Why It's Harder to Get Bankers Than Mafiosi

Reprinted from National Journal

Mary Jo White is one of the toughest prosecutors ever to emerge in a district that’s renowned for them. During her nine-year stint as U.S. attorney for the Southern District of New York, the 5-foot-tall White showed no fear in prosecuting some of the world’s most dangerous and violent men. She convicted Omar Abdel Rahman, the notorious “blind sheikh” who plotted to blow up the United Nations, and Ramzi Ahmed Yousef, who schemed to destroy the World Trade Center and U.S. airliners. She also won murder and racketeering convictions against John Gotti, the capo di tutti capiof Mafia bosses.

But as President Obama’s choice to head the Securities and Exchange Commission, the 65-year-old White is going to be entering a very different world. One problem is institutional: The SEC, unlike the Justice Department, prosecutes only civil, not criminal, cases, and traditionally settles the vast majority of them. Another issue is personal: When you prosecute terrorists, you’re not thinking about hurting the reputations of friends you might have in al-Qaida, or jeopardizing a cushy position that might be waiting for you down the road. When you take on a John Gotti, you’re not likely to be worried about jeopardizing some future sinecure in the Mafia.

The sorry historical record of recent years shows that things work very differently in the ever-revolving world of financial justice. “On the positive side of the ledger, Mary Jo White has always had a reputation as a pit bull,” says Bill Singer, a former attorney for the American Stock Exchange and the National Association of Securities Dealers as well as a longtime critic of the SEC. “For the first time, we don’t necessarily have a career regulator in the mold of an Arthur Levitt or [current SEC chief] Mary Schapiro. But if she takes over, it does raise uncomfortable feelings that the revolving door at the SEC is spinning yet again.”

Indeed, as financial blogger Yves Smith points out, since White left her job as U.S. attorney in 2002, she has represented former Bank of America CEO Ken Lewis in a civil fraud suit and served as a board member of NASDAQ. “The biggest potential fly in the ointment on the conflicts side,” Smith adds, “is that her husband, John White, who headed the SEC’s corporate finance section under Chris Cox [but] is back at Cravath, has been lobbying against regulation.”

Beyond that, it’s just much harder to prosecute civil fraud in the arcane world of Wall Street (where the typical defense is that no one understood how bad things would get—one heard often in recent years) than it is to build criminal cases against terrorists and mafiosi. The six-year statute of limitations on Wall Street’s offenses during the subprime-mortgage scandal—unquestionably one of the worst financial frauds in history—is now running out without a single major conviction of, or civil finding against, any major executive.

White might find a cautionary tale in the career path of Robert Khuzami, the SEC’s just-departed director of enforcement, who, like White, was known as a first-rate prosecutor from the Southern District. (In fact, he helped White put Abdel Rahman behind bars, and later hung on the walls of his SEC office two framed court drawings of himself arguing that case.) Like White, he was somewhat compromised: He had worked for Deutsche Bank, one of the biggest culprits in the subprime-mortgage disaster. Despite setting up promising special investigative units of prosecutors, Khuzami failed to get even an admission of liability from Goldman Sachs in trying to prove that the investment bank had deceived investors by helping to design a complex security that was designed to plummet in value so that “short-sellers” such as John Paulson could make a bundle. In another case, against Citigroup in 2011, Khuzami was sharply rebuked by U.S. District Judge Jed Rakoff, who refused to approve the SEC’s $285 million settlement with the bank because, as in the Goldman case, the commission failed to gain any admission
of wrongdoing.

