, at least partly. Perhaps he will also attract votes from Likud members who are disgusted by the neo-fascist turn some of the Likud leaders have taken - enough votes to upset the balance in the Knesset and put an end to the ultra-rightist frenzy.

If there was ever a news story that crystallized the moral dementia of modern Wall Street in one little vignette, this is it.

Newspapers in Colorado today are reporting that the elegant Hotel Jerome in Aspen, Colorado, will be closed to the public from today through Monday at noon.

Why? Because a local squire has apparently decided to rent out all 94 rooms of the hotel for three-plus days for his daughter's Bat Mitzvah.

The hotel's general manager, Tony DiLucia, would say only that the party was being thrown by a "nice family," but newspapers are now reporting that the Daddy of the lucky little gal is one Jeffrey Verschleiser, currently an executive with Goldman, Sachs.

At first, I couldn't remember how I knew that name. But then I looked it up and saw an explosive Atlantic magazine story, published last year, called, "E-mails Suggest Bear Stearns Cheated Clients Out Of Millions." And then I remembered that piece, and it hit me: Jeffrey Verschleiser is one of the biggest assholes in the entire world!

The story begins at Bear Stearns, where Verschleiser used to work, up until the company exploded, in large part because of him personally.

Back in the day, you see, Verschleiser headed Bear's mortgage-backed securities operations. Toward the end of his tenure, his particular specialty began with what at the time was the usual industry-wide practice, putting together gigantic packages of crappy subprime mortgages and dumping them on unsuspecting clients.

But Verschleiser reportedly went beyond that. According to a lawsuit later filed by a bond insurer called Ambac, Verschleiser also masterminded a kind of double-dipping scheme. What he would do is sell a bunch of toxic mortgages into a trust, which like all mortgage trusts had provisions written into their pooling and servicing agreements (PSAs) that required the original lenders to buy the loans back if they went into default.

So Verschleiser would sell bad mortgages back to the banks at a discount, but instead of passing the money back to the trust, he and other Bear execs allegedly pocketed the funds.

From the Atlantic story by reporter Teri Buhl:

The traders were essentially double-dipping -- getting paid twice on the deal. How was this possible? Once the security was sold, they didn't have a legal claim to get cash back from the bad loans -- that claim belonged to bond investors -- but they did so anyway and kept the money. Thus, Bear was cheating the investors they promised to have sold a safe product out of their cash. According to former Bear Stearns and EMC traders and analysts who spoke with The Atlantic, Nierenberg and Verschleiser were the decision-makers for the double dipping scheme.

Imagine giving someone a hundred bucks to buy a bushel of apples, but making a deal with him that he has to buy back any apples that turn out to have worms in them. That's what happened here: Bear sold the wormy apples back to the farmer, but instead of taking the money from those sales and passing it on to you, they simply kept the money, according to the suit.

How wormy were those apples? In one infamous email cited in the suit, a Bear exec colorfully described the content of the bonds they were selling:

Bear deal manager Nicolas Smith wrote an e-mail on August 11th, 2006 to Keith Lind, a Managing Director on the trading desk, referring to a particular bond, SACO 2006-8, as "SACK OF SHIT [2006-]8" and said, "I hope your [sic] making a lot of money off this trade."

So did Verschleiser himself know the mortgages were bad? Not only did he know it, he went so far as to tell his colleagues in writing that it was a waste of money to even bother performing due diligence on the bad bonds:

Jeffrey Verschleiser even said in an e-mail that he knew this was an issue. He wrote to his peer Mike Nierenberg in March 2006, "[we] are wasting way too much money on Bad Due Diligence." Yet a year later nothing had changed. In March 2007, Verschleiser wrote to Nierenberg again about the same due diligence firm, "[w]e are just burning money hiring them."

One of the ways that banks like Bear managed to convince investors to buy these bonds was by wrapping them in bond insurance through companies like Ambac, commonly known as "monoline" insurers. Investors who knew the bonds were insured were less worried about default.

Verschleiser, seeing that Bear had gotten firms like Ambac to insure its "sack of shit" bonds, saw here a new opportunity to make money. He first induced the monolines to insure the worthless bonds, then bet against the insurers! (Is it any wonder this guy ended up hired by Goldman, Sachs?) From the Atlantic story again:

Then in November 2007, Verschleiser wrote to his risk committee that he knew insurers for mortgage securities were going to have big financial problems. He suggested they multiply by ten times the short bet he'd just made against stocks like Ambac. These e-mails show Verschleiser's trading desk bragging to firm leadership that he made $55 million off shorting insurers' stock in just three weeks.

So in essence, Verschleiser was triple-dipping. First he was selling worthless "sacks of shit" to investors, representing them as good investments. Then, he kept the money from the return sales of the wormy apples. And then, on top of that, he made money by betting against the insurers he was sticking with these toxic assets.

