Accustomed to singling out the poor, the minority, the ill and the invisible

At the Narco News Bulletin, Al Giordano reflects upon the potential paradigm shift if the war on "the poor, the minority, the ill and the invisible" targets an American sports icon.

Not since the olden days in Nottingham has a sheriff been on the verge of sparking an incident that would have such mega-consequences for a population. Can you imagine, kind reader, the firestorm if the drug war – so accustomed to singling out the poor, the minority, the ill and the invisible – suddenly targets America’s Darling and makes Michael Phelps the most recognizable face of peaceful illegal drug use on the planet? It would be akin to throwing a lit match into the basement full of gasoline that underlies current prohibitionist drug policies. Phelps is healthy, soft-spoken, polite, of good humor, skilled on television (as his hosting of Saturday Night Live revealed)… Grandmothers everywhere, when they see his face, don’t want to send him to prison: They want to pinch his cheek.

The media circus that would ensue would bring the hypocrisy of the drug war into every living room and stir a nationwide debate around every kitchen table over how thoroughly senseless the US war on drugs has become. In the context of the step-by-step and incremental policy changes underway, the making of Michael Phelps into martyr and poster boy would serve, much like that first hammer in Berlin, to inspire a thousand more blows against the Drug War Wall, turning its evident cracks into gaping holes and its cement to rubble.

Estimates suggest that half of the U.S. population has at one time or another experimented with marijuana. Two of our last three presidents have admitted as much. The one in between hinted as much.

At Counterpunch, Dale Gieringer provides some historical context on drug prohibition.

On February 9, 1909, Congress passed the Opium Exclusion Act, barring the importation of opium for smoking as of April 1. Thus began a hundred-year crusade that has unleashed unprecedented crime, violence and corruption around the world —- a war with no victory in sight.

Long accustomed to federal drug control, most Americans are unaware that there was once a time when people were free to buy any drug, including opium, cocaine, and cannabis, at the pharmacy. In that bygone era, drug-related crime and violence were largely unknown, and drug use was not a major public concern.

Gieringer tells us that the U.S. motivation for passing the Opium Exclusion was political; to curry the favor of the Chinese government.

Congress was moved to Act in 1909 not by any drug abuse crisis, but by foreign policy concerns. Per capita opium use had begun to decline by 1900, and only one in a thousand Americans indulged in smoking opium. Nonetheless, the State Department determined that an initiative against opium smoking would be useful in opening the door to China, which had long chafed under British compulsion to allow the opium trade. At the invitation of Theodore Roosevelt's administration, an international commission was convened in Shanghai in December 1908 to sign a treaty ending the trade –- the first step in what would become a far-reaching international system of drug control. As a gesture of good faith, the State Department called on Congress to pass legislation that would ban the importation of smoking opium, thereby creating the first illegal drug.

The so-called "War on Drugs" has greatly expanded the prison population:

Early 20th-century Americans would be astounded to see what a problem drugs have become since the establishment of drug prohibition. Every year, two million Americans are arrested and 400,000 imprisoned for drug offenses that did not exist in their time. Drug laws are now the number-one source of crime in the U.S., with one-half of the entire adult population having violated them.

But isn't that the point, after all? As long as those imprisoned are confined to the ranks of "the poor, the minority, the ill and the invisible," the war on drugs doesn't much enter into the conscience of middle class white America. Much like the war on terror doesn't much enter into that conscience. Handy mantras, marketing gimmicks, slogans to move the faithful on a gut level, to keep them from peering too deeply into the abyss.

How to cut your mortgage costs in half

This NYT article contains an incredible story. Set in Nevada (but likely to be played out all over the country), we learn of the Terrible Herbst chain of gas stations / convenience stores featuring slots, candy and beer. A combination that would seem to be a winner in bad times. The recently failed First National Bank of Nevada held the mortgage on the Terrible Herbst chain. The FDIC comes riding, like the U.S. cavalry to the rescue.

When regulators took over the First National Bank of Nevada last year, they faced a showdown with the Terrible Herbst, the mustachioed cowboy who boasts of being the “best bad man in the West.”