Khuzami is credited with restoring morale to the SEC after its disastrous failure to uncover Bernie Madoff’s 20-year scam, but some critics point out that most of his success has been with traditional insider-trading cases, which is mostly what the SEC has excelled at pursuing, even though such activities remain widespread on the Street. “Where he made a terrible mistake is in not insisting on an admission of liability” in the subprime cases, Singer says. “The point is that none of these major brokerage firms is ever going to clean up its act until one day some intelligent SEC enforcement chief or prosecutor says, ‘You’re not going to be allowed to do any underwritings for 30 days and, two, we’re going to insist you admit to liability.’ ”

One thing White may have going for her is that Khuzami’s boss, Schapiro, is a fairly easy act to follow. During her tenure, the SEC pursued few major subprime-related prosecutions—although, like Khuzami, Schapiro did manage to bolster the SEC’s enforcement process and create a new tips database and a whistle-blower office. But, Singer argues, much more is needed. “Mary Jo White needs to come into the SEC with a sledgehammer, not with a putty knife,” he says. “Regulators in Washington usually go through three stages: I don’t know; I’m about to make changes; and, thanks for the job.”

There’s really nowhere to go but up.

Is Obama Now the Most Isolationist President Since Calvin Coolidge?

Reprinted from National Journal

In some ways, it’s what Barack Obama didn’t say in his Inaugural Address that was most significant.

The president came close to ignoring the rest of the world as he delivered a broad vision for America’s future. And yet the near-total absence of overseas issues in his 22-minute address amounted to, paradoxically, the fullest articulation yet of the president’s cherished theme from the campaign, that America’s attention should turn to “nation-building here at home.” 

What we learned on Monday is that Obama seems to take this idea very seriously, and we may be going back to the sort of inward-looking White House we have not seen since the days of Calvin Coolidge, the last unabashedly isolationist president. Obama set the tone at the outset by declaring, somewhat too hopefully, “A decade of war is now ending.”  His speech also shed new light on the president’s recent Cabinet appointments. With a prospective Defense secretary who has consistently resisted the use of force abroad — Chuck Hagel — and a soon-to-be-confirmed secretary of State who relishes flying around the globe to fix messy situations — John Kerry — Obama will soon have the team he needs to keep the world at bay.

The speech seemed to vindicate the view of some critics that the president who won a Nobel Peace Prize nine months into his first term and extended a hand to his father's coreligionists in a soaring speech in Cairo in 2009 — promising  “a new beginning between the United States and Muslims around the world” — has dwindled into the Drone President overseas. Despite some foreign-affairs successes (for example, an opening to Myanmar, a “pivot” to Asia), Obama’s signature legacy abroad thus far has been to turn covert war using drones and special operations into a new, seemingly permanent method of battle. 

Perhaps most strikingly, Obama never mentioned Syria in his speech, although the 60,000-plus dead in that terrible humanitarian crisis are already far greater in number than the Kosovar Muslims slaughtered by the Serbs on Bill Clinton’s watch, which provoked a massive NATO air campaign. Nor did Obama address the rise of new jihadist terror in North Africa, which only days before his inauguration resulted in the deaths of at least 37 hostages in Algeria, including three Americans.

Obama did deliver a few throwaway lines about preserving peace abroad, as every president must: “America will remain the anchor of strong alliances in every corner of the globe,” he said. “We will support democracy from Asia to Africa, from the Americas to the Middle East, because our interests and our conscience compel us to act on behalf of those who long for freedom.” But moments later the president returned to the main theme of his speech, invoking Martin Luther King and Abraham Lincoln to press for more freedoms at home, becoming the first president to directly link rights for women, blacks, and gays, “through Seneca Falls and Selma and Stonewall.’

To the extent he addressed the rest of the world, it was mainly as a foil: “We cannot cede to other nations the technology that will power new jobs and new industries. We must claim its promise,” Obama said. Contrast that to JFK’s famous 1961 pledge to “pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, in order to assure the survival and the success of liberty.” Or George W. Bush’s second-term commitment "to seek and support the growth of democratic movements and institutions in every nation and culture," as Obama’s predecessor put it in his second Inaugural Address. The overwhelming emotional direction of the president’s second-term goals seemed to be domestic, despite a foreign-policy agenda that includes climate change and nuclear nonproliferation.

In his closing peroration, repeating again and again the phrase “our journey is not complete,” Obama said his “generation’s task” is to grant equal pay for women, affirm gay and voting rights, fix inequality, and keep children safe. Gone was the familiar commitment to renewed efforts at taking on terrorists abroad, the kind of stern warning Obama issued in his first Inaugural Address when he said, “You cannot outlast us, and we will defeat you.”