We all know what happened from there. Bear, Stearns went under, thanks in large part to insane schemes like Verschleiser's, and all of us were forced to pick up at least part of the tab as the Fed spent billions subsidizing Bear's emergency takeover by JP Morgan Chase. In subsequent litigation, Chase has steadfastly refused to buy back the bad mortgages dumped on investors by the likes of Verschleiser, and has even fought tooth and nail to prevent the information in the Ambac suit from being made public.

Ambac went into Chapter 11 bankruptcy in 2010 for a variety of reasons, some of which had nothing to do with its losses in deals like these. But certainly Ambac and other monoline insurers like MBIA suffered for having insured worthless mortgage bonds sold onto the market by the Verschleisers of the world. Ambac in its suit asserted that it paid out over $641 million in claims related to the bonds from the Bear deals. With all of this, though, Verschleiser landed happily on his feet. He reportedly heads Goldman's mortgage division now. And after cutting a mile-wide swath of losses through the American economy, helping destroy two venerable firms in Bear and Ambac, bilking the taxpayer for untold millions more (he is also named in a lawsuit filed by the Federal Housing Finance Agency for allegedly speeding bad loans onto securitization before they defaulted), Verschleiser is now living the contented life of a proud family man, renting out a 94-room hotel for three days for his daughter's Bat Mitzvah.

It's certainly heartening that Verschleiser is spending this money on his daughter instead of, say, hiring a busload of Jamaican hookers to spend the weekend lounging with him in a hot tub full of Beluga caviar. People ought to give their children the best, I guess. But there's this, too: at a time when one in four Americans has zero or negative net worth, renting a 94-room hotel for three days for a tweenager party might already be pushing the edge of the good taste/tact envelope. Even for the most honest millionaire in Aspen, it would seem a little gauche.

But for this burglarizing dickhead to do it? It's breathtaking. I hope he at least invited his bankrupted investors to the pool party.

p.s. Since this blog was posted, I've received a number of letters all asking the same question -- how could it be possible that what Verschleiser did is not illegal? How is he not in jail?

The answer is that if the allegations in the Ambac suit are true, it certainly would seem to be illegal. Most notably, the pocketing of putback money almost has to be a form of theft or embezzlement.

The rest of Bear/Verschleiser's scheme, however, is also illegal, but in a more complicated way. If you read the complaint in the Ambac suit, what you see is a sort of extreme blueprint for how mortgage securitization worked in general during that period.

There is a veritable sea of fraudulent and corrupt practices one may gaze upon here, if the SEC were looking for something to target -- everything from withholding material facts from customers and ratings agencies, to threatening ratings agencies with lost business if they didn't overrate bonds, to lying in offering documents, to the manipulation of accounting procedures (this went on after the loans had moved onto Chase's books), etc. -- but the most flagrant violation in the suit involves the issue of due diligence, and here we do know a lot about Verschleiser's role.

It seems that when Bear did do due diligence in these deals, it very frequently overrode the firms they'd hired to do that due diligence, and put the loans in the deals anyway. In the third quarter of 2006, Bear overrode its due diligence firm an incredible 65% of the time, putting loans into their securitizations despite an outside firm finding red flags in the notes.

Even worse, Bear went out of its way to hide the evidence that it was knowingly ignoring due diligence. This is from the complaint:

Bear Stearns ignored the proposals made by the heads of its due diligence department in May 2005 to track the override decisions, and instead took the opposite tack, adopting an internal policy that directed its due diligence managers to delete the communications with its due diligence firms leading to its final loan purchase decisions, thereby eliminating the audit trail.

This is fraud because in its agreements with investors, Bear promised to conduct "due diligence," it promised to conduct "quality control" testing of the loan pools, it promised to "repurchase" defective loans, and it also promised to implement "seller monitoring," i.e. to prevent the securitization of loans from bad suppliers.

But it not only didn't do these things, it engaged the opposite behavior and knowingly covered up its fraud by deleting its communications.

Verschleiser was personally named in the evidence offered in the Ambac suit. In a letter to Ambac, Bear's RMBS Investor Relations managing director Cheryl Glory wrote that "Jeff will... provide you with the due diligence results of all three deals once complete."

But this is the same Jeff who we now have in writing saying this about those promised due diligence results: "We are wasting way too much money on Bad Due Diligence," and "We're just burning money hiring them."

It doesn't take a genius to deduce that Bear was not upholding its contractual obligations by delivering what it itself considered "bad due diligence" to Ambac. At the very least, this is actionable.

Verschleiser undermined due diligence in other ways. One good one was to demand that his due diligence people operate at speeds that made genuine due diligence impossible.