This was no real gunslinger, but the name and logo of a chain of gas stations and convenience stores in Nevada that feature slot machines next to candy and beer.

The family-owned Herbst chain, auditors at the Federal Deposit Insurance Corporation concluded, did not generate enough sales at its Reno-area gas stations to support the repayment of a loan, leaving auditors with three bad choices: Move to take over those stations and put the government in the gambling business. Cut off any flow of additional loan money. Or sell the loan at a steep loss.

What to do, what to do, what to do with Terrible Herbst? Well, ya got to know when to hold 'em, know when to fold 'em, know when to walk away, know when to run. Consider the options:

In the case of Terrible Herbst and its Reno-area gas stations, officials at the F.D.I.C. considered taking the highly unusual step of applying for a temporary casino license, allowing the agency to operate the gas stations and the electronic games after perhaps foreclosing on the nearly $10 million loan, one official involved in the effort said.

Another option, simply cutting off additional advances of cash from the loan, was ruled out because the business might close, making it nearly impossible to collect any of the outstanding principal.

What to do, what to do, what to do. Okay. Here's the plan:

The resolution of the case turned out to be a windfall for Terrible Herbst. The government put the loan on sale, and who should buy it directly from the government but the Herbst family, at a discount of more than 50 percent.

The government ate the loss, but at least it collected on some of the bad debt, the F.D.I.C. official involved in the deal said.

Executives at Terrible Herbst, who said they never formally refused to pay off the loan in full, were hardly disappointed.

“It worked out just fine,” said Sean Higgins, the company’s general counsel. “At least for Terrible Herbst.”

I think I understand.

Herbst owes $10 million on the properties, but can't generate enough income to pay them off.

FDIC doesn't want to takeover and run the properties, doesn't want to loan any more money. So, FDIC will let the government take a loss. Sell the properties at a "MORE than 50% discount." Just how much more, we are not told. I wonder why?

Suppose it's a 60% discount. Somebody was smart enough to find a dumb buyer for these toxic assets. Cool. Rather than having a toxic asset on its books, the government now has a cool $4 mill.

Some sucker owns the properties. Who dat sucker? Why, dat sucker is none other than Terrible Herbst. They just saved (something on the order of) $6,000,000.

Can anyone say potential moral hazard here? Any reason NOT to give say a 5% "fee" to a player with enough ambition to put get this deal done. How about if the player is maybe the brother-in-law of the FDIC regulator?

It's the great American way.

3 for 2007; 25 for 2008; 13 so far for 2009

This New York Times article indicates the scope of bank failures in 2007 and 2008. Hold on to your hats. Looks like 2009 will be an even steeper ride.

The F.D.I.C. inherited the collection of loans and property after the failure of 25 banks in 2008, compared to just three in 2007. Thirteen more have failed this year, including four on Friday night, and no one doubts that more are on the way. The F.D.I.C., which insures bank deposits and ultimately has responsibility for liquidating failed banks, is selling hundreds of millions of dollars worth of loans through eBay-like auction sites.

"Through eBay-like auction sites?" Does this mean "on-line." Talk about virtual reality. More like virtual unreality.

A surprisingly low profile in the new administration's stated plans

At the invaluable Tom Dispatch web site, Steve Fraser examines the public response to the wall street "titans" in 1929 and again in 2009 (my emphasis added).

This was then:

After 1929, when the old order went down in flames, when it commanded no more credibility and legitimacy than a confidence game, there was an urgent cry to regulate both the malefactors and their rogue system. Indeed, new financial regulation was at the top of, and made up a hefty part of, Roosevelt's New Deal agenda during its first year. That included the Bank Holiday, the creation of the Federal Deposit Insurance Corporation, the passing of the Glass-Steagall Act, which separated commercial from investment banking (their prior cohabitation had been a prime incubator of financial hanky-panky during the Jazz Age of the previous decade), and the first Securities Act to monitor the stock exchange.

This is now:

One might have anticipated an even more robust response today, given the damage done not only to our domestic economy, but to the global one upon which any American economic recovery will rely to a very considerable degree. At the moment, however, financial regulation or re-regulation -- given the last 30 years of Washington's fiercely deregulatory policies -- seems to have a surprisingly low profile in the new administration's stated plans. Capping bonuses, pay scales, and stock options for the financial upper crust is all well and good and should happen promptly, but serious regulation and reform of the financial system must strike much deeper than that.