Obama may be overconfident about that. Wishful thinking does not a presidency make. The day after Obama’s speech, another series of car bombings in Iraq killed at least 16 people, more evidence of reemerging Sunni-Shiite tensions. Iran and North Korea remain festering nuclear nightmares. A new wave of jihadists is rising in the Middle East. It’s not likely the president will be able to shut out the world for long.

Let's Rethink How We Fight the Jihadists

Reprinted from National Journal

On one level, Mokhtar "Marlboro Man" Belmokhtar is just another lone Islamist warlord, pursuing his own private jihad in the Sahara Desert. But a deeper look at the Algerian terrorist’s biography tells a larger story of how, for many decades, various kinds of Western intervention in the region have helped to create and shape the Belmokhtars of the jihadist world.  

Belmokhtar’s personal story is also a warning sign that France’s neocolonialist military intervention in Mali—although perhaps launched for the right reasons, to stop a violent jihadist takeover—may well create another backlash even worse than the Western hostage situation that it has apparently already provoked.

In the West and in Washington, many pundits approved of the French intervention (although the Obama administration steered clear of supporting it). Rand scholars Stephanie Pezard and Michael Shurkin even approvingly cited France’s colonial history in Mali in lauding the attack, suggesting that Paris  again find "proxies" it can control. "This is, in effect, how France conquered and secured northern Mali in the first place a century ago," they write today on CNN’s Global Public Square. "The aim now has changed – strengthening Mali rather than perpetuating colonial rule – but the key point remains finding the right partners.” On the extreme right, commentators such as Charles Krauthammer and John Bolton again made the same sort of case they argued before the 2003 Iraq invasion: Jihadists were responding to "American weakness," as displayed by President Obama’s lack of response to the Sept. 11 attack in Benghazi. What is required now, they say, is another show of military strength in the region.

And thus the cycle is perpetuated: Westerners march in, and the locals are radicalized. Fawaz Gerges, a Middle East expert at the London School of Economics, told National Journal on Thursday, "Regardless of the intentions of the French leadership today, their military intervention in Mali will be seen through France's colonial legacy in West and North Africa, a bloody legacy. France is not responsible for producing the jihadis roaming the wadis and deserts, and mountains of North and West Africa, but its military intervention may fuel anti-hegemonic and anti-colonial grievances that power the jihadist caravan. There is a real danger that Western boots on the ground in Muslim societies would produce counterproductive results, as the cases of Afghanistan and Iraq clearly show.

"One would have expected the French to have learned the lessons of the Soviet and American experiences!" Gerges says.

Apparently not. True, it is difficult for anyone to figure out what is happening in the chaotic aftermath of the two-year-old "Arab Spring." But with each passing month, the outcome looks less Western-friendly and more Islamist.  Yet the Islamism enfranchised by these democratic movements across the region is taking different, complex forms. Some outcomes are “legitimate,” as in the elections of Muslim Brotherhood leader Mohamed Morsi in Egypt and Ennahda, the moderate Islamist party in Tunisia. Others are illegitimate and far more dangerous (new violent groups that have sprung up in Mali, Sudan, Yemen, and elsewhere).

All this must be grappled with, and distinctions must be made. Yet to date U.S. and Western policy is mostly failing to do that--in Mali, Syria, even Egypt.

Belmokhtar, who reportedly funds his jihad with a vast cigarette trade, apparently led the hostage raid on the BP gas facility, an attack that, according to some reports, was provoked by the French air and ground assaults in Mali next door. If so, this is just another round in a very old fight, and let's say so. The paternalistic approach of French President Francois Hollande is part of a tit-for-tat that has been going on since the 19th century, when France declared Northwest Africa its imperial domain, culminating 100 years later in a notoriously brutal French “counterinsurgency” operation in Algeria from 1954 to 1962 (captured in an iconic 1966 film, The Battle of Algiers), which ended in Algerian independence.