At one point during these deals, Verschleiser reamed out his immediate subordinate, co-head of mortgage finance Baron Silverstein, over the "problem" of the due diligence department taking too much time to do its work. Silverstein responded by issuing the following tirade to John Mongelluzzo, Bear's VP for Due Diligence, demanding that he not get in the way of Bear's insane goal of funding 500 mortgages a day:

I refuse to receive more emails from [Verchleiser] (or anyone else) questioning why we're not funding loans every day. I'm holding each of you responsible for making sure we fund at least 500 each and every day... I was not happy when I saw the funding numbers and I knew NY would NOT BE HAPPY... I expect to see 500+ every day. I will do whatever is necessary to make sure you're successful in meeting this objective.

Whenever any right-wing loon, or Bloombergite, tries to tell you the mortgage crisis was caused by the government forcing the poor banks to lend to broke black people, please direct them to this passage. The banks not only wanted to give out these loans, they wanted to give them out at the speed of light. They wanted to crank them out so fast that their own auditors literally couldn't read the writing on the loan applications. This was greed, not policy. Anybody who says anything else is high on something.

Anyway, given that much of Verschleiser's questionable behavior is in writing, his case sure seems court-ready. But for whatever reason, he has not been indicted.

One can almost understand a regulator not wanting to take on the whole circular securitization scheme -- Bear lends money to corrupt mortgage firm, mortgage firm makes bad loans, Bear packages bad loans and sells to investors, then takes the proceeds and creates more bad loans -- because it is so complex and difficult to prove.

The editor of The Hill, a newspaper exclusively covering Congress, said that Congress was not going to do very much in 2012, except for "the big bill" which is extending the payroll tax cut and unemployment compensation, which expire in late February. That two month extension will likely reignite the fight between Democrats and Republicans that flared last month.

In 2012, Congress, the editor implied, would be busy electioneering. That is, the Senators and Representatives will be busy raising money from commercial interests so they can keep their jobs. There won't be much time to change anything about misallocated public budgets, unfair tax rules, undeclared costly wars, and job-depleting trade policies that, if fixed, would increase employment and public investment.

So this year, Congress will spend well over $3 billion on its own expenses to do nothing of significance other than shift more debt to individual taxpayers by depleting the social security payroll tax by over $100 billion so both parties can say they enacted a tax cut! That is what the Democrats in Congress and the President call a significant accomplishment.

Will someone call a psychiatrist? This is a Congress that is beyond dysfunctional. It is an obstacle to progress in America, a graveyard for both democracy and justice. No wonder a new Washington Post-ABC news poll found an all time high of 84 percent of Americans disapprove of the job Congress is doing.

Both Republicans and Democrats say they want to reduce the deficit. But they are avoiding, in varying degrees, doing this in any way that would discomfort the rich and powerful. One would think that, especially in an election year, the following legislative agenda would be very popular with the voters.

First, restore the taxes on the rich that George W. Bush cut ten years ago which expanded the deficit. So clueless are the Democrats that they have not learned to use the word "restore" instead of the Republican word "increase" when talking about taxes that were previously cut for the millionaires and billionaires.

Second, collect unpaid taxes. The IRS estimates that $385 billion of tax revenues are not collected yearly. If the IRS budget increased and more people were hired, every dollar it spent would return $200 from tax evaders, including corporations and the wealthy. When taxes are not collected, the large majority of honest taxpayers are left with the unfair consequences. Imagine that money being applied to jobs that repair our crumbling public works.

Third, end the outrageous corporate loopholes that allow profitable large corporations to pay just half of the statutory tax rate of thirty-five percent. More than a few pay less than five percent and many pay zero on major profits. During a recent three year period, according to the Citizens for Tax Justice, a dozen major corporations such as Verizon and Honeywell paid no taxes on many billions of profits, and the legendary tax escapee, General Electric, managed to pay zero and even receive billions in benefits from the U.S. Treasury.

Fourth, do what most U.S. soldiers in the field have believed should have been done years ago--get out of Afghanistan and Iraq and nearby countries like Kuwait where thousands of U.S. soldiers based in Iraq have moved.

Fifth, to increase consumer demand, which creates jobs, raise the federal minimum wage from the present level of $7.25--which is $2.75 less than it was way back in 1968, adjusted for inflation--to $10 per hour. Businesses who keep raising prices and executive salaries (eg. Walmart and McDonalds) since 1968 should be reminded of their windfall in that period.

In addition, President Obama can urge mutual and pension funds and individual shareholders to demand higher dividends from companies like EMC, Google, Apple, Cisco, Oracle and others firms hoarding two trillion dollars in cash as if this money was the corporate bosses', not the owner-shareholders. More dividends, more consumer demand, more jobs.

Want to know why Congress doesn't make such popular and prudent decisions for the American people? Because the people are not objecting to all the power that their Congressional representatives and their corporate allies have sucked away from them. Because the people are not putting teeth and time into the "sovereignty of the people" expressed in the preamble to our Constitution which begins with "We the people," not "We the corporation."

So citizens, it's your choice. If you don't demand a say day after day, you'll continue to pay day after day.