And for some reason (bipartisanship?), the Obama administration is "staying the course" on the corporate "bail-out." Never forget, Obama is joined at the hip to Bush on this. Obama spent political capital to help get the TARP plan approved. Who the hell is advising him? And just how much money did his campaign rake in from Wall Street?

Instead, the new administration is evidently locked into the bail-out state invented by its predecessors, the latest version of which, the creation of a government "bad bank" (whether called that or not) to buy up toxic securities from the private sector, commands increasing attention. A "bad bank" seems a strikingly lose-lose proposition: either we, the tax-paying public, buy or guarantee these securities at something approaching their grossly inflated, largely fictitious value, in which case we will be supporting this second gilded age's financial malfeasance for who knows how long, or the government's "bad bank" buys these shoddy assets at something close to their real value in which case major banks will remain in lock-down mode, if they survive at all. Worse yet, the administration's latest "bad bank" plan does not even compel rescued institutions to begin lending to anybody, which presumably is the whole point of this new financial welfare system.

And just how much of the stimulus bill is in the oh so productive voodoo trickle down economics of tax cuts?

Meet the new boss. Same as the old boss.

The three front war

From this Al-Jazeera report, the U.S. appears to have another war criminal president. No surprise to any serious student of American history.

The US has launched more than 30 missile attacks on Pakistani soil in recent months, ostensibly against al-Qaeda and Taliban-linked fighters.

More than 220 people were killed in the attacks, according to a tally of reports from Pakistani intelligence agents, district government officials and residents.

Pakistan has been angered by the raids, saying that innocent civilians have been killed and that Pakistani sovereignty has been infringed.

Meet the new boss, same as the old boss.

Trying to undo the recovery from the First Great Republican Depression

At the Sideshow, Avedon Carol notes that:

You have to understand that the conservatives aren't just trying to "undo the New Deal" - though of course they are - but ultimately to undo the recovery from the First Great Republican Depression by first preventing a recovery from their new one.

They seem to be getting plenty of help from the democratic congress and the democratic President of the United States too.

More than 10 years behind the times

In the fall of 1998, FAIR published an article by Janine Jackson entitled The Myth of the 'Crack Baby'. Recently the New York Times featured an article by Susan Okie entitled The Epidemic That Wasn't.

From Janine Jackson's 1998 article we are offered insights into how typical MSM reporting would cover the narrative:

Already obsessed with the use of the cocaine derivative crack among the urban poor, mainstream media used ... limited, qualified findings as grounds for an astonishing spree of sloppy, alarmist reporting and racial and economic scapegoating that still echoes today

...


"Crack baby" stories typically had an anecdotal focus and a veneer of sympathy for the "tiny victims," ... More urgency was reserved, though, for the unimaginable dangers these babies were supposedly destined to wreak on the world: The Washington Post (9/17/89) warned of "A Time Bomb in Cocaine Babies," while the St. Louis Post-Dispatch (9/18/90) declared flatly, "Disaster In Making: Crack Babies Start to Grow Up."

...

The emphasis may have varied, from pity for the children ("Crack Babies Born to Life of Suffering," USA Today, 6/8/89) to disgust for the mothers ("For Pregnant Addict, Crack Comes First," Washington Post, 12/18/89) to the unfathomable amount "their" problems might wind up costing "us" ("Crack's Tiniest, Costliest Victims," New York Times, 8/7/89). But overall, commercial media found the premise - a coming onslaught of affectless genetic deviants - utterly persuasive.

Compelling stories cast within the mold of a morality tale. Jackson notes (my emphasis added)

The premise, however, was false. The inadvisability of using cocaine during pregnancy is not disputed. But subsequent research on cocaine-exposed children found that many of the dangers mentioned in initial studies are simply not borne out.

... Health-care providers working with infants exposed to cocaine in utero found them indistinguishable from other children. Much medical research pointed to other factors - such as the lack of good prenatal care, use of alcohol and tobacco, and, simply enough, poverty - as more primary factors in poor fetal development among pregnant cocaine users than cocaine itself.