But French paternalism never completely went away. Belmokhtar was radicalized like so many others by the policies of U.S.-supported dictators in the Arab world, and by the teachings of the Palestinian radical Abdullah Yusuf Azzam, and he checked his box with Qaida training in Afghanistan. But his anti-Western passions are clearly turbocharged by France’s long and ugly history in his country. “When he returned to Algeria in 1993, the country was already in the throes of conflict after the French-backed Algerian military annulled elections that the Islamic Salvation Front (FIS) was poised to win," according to a BBC profile. "Belmokhtar joined the conflict, which claimed hundreds of thousands of lives, and became a key figure in the militant Armed Islamist Group (GIA) and later the breakaway Salafist Group for Preaching and Combat (GSPC).” And what is the French military doing in Mali today? Defending yet another military tyranny (the democratically elected government of President Amadou Toumani Toure was overthrown in 2012, leading to the civil strife).

It's what the West has been doing for the past century. Today, one still occasionally hears that anti-Westernism--both the moderate Islamism of the Muslim Brotherhood and Qaida-style extremism--rises out of some inevitable “clash of civilizations.” In truth, despite al-Qaida's rants about grievances going back to the Crusades, the enmity between the West and the Arab world is a relatively modern phenomenon that is intimately tied to this Western colonial history. It began with British and French imperial designs, typified by the infamous 1916 Sykes-Picot Agreement, by which the British and French agreed to divvy up the Arabic-speaking countries after World War I. Things got progressively worse after the creation, by the Europeans, of corrupt, kleptocratic tyrannies in Saudi Arabia, Syria, Egypt, Iraq and Jordan; the endemic poverty and underdevelopment that resulted for most of the 20th century; the U.N.-imposed creation of Israel in 1948; and finally, in recent decades, American support for this status quo and George W. Bush's invasion of Iraq, which only regenerated the cycle of enmity toward the West.

To his critics, President Obama has looked consistently weak and indecisive in response to the “Arab Spring,” culminating in his "lead from behind" approach to NATO’s intervention in Libya and the humiliation and anguish left behind by the deaths of Ambassador Chris Stevens and three other Americans in Benghazi.

But, frankly, Obama has good reason to hesitate. The last thing the U.S. wants to do now is look like it is meddling, yet again, in a region that has already had far too much of it from the West. Still, even if what is emerging in the region is less than coherent, the president needs to develop a more coherent policy response than he has so far.

What Morsi Thinks Doesn't Matter--It's What He Does

Reprinted from National Journal

Mahmoud Abbas, the president of the Palestinian Authority who has probably spent more hours negotiating with Israelis than anyone, once called the Holocaust a “fantastic lie.” Yasser Arafat, in his heyday as an itinerant terrorist before he showed up on the White House lawn, described Jews as "dogs" and "filth." Former Secretary of State James Baker, who set the stage for the 1993 Oslo Accords, once reportedly muttered, "They didn't vote for us [the Republicans]," so "f--- the Jews."

And now it’s Mohamed Morsi’s turn. In a video from 2010 that has gone viral, the Egyptian president, who was then head of the Muslim Brotherhood, referred to "Zionists" as "bloodsuckers who attack Palestinians" as well as "the descendants of apes and pigs."

The reflexive response of many in the pro-Israel community was predictable: See? Didn’t we tell you? This just shows how impossible it is to deal with these people. Whatever hopes Obama’s incoming (if not yet confirmed) secretary of State, John Kerry, had for restarting peace talks in a region he has long had a passion for—the Mideast—will not likely be realized, at least with Morsi playing the broker.

But this is an overreaction. Yes, there’s every reason to think Morsi still believes what he said, despite the effort of the Egyptian government to explain his remarks away. (And with an almost comical version of a classic Washington locution too: Morsi’s comments were “taken out of context,” his spokesman, Yasser Ali, said.) No doubt Morsi hates Jews and wishes Israel would sink into the sea. There’s every reason to think Abbas, in his heart of hearts, hates Israelis too.

But these sentiments are really all but irrelevant to diplomacy and peacemaking. Many a peace plan has papered over deep and abiding hatreds between peoples, subordinating those sentiments to larger interests. The hatred doesn’t go away; it just becomes … inoperative. Morsi’s Egypt is a case in point. As president, Morsi has already begun to edge ideologically toward what would have been unthinkable, if he remained just a leader of the Brotherhood: accepting the existence of Israel. How? Because Morsi pledged to President Obama that he will observe the Egypt-Israel peace treaty (the 33-year success of which is itself an example of how a “cold peace” can neutralize old hatreds). And Morsi knows that Obama is not without leverage—including some $1.5 billion in foreign aid and promises of debt relief—at a time when he has pledged to revive Egypt’s impoverished economy and link it up to the global system.

Professional diplomats know this, as do the smartest politicians. As president, Bill Clinton loved to quote martyred Israeli Prime Minister Yitzhak Rabin’s words: “You don’t make peace with your friends.” Rabin’s visible distaste at shaking hands with Arafat at the White House in 1993 was itself an eloquent expression of this very idea. (And Rabin, after all, was just paraphrasing Moshe Dayan, who said “If you want to make peace, you don't talk to your friends. You talk to your enemies.”)

The real master of this game was the late diplomat Richard Holbrooke, who in his brilliant memoir about his peace efforts in Yugoslavia, To End a War, criticized the fatalistic idea “that nothing could be done by outsiders in a region so steeped in ancient hatreds.” Holbrooke brought a handful of players who wished for nothing more than each other’s extinction to the table at Dayton in 1995, and a shaky peace has outlived many of the worst actors, especially Slobodan Milosevic.

Holbrooke’s widow, the writer Kati Marton, wrote in an e-mail on Wednesday: “He never stopped talking about this subject! He did not believe in the whole ‘ancient ethnic hatreds’ notion, he absolutely denied the inevitability of conflict between rival groups. 'We don't have to make them love each other!’ he used to say. ‘Just get them to tolerate each other's right to exist in the same neighborhood.’ "

Holbrooke often cited the examples of the Flemish and Walloons coexisting in Belgium, the Germans and French with their bloody history of conflict leading to two world wars, and the long conflicts between the Irish in the north and south, Marton said. “All finally relented and learned to coexist because they had to,” she said. And “what he absolutely believed was that the U.S. had to play a central role in getting these ‘badly behaved children’ to behave better.”

True, at the moment, the obstacles to restarting Mideast peace talks look all but insurmountable. Hamas, a Muslim Brotherhood offspring, has consistently refused to acknowledge Israel’s right to exist; that stance, along with the group’s continued sponsorship of terrorist attacks, has resulted in a permanent standoff in which neither Israel nor Hamas will negotiate with each other.

But as much as Obama wants to leave Mideast quagmires behind him, peace was, after all, one of his 2008 campaign pledges, an effort that he appeared to have botched with fumbling attempts to pressure Prime Minister Benjamin Netanyahu in 2009. John Kerry badly wants a legacy of his own. “Kerry has amassed an encyclopedic knowledge of the Middle East—often putting him ahead of his potential future boss on the region's urgent crises,” his biographer, historian Alan Brinkley, has written. And if the U.S. pushes Morsi, and Morsi “wants to try, Palestinian leaders can't afford not to play along” and perhaps even forge an elusive unity government, former U.S. Mideast negotiator Aaron David Miller writes. “Hamas needs Cairo to open up Gaza economically and to exert pressure on Israel. Abbas knows there's no going back to the good old days with [former Egyptian President Hosni] Mubarak, but he too wants to stay on Egypt's good side. And so unity talks will start, stop, start again, and perhaps even result in a formal accord.”

And Mohamed Morsi could still be the fulcrum of peace in the Mideast. He may be the only Arab leader who can talk to both Israel and Hamas at the same time. For the present, he is the key figure both in setting the direction of Egypt—whether as a legitimate participatory democracy or retrograde dictatorship—and in possibly brokering something more enduring than a mere ceasefire between Hamas and Israel.

No matter what he believes. 