Proponents of a revised view included Dr. Ira Chasnoff, whose initial 1985 study launched much of the media juggernaut. By 1992, Chasnoff was saying, "poverty is the worst thing that can happen to a child," and expressing dismay at the press' misuse of medical research. "It's sexy," he suggested of the "crack baby" story (AP, 12/6/92). "It's interesting, it sells newspapers and it perpetuates the us-vs.-them idea."

Just who is the us in the "us-vs.-them idea" mentioned by Dr. Chasnoff?

From the 2009 New York Times story, we learn that

When the use of crack cocaine became a nationwide epidemic in the 1980s and ’90s, there were widespread fears that prenatal exposure to the drug would produce a generation of severely damaged children.

...[S]cientists say, the long-term effects of such exposure on children’s brain development and behavior appear relatively small.

...
Cocaine is undoubtedly bad for the fetus. But experts say its effects are less severe than those of alcohol and are comparable to those of tobacco — two legal substances that are used much more often by pregnant women, despite health warnings.

In the first half of NYT article, we are told that the morality of cocaine use is the issue

cocaine use in pregnancy has been treated as a moral issue rather than a health problem ... Pregnant women who use illegal drugs commonly lose custody of their children, and during the 1990s many were prosecuted and jailed

But later in the article the racial issues loom large:

Possession of crack cocaine, the form of the drug that was widely sold in inner-city, predominantly black neighborhoods, has long been punished with tougher sentences than possession of powdered cocaine, although both forms are identically metabolized by the body and have the same pharmacological effects.

... If [cocaine-exposed children] develop physical symptoms or behavioral problems, doctors or teachers are sometimes too quick to blame the drug exposure and miss the real cause, like illness or abuse.

“Society’s expectations of the children,” she said, “and reaction to the mothers are completely guided not by the toxicity, but by the social meaning” of the drug.

What exactly does the "social meaning" of the crack cocaine mean? My best guess is that it means white elites jump upon any and all opportunities to further marginalize, stigmatize, and demoralize poor blacks.

Teasing out the effects of cocaine exposure is complicated ... [because] ... almost all of the women in the studies who used cocaine while pregnant were also using other substances.

Moreover, most of the children in the studies are poor, and many have other risk factors known to affect cognitive development and behavior — inadequate health care, substandard schools, unstable family situations and exposure to high levels of lead.

Back in 1998, FAIR painted a much clearer picture of the inherent racism and how 60 minutes legitimatized

Such a sustained media assault was not without real world effects, of course. Years of accusatory coverage contributed to a shift to more punitively focused public policy, which was, in turn, welcomed by the press. In 1994, 60 Minutes aired a show (11/20/94) celebrating one such policy: a South Carolina law under which women who used cocaine while pregnant were arrested and jailed under child abuse statutes. "Cracking Down," the segment was called.

Fast forward to 1998: Despite an amicus curiae letter signed by 15 leading medical and social service organizations condemning the policy, the Supreme Court declines to hear an appeal in the convictions of two South Carolina women. Cornelia Whitner and Malissa Crawley, both mothers of healthy children, are serving prison terms for prenatally "abusing" them by using cocaine. And 60 Minutes announces plans to re-air its 1994 segment on the policy that sent them to jail.

... [O]f 23 prosecutions, 22 were of African-American women, and the one white woman was married to a black man.

In America, the perpetuation of racial divide (us-vs.-them) serves to deflect from class issues. As the lawyer who represented Whitner and Crawley notes:

"Many of the people who are actually working with the women and children were saying, 'These are poverty babies, and nobody wants to address that. So we call them crack babies.'"

In addition

[L]eading medical groups like the American Medical Association, the American Nurses Association, the American Academy of Pediatrics and the March of Dimes [join] in saying, "If you want to help children, don't arrest their mothers."

In an entirely different morality play, Chicago Tribune sports writer Bob Verdi writes some unmentionable truths:

Like lemmings, members of the broadcast and print media have piled on ...

We in the media are not here to make you think; we are here to tell you what to think.