Why We Need Holbrooke More than Ever

Reprinted from National Journal

As America’s longest war winds down, there is a giant hole in Washington's thinking where a strategy should be. Despite the hopeful talk that came out of his summit in Washington with Afghan President Hamid Karzai last week, President Obama is in danger of losing control of South Central Asia entirely, sacrificing a decade’s worth of blood and treasure as he begins his second term. Most of the focus now is on how rapid the U.S. troop drawdown will be. But the bigger problem for Obama is the absence of a U.S. diplomatic vision for the region—and a diplomat to execute it.

More than 11 years after 9/11,  the United States still has no comprehensive approach to the region that yielded up the worst-ever attack on America’s continental soil. Despite Obama’s pledge to remain committed to helping Afghanistan until at least 2024, the administration has failed to conceive of and articulate a strategy that would at once exert intense pressure on Pakistan to cease its policies of granting haven to and support for Taliban-allied insurgents in Afghanistan; shore up the hopes and lives of the many Afghans who still want to rescue their country from the Taliban, and coax India and other surrounding countries with which Washington has relationships into playing more of a supporting role in these efforts.

Most commentary on Afghanistan tends to dwell on the failure, or meager results, of America’s counterinsurgency strategy rather than what has been an unquestioned success. Over the past decade Obama, and George W. Bush before him, managed to construct one of the most comprehensive military alliances in history, with 27 other NATO nations and 22 non-NATO countries deploying  nearly 45,000 troops in Afghanistan at present, in addition to the 68,000 U.S. troops there. And yet there has been no commensurate effort to transform this military structure into a united diplomatic front that could jointly place pressure on Pakistan, whose recalcitrant behavior continues to be perhaps the single biggest obstacle to defeating the Taliban. Despite last summer’s Tokyo donors’ conference and the NATO summit in Chicago last May, U.S. diplomats continue to see the Pakistan problem as mainly a bilateral one. But the evidence is to the contrary. It isn’t just American lives that have been lost; it is also hundreds of British, French, Canadian, Italian, German, Danish  and Australian lives, to name just a few. 

The upshot is that although Obama has committed the United States to a ten-year strategic partnership with Afghanistan after 2014—and NATO nations chipped in with $16 billion in aid pledges in Tokyo last summer--Washington and other major powers continue to allow a middle-sized developing country, Pakistan, to defy them with virtual impunity. Even as some of the most powerful nations on earth have pursued tough multilateral sanctions against Iran, they have not threatened Pakistan with a similar fate, despite Islamabad’s role in aiding in the deaths of their soldiers. And Pakistan, although nuclear-armed, can stand isolation even less than Iran can. Its biggest strategic fear is an economically rising India, and sanctions would mean Islamabad risks losing economic, and thus military, ground to its arch-rival. 

“We have to be willing to escalate the pressure, which in my view has to include Pakistan's very difficult economic circumstances," Zalmay Khalilzad, the former U.S. ambassador to Iraq and the United Nations, told me last spring.  "It is a failure of diplomacy of the highest order.” U.S. and NATO officials remain hesitant about offending Islamabad because of a paralyzing fear that, if Pakistan becomes destabilized, its nuclear arsenal could fall into the wrong hands. 

This drift in policy shows no signs of abating. On the contrary, since the sudden death of Richard Holbrooke on Dec. 13, 2010, there has been no a senior diplomat in place with enough authority, toughness, and vision to handle the problem, according to U.S. and European officials . Holbrooke’s replacement as Obama’s special representative for Afghanistan and Pakistan, career Foreign Service officer Marc Grossman, was widely considered to have been ineffective and provoked infighting from the State Department’s South and Central Asian Bureau. But Grossman retired in mid-December, and his job went to an even more junior diplomat, his deputy David Pearce.