Funding and arming an international terrorist organization

Could it reasonably be said that a nation which spends $28.5 billion to support an international terrorist organization and furthermore provides 95% of the armaments used by said international terrorist aids and abets the terrorism?

This is not a theoretical question.

The more we fight the so-called "War on Drugs", the more the drugs seem to be winning. Which is difficult to reconcile when you stop and consider that "the drugs" don't shoot back.

I blame Obama

Tom and Raeanne visited tonight. As always, the conversation got around to politics. Tom called the democrats in the house and the senate "the most feckless group of people imaginable." Tom's lost that sense of optimistic hope so many felt upon the election of President Obama; he feels weary.

"Well, not ALL of them. There's Dennis Kucinich" I countered (Gwen More, Nick Rahall and Maxine Waters too).

But I put the blame for the sagging popular support for the stimulus package on squarely on President Obama. HE is the leader. HE must be the one to make the case to the American people. And that shouldn't be very difficult, if he were to be breathtakingly honest.

More of this later today.

Where the money goes

At Counterpunch, Robert Bryce has written a harsh indictment ethanol citing more than a dozen sources which document different aspects of hidden costs of the ethanol "scam." The following statistics scream out about the injustice of wealth distribution around the world.

[I]n the U.S. only about 6.5 percent of disposable income is spent on food. By contrast, in India, about 40 percent of personal disposable income is spent on food. In the Philippines, it’s about 47.5 percent. In some sub-Saharan Africa, consumers spend about 50 percent of the household budget on food. And according to the U.S.D.A., “In some of the poorest countries in the region such as Madagascar, Tanzania, Sierra Leone, and Zambia, this ratio is more than 60 percent.”

Disasters foretold

What if a former politician gave a speech foretelling the disasters of Bush administration's Iraq policies and tax and budget proposals and nobody listened? Al Gore did just that in August 2003.

"Here is the pattern that I see: The president's mishandling of and selective use of the best evidence available on the threat posed by Iraq is pretty much the same as the way he intentionally distorted the best available evidence on climate change and rejected the best available evidence on the threat posed to America's economy by his tax and budget proposals," Gore said.

The Bush administration, Gore said, employs a "propaganda machine" that engages in "a systematic effort to manipulate facts in service to a totalistic ideology that's felt to be more important than the mandates of basic honesty."

So a mere five and a half years later, the main-stream media fed public has:

serious difficulty recognizing the mishandling and selective use of the best evidence available on the threat posed by Iran, Hamas and Afghanistan,

serious difficulty recognizing the distortions of the best available evidence on climate change

little if any idea of the warnings raised about the damage that would be inflicted upon the American economy by the Bush tax cuts and phony budget proposals

The mainstream media - press, TV and radio - serve as a tool for the interest of the corporate, financial, infotainment, educational and military elites whose vested interests devolve to maintaining the status quo: those with the most wealth to get ever more of it; those in power triangulating schemes to keep and expand it.

The MSM is a perpetual propaganda machine engaged in a corrupt and persistent effort to manipulate facts in service to an ideology that benefits the powerful few to the serious detriment of most.

Don't expect our elected democratic officials or the so-called liberal of the MSM to address this. By definition these too are elites.

Our psyche's Prime Directive

Jonathan Schwartz offers this remarkable and chilling insight into the nature of the beast. Take the time to read the whole piece.

It's hard to belong to a species that often acts with such berserk cruelty. We don't just cause each other horrible pain; we do it gratuitously, far beyond what's necessary to reach any of our conscious goals, and in fact to the point it's completely counterproductive for anything we believe we're trying to do.

...

It appears that, for humans, once you've started down the road of hurting someone, you must continue. Indeed, you must hurt them even more to prove to yourself these people deserve to be hurt. That's because our psyche's Prime Directive is to preserve our self-image at all cost.

Due to the Prime Directive, when we hurt others our psyche tell us that our victims are dirty thieves. After all, they are trying to steal our most valuable possession: our self-image. And what do you do to dirty thieves? YOU PUNISH THEM. And when they try to make you feel bad about this new punishment, this just goes to show what giant dirty thieves they are, so you must PUNISH THEM MORE.

One of the commentators included this "joke" to further illustrate the point:

An Irishman has been bayoneted by a British soldier, and as the Mick dies slowly in a ditch the Brit kicks him over and over, cursing him and wishing him a painful, slow death. With his last breath the Irishman asks, "Why are you so angry at us?" The Brit leans down, whispers, "You swine, we will NEVER forgive you for what we've done to you."

Another commentor linked to an earlier Schwartz posting inspired by excerpts from a Molly Ivins piece:

[M]ost people have a very hard time forgiving those whom they have deeply wronged. I know that's sort of counterintuitive, but think about some of the bad divorces you have known. When we have done something terrible to someone, we often need to twist it around so it's their fault, not ours

.

This is mostly disgusting - but a tiny bit scary

This editorial illustrates just perfectly why the New York Times is forever being lambasted for being part of the omnipresent liberal media:

Last week at the National Press Club in Washington, a group seeking to speak for the future of the Republican Party declared that its November defeats in Congressional races stemmed not from having been too hard on foreigners, but too soft.

The group, the American Cause, released a report arguing that anti-immigration absolutism was still the solution for the party’s deep electoral woes, actual voting results notwithstanding. Rather than “pander to pro-amnesty Hispanics and swing voters,” as President Bush and Karl Rove once tried to do, the report’s author, Marcus Epstein, urged Republicans to double down on their efforts to run on schemes to seal the border and drive immigrants out.

Absolutely love the headline for the editorial:

The Nativists Are Restless

Reinforcing it for Thomas Friedman

Thomas Friedman's NYT's editor was really lying down on the job today. One comes to expect such idiotics from Friedman the Flat Earther.

[W]e’re going to have to get used to a loss of trust. All those rock-solid people and institutions that we trusted with our money, our pensions and our kids’ piggybank savings — like Citigroup, Merrill Lynch, Bank of America — do not seem trustworthy anymore. Never before in my adult life have I looked around at every bank in my town and said, “I’m not sure I wouldn’t prefer to put my paycheck in a mattress.”

Tom, Tom, Tom, you moron: you really don't grasp the full import of what you write. Cash your paycheck first bozo. Then take the cash and put it in a mattress. Finally, make a note to remember which mattress you put the money in.

The recent $50,000,000,000 ponzi scheme made it real for Friedman:

The Bernard Madoff scandal, of course, has only reinforced that loss of trust. His degree of betrayal — his alleged willingness to embezzle the life savings of people whom he had known his whole life — is so coldhearted that it charts new territory in human behavior. He’s on his way to becoming an adjective. Money managers are already being asked prove to prospective new clients that their internal safeguards are “Madoff proof.”

Hmmm ... about that new territory in human behavior. There have always been people willing to embezzle the life savings of others. A man once blew up an airplane to collect life insurance on his mother. That sounds pretty cold hearted.

The ACLU is out $850,000 on account of Madoff, per one of their phone solicitors who contacted me last night. The Guardian noted a while back that

[h]is alleged victims include hundreds of charitable institutions, investment firms and wealthy private investors.

An earlier NYT story indicates that Madoff's early appeal was to people who wanted to be in with the in crowd:

Initially, he tapped local money pulled in from country clubs and charity dinners, where investors sought him out to casually plead with him to manage their savings so they could start reaping the steady, solid returns their envied friends were getting.

Then, he and his promoters set sights on Europe, again framing the investments as memberships in a select club.

Perhaps in a Friedman world, the wealthy would never cheat the wealthy, at least not out of their life's savings. Well, not any more in Friedmans' world:

I knew B. Ramalinga Raju, the Satyam chairman accused of embezzling $1 billion from his own company. What’s really sad is that I didn’t get to know him through his business but through an interest in his family’s charitable work. They created India’s first 911 emergency system in their home state and call centers in Indian villages, so young people there could get service jobs. Was all that a fake, too? Or was he just an embezzler with a good heart? Don’t know. When you can’t even trust a person’s charitable work, you’ve hit a new low.

Those who have been embezzled out of their life's savings, THEY have hit a new low. Friedman's new low seems to have been hit because elites are embezzling billions. Perhaps they should just make theirs the old fashioned way: off the backs of slaves, indentured servants, and sweatshop workers. Or lobbying the government to reduce the tax rate on hedge fund managers wages, salaries, bonuses and tips to 15%.