Cynics in Washington tend to write Afghanistan off as a failure anyway; so why not just rush for the exits? But based on a trip I made there last May, such talk may be a self-fulfilling prophecy. Abandonment is a national trauma in Afghanistan, similar to what Hiroshima means to the Japanese or 9/11 means to Americans. Afghans recall what happened in 1989, when President George H.W. Bush abandoned the country after the mujahedeen forced a Soviet withdrawal; and then again in 2002, when Bush's son, George W., turned his attention and resources to Iraq while the Taliban quietly regrouped. That is why many Afghans said the psychology changed after the news of long-term U.S. and Western commitments, which tended to undercut the Taliban’s ostensible plan to simply wait out Western withdrawal.

Yet if America is making a commitment, America must also have a strategy. Last month marked the two-year anniversary of Richard Holbrooke’s death. His widow, the writer Kati Marton, told me in an interview last year that only months before his death at age 69, Holbrooke  had begun to grow confident that he could deliver a strategic vision for the region that would address the fundamental issues in the U.S.-Pakistan relationship. "The thing that keeps me awake some nights,” she said, “is that I'm not at all sure he had that conversation with the president."

Why Do Neoconservatives Still Exist?

Picture credit: The New Republic

William Kristol is an influential foreign policy strategist whose career has been distinguished by three main themes. One, for years Kristol has been very brave with other people’s courage. Though he never served in the military, he has nonetheless advocated the aggressive projection of U.S. military might around the globe for almost two decades. Among the chicken-hawks of Washington, Bill Kristol is the bantam rooster.

Two, Kristol has been wrong about most of the major foreign-policy issues on which he has offered an opinion. Demonstrably, factually in error. Especially when it comes to the biggest conceptual challenge of our age, America’s response to 9/11, Kristol got it wrong both strategically and tactically.

Three, Kristol is living proof that the “neoconservative movement” has long overstayed what should have been its short intellectual shelf life. 

I guess this is not surprising in Washington, where smooth-talking policy entrepreneurs like Kristol are held to no higher standard than their last snappy sound-bite. So rather than finding himself discredited, the always articulate and clever Kristol is still thriving. In fact, in what appears to be almost a panic, he’s now leading the neoconservative fight against Chuck Hagel,  a man whose policy record amounts to a living refutation of Kristol’s debunked worldview. Kristol,  in saying Saddam had “connections” with al Qaida and that weapons of mass destruction would certainly be found, and that George W. Bush could do it all and still preside over a strong economy, has made too many giant errors of judgment to count over the decades. But in untruths that achieve the level of the absurd—without the wit of, say, The Onion-- there is little that matches this recent Kristol diatribe in his Weekly Standard magazine against the former Nebraska senator:

“His backers can cite no significant legislation for which Hagel was responsible in his two terms in the Senate. They can quote no memorable speeches that Hagel delivered and can cite no profound passages from the book he authored. They can summarize no perceptive Hagelian analysis of defense or foreign policy, and can appeal to no acts of management or leadership by the man they'd have as our next secretary of defense.”

Let’s start with what is personally offensive about Kristol's views. Other critics of Hagel’s, like Sen. John McCain, have at least acknowledged his distinguished combat service in Vietnam. But not Kristol, who simply dismisses Hagel as a candidate with a “general lack of distinction.” It’s yet more evidence that war is, and has always been, just an abstraction to Kristol, and the actual experience of it means little to him. His calm advocacy of force –and he’s been very consistent in this -- remains unflustered by blown-off limbs and burned-off faces, devastated lives, desolate widows and orphans. 

But let’s get to the real meat of the matter. Yes, it’s enlightening to point out how mistaken some of Kristol’s past statements were, especially in comparison with what turned out to be, in truth, an impressively “perceptive Hagelian analysis.” While Kristol was agitating for war and saying things like, "I think we'll be vindicated when we discover the weapons of mass destruction and when we liberate the people of Iraq" (March 5, 2003), Hagel was warning presciently that there was no evidence of Saddam's links to al Qaida, that his possession of WMD were in doubt, and that America was in danger of strategic overreach and enraging the Arab world. "Many of those who want to rush this country into war and think it would be so quick and easy don't know anything about war," Hagel told me in the summer of 2002. "They come at it from an intellectual perspective versus having sat in jungles or foxholes and watched their friends get their heads blown off.”