If you can't trust the wealthy to look out for the interests of the wealthy, just who CAN you trust? Perhaps nationalizing all those financial institutions that are technically insolvent might not be the worst way to go.

None of the banks contacted for this story would discuss how their actions might affect credit scores

A Boston Globe article tells us that some credit card issuers (American Express Company, Bank of America Corp and CitiBank, Eastern Bank owned by Barclay Card U.S. are all cited as examples) are restricting lending. Ostensibly these lenders are

seeking to reduce their debt exposure, are shutting off and limiting consumer credit card lines, even for many customers who carry low balances and pay on time

While merely two years ago almost anyone could get a credit card, those halycon days when the credit card companies wanted everyone to swim in the comforting waters of the fast and easy credit river, the water flows have changed so that

drowning in debt and soured investments, lenders are seeking to stop consumers from running up big balances in hard times, bills they might not be able to pay

While not mentioning any such companies by name, the Globe notes the irony that some of these companies reducing credit card lending took government bail out funds ostensibly given to free up money for lending. Furthermore this move to limit lending might

damage cardholders' credit ratings by making them appear to be riskier borrowers

(E.g., a $1,000 balance on a $10,000 maximum card is using 10% of their limit, but the same balance on a $2,500 max goes to 40%. Which, perhaps not coincidentally permits the companies to charge higher interest rates.)

One of American Express Company's 10-year clients had both her personal and business credit cards put on hold pending submission of two year's tax returns, plus three months of pay stubs and bank records. Upon being contacted by the Globe, the company refused to comment on this particular case.

Some of the corporate lines given for these actions include:

"Though we continually look at the credit limits we offer card members and review them on a case-by-case basis, we are being more targeted in response to economic conditions," ... "This may also include cancellations."

And then again, it just may include raising interest rates.

We're taking a more aggressive look at accounts in order to control risk in the current environment

Okay, "risk control" sounds like they want to eliminate the riskier credit risks. Citibank says:

"We have taken actions such as lowering credit limits, adjusting rates, tightening credit standards, and closing inactive accounts, particularly in certain geographies and where we can use mortgage data to enhance our decision-making capabilities."

Closing inactive accounts makes sense. That way people won't suddenly go to the inactive accounts to get credit they won't pay back. But note very carefully that part about "adjusting rates." ADJUSTING RATES means INCREASING RATES. Let there be no questions about this.

The Globe also notes that another phenomenon fueling these credit reductions:

as investor demand for credit card debt that is usually packaged into securities has plunged, banks are being forced to keep the debt on their books longer

Oops. Trying sell a stream of future credit card repayments as a bond with a price set to yield a "guaranteed" rate of return is not so compelling in an environment where

banks and credit card companies are reacting to an increase in the number of cardholders who fail to pay their bills. For example, American Express said it wrote off 6.7 percent of its $63 billion US loan portfolio in the fourth quarter, up from 3.4 percent a year ago. To counter such losses, some institutions, including Citibank, have raised the interest rates they charge certain customers as a way to generate revenue

Remember too that the credit card companies "get it" on both ends. Their card-holders pay back the loans with interest if late, but also, the seller pays a fixed amount per transaction plus a percentage of the sale.

This article reads sympathetically to the credit card issuers. Note the subheadline:

Fear excessive use amid hard times

But this nugget is very telling:

None of the banks contacted for this story would discuss how their actions might affect credit scores.

The company that calculates scores, Fair Isaac Corp., said it is examining the impact that creditline cuts are having. The results are expected to made public within the next month and could lead to a shift in the way scores are calculated. Still, Fair Isaac spokesman Craig Watts defended banks' moves to reduce credit lines. "It's only unfair if you regard credit as a right instead of a privilege," Watts said.

Spokesman Watts is perhaps being disingenuous. One consequence of reducing the maximum limits will be to reduce the FICO scores as a de facto means to increase the appearance of a riskier looking client thus providing the rational for increasing the interest rates on all customers, except those who don't need the credit card in the first place.