But even more important than the fact that Hagel was mostly right about the hazards of launching a new war, and Kristol was mostly wrong, is this point: I think it’s well past time to say neoconservatism is done. Bill Kristol’s 15 minutes are over. In truth he’s had more than 15 years, and that’s far too many. Neoconservatism was essentially a rebirth of Reaganism, a movement that Kristol and his co-author, Robert Kagan, single-handedly launched with a 1996 article in Foreign Affairs titled “Toward a Neo-Reaganite Foreign Policy." It emerged out of the hubris of the post-Cold War era. In that heady time, when America became the lone superpower, the neocons sought to achieve a robust marriage of power and principle. They wanted to fuse what they saw as America’s precision-guided ability to change regimes at will with an evangelical belief that the only right regime is democracy. The neocons believed that, thanks to America’s unrivaled might, this was the moment in history to complete the global transformation begun by Reagan—who famously declared in 1982 that tyranny was destined for the ashheap of history—and left unfinished after the Cold War. After 9/11, they simply applied this template to the completely contrived idea that a tyrant like Saddam was the natural ally of an “Islamo-fascist” group like al Qaida and could supply it with WMD. The neocons said America could do it all: destroy al Qaida and Saddam's tyranny at the same time.

We have now seen the results of this philosophy: catastrophic overreach, just as Hagel warned. America has now suffered two terrible, draining wars. Contrary to neocon confidence about “walking and chewing gum at the same time,” we know that America couldn’t. We know that the first, necessary war, in Afghanistan, suffered because of the diversion to the second (and unnecessary) one in Iraq, just as Hagel warned. We know that, rather than reasserting U.S. power, the neocons achieved the opposite: They succeeded only in exposing our vulnerabilities to the world by creating generations of IED-savvy insurgents and generating more terrorists than existed before. The neocons wanted to put an end to the “Vietnam syndrome” of self-doubt about the use of force. Instead they left us with an “Iraq syndrome” that that will ensure no U.S. president, Democrat or Republican, will ever rush off to forcibly change regimes again.

That’s why this is probably Chuck Hagel’s time, and Kristol’s has long passed.

Frank Partnoy, Unsung Hero

Frank Partnoy is one of America’s unsung heroes. Why he isn’t better known remains a mystery to me. Or perhaps it's not much of a mystery at all, since in truth only a few people in the country are actually smart and sophisticated enough to fully understand what Partnoy has been warning Americans about for nearly two decades.  The difficult-to-comprehend warnings that Partnoy issues in his brilliant new Atlantic cover story co-authored with Jesse Eisinger—“What’s Inside America’s Banks?” – are similar to what this Wall Street cowboy-turned-Cassandra has been saying since 1997, when his book Fiasco came out and he first sought to alert the U.S. public that they were getting shafted by banks in the most sophisticated confidence game in history: OTC derivatives.

The problem today, four years after the worst financial crash in U.S. history (yes, you read that right: worse than 1929),  is very similar to what Partnoy has been trying to tell us about for 16 years, ever since he left Morgan Stanley to start on his truth-telling mission: a near total-opacity, a lack of transparency in banking that befuddles even the most sophisticated financial investors. THEY COST THE AMERICAN ECONOMY THE BIGGEST DOWNTURN SINCE THE '30S, AND YET WE STILL DON’T KNOW WHAT THE BIG BANKS ARE DOING, FOLKS!   As I posted last July, after Sandy Weill’s astonishing conversion from mega-mind of Citibank to meek champion of a new Glass-Steagall, the biggest U.S. banks are only getting bigger and more dangerous. According to Federal Reserve officials quoted by Bloomberg last spring, five banks — JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, and Goldman Sachs — now hold assets equal to more than half the size of the entire U.S. economy ($8.5 trillion, or 56 percent). That's vastly larger than the proportion controlled by these same banks before the financial crisis (43 percent). The banking behemoths are now about twice as big as they were a decade ago.

Wall Street has Washington -- and America -- by the nuts. And the most pathetic part about it is we don't even know it. Will somebody please listen to Frank Partnoy at long last?