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Why haven't the President and Senate Democrats pulled the reconciliation trigger before now? I haven't spoken directly with the President or with Harry Reid but I've spent the last several weeks sounding out contacts on the Hill and in the White House to find an answer. Here are the theories. None of them justifies waiting any longer. Reconciliation is too extreme a measure to use on a piece of legislation so important. I hear this a lot but it's bunk. George W. Bush used reconciliation to enact his giant tax cut bill in 2003 (he garnered only 50 votes for it in the Senate, forcing Vice President Cheney to cast the deciding vote). Six years before that, Bill Clinton rounded up 51 votes to enact the Children's Health Insurance Program (CHIP), the largest expansion of taxpayer-funded health insurance coverage for children in the U.S. since Medicaid began in the 1960s. Through reconciliation, we also got Medicare Advantage. Also through reconciliation came the COBRA act, which gives Americans a bit of healthcare protection after they lose a job ("reconciliaton is the "R" in the COBRA acronym.) These were all big, important pieces of legislation, and all were enacted by 51 votes in the Senate. Use of reconciliation would infuriate Senate Republicans. It may. So what? They haven't given Obama a single vote on any major issue since he first began wining and dining them at the White House. In fact, Senate Minority Leader Mitch McConnell and company have been doing everything in their power to undermine the President. They're using the same playbook Republicans used in the first two years of the Clinton administration, hoping to discredit the President and score large victories in the midterm elections by burying his biggest legislative initiative. Indeed, Obama could credibly argue that Senate Republicans have altered the rules of the Senate by demanding 60 votes on almost every initiative - a far more extensive use of the filibuster than at any time in modern history - so it's only right that he, the President, now resort to reconciliation. Obama needs Republican votes on military policy so he doesn't dare antagonize them on health care. I hear this from some quarters but I don't buy it. While it's true that Dems are skeptical of Obama's escalation of the war in Afghanistan and that Republicans are his major backers, it seems doubtful R's would withdraw their support if the President forced their hand on health care. Foreign policy is the one area where Republicans have offered a halfway consistent (and always bellicose) voice, and Dick Cheney et al would excoriate them if they failed to back a strong military presence in the Middle East. This is truer now than ever. Reid fears he can't even get 51 votes in the Senate now, after Scott Brown's win. Reid counts noses better than I do, but if Senate Democrats can't come up with even 51 votes for the health care reforms they enacted weeks ago they give new definition to the term "spineless." Besides, if this is the case, Obama ought to be banging Senate heads together. A president has huge bargaining leverage because he presides over an almost infinite list of future deals. Lyndon Johnson wasn't afraid to use his power to the fullest to get Medicare enacted. If Obama can't get 51 Senate votes out of 58 or 59 Dems and Independents, he definitely won't be able to get 51 Senate votes after November. Inevitably, the Senate will lose some Democrats. Now's his last opportunity. House and Senate Democrats are telling Obama they don't want to take another vote on health care or even enact it before November's midterms because they're afraid it will jeopardize their chances of being reelected and may threaten their control over the House and Senate. I hear this repeatedly but if it's true Republicans have done a far better job scaring Americans about health care reform than any pollster has been able to uncover. Most polls still show a majority of Americans still in favor of the basic tenets of reform - expanded coverage, regulations barring insurers from refusing coverage because of someone's preexisting conditions and preventing insurers from kicking someone off the rolls because they get sick, requirements that employers provide coverage or pay into a common pool, and so on. And now that many private insurers are hiking up premiums, co-pays, and deductibles, the public is even readier to embrace reform.

We know that the Obama administration will not go after the banksters that created this global financial calamity. It has been thoroughly co-opted by Wall Street's fifth column, who hold most of the important posts in the administration. Europe has even more at stake and has shown somewhat more willingness to take action. Perhaps our only hope for retribution lies there.

Some might believe the term "banksters" is too mean. Surely Wall Street was just doing its job -- providing the financial services wanted by the world. Yes, it all turned out a tad unfortunate but no one could have foreseen that so many of the financial innovations would turn into black swans. And hasn't Wall Street learned its lesson and changed its practices? Fat chance. We know from internal emails that everyone on Wall Street saw this coming -- indeed, they sold trash assets and placed bets that they would crater. The crisis was not a mistake -- it was the foregone conclusion. The FBI warned of an epidemic of fraud back in 2004 -- with 80% of the fraud on the part of lenders. As Bill Black has been warning since the days of the Saving and Loan crisis, the most devastating kind of fraud is the "control fraud," perpetrated by the financial institution's management. Wall Street is, and was, run by control frauds. Not only were they busy defrauding the borrowers, like Greece, but they were simultaneously defrauding the owners of the firms they ran. Now add to that list the taxpayers that bailed out the firms. And Goldman is front and center when it comes to bad apples. Lest anyone believe that Goldman's executives were somehow unaware of bad deals done by rogue traders, William Cohan reports that top management unloaded their Goldman stocks in March 2008 when Bear crashed, and again when Lehman collapsed in September 2008. Why? Quite simple: they knew the firm was full of toxic waste that it would not be able to continue to unload on suckers -- and the only protection it had came from AIG, which it knew to be a bad counterparty. Hence on March 19, Jack Levy (co-chair of M&As) sold over $5 million of Goldman's stock and bet against 60,000 more shares; Gerald Corrigan (former head of the NY Fed who was rewarded for that tenure with a position as managing director of Goldman) sold 15,000 shares in March; Jon Winkelried (Goldman's co-president) sold 20,000 shares. After the Lehman fiasco, Levy sold over $6 million of Goldman shares and Masanori Mochida (head of Goldman in Japan) sold $56 million worth. The bloodletting by top management only stopped when Goldman got Geithner's NYFed to produce a bail-out for AIG, which of course turned around and funneled government money to Goldman. With the government rescue, the control frauds decided it was safe to stop betting against their firm. So much for the "savvy businessmen" that President Obama believes to be in charge of Wall Street firms like Goldman.

From 2001 through November 2009 (note the date -- a full year after Lehman) Goldman created financial instruments to hide European government debt, for example through currency trades or by pushing debt into the future. But not only did Goldman and other financial firms help and encourage Greece to take on more debt, they also brokered credit default swaps on Greece's debt-making income on bets that Greece would default. No doubt they also took positions as the financial conditions deteriorated-betting on default and driving up CDS spreads. But it gets even worse: An article by the German newspaper, Handelsblatt, ("Die Fieberkurve der griechischen Schuldenkrise", Feb. 20, 2010) strongly indicates that AIG, everybody's favorite poster boy for financial deviancy, may have been the party which sold the credit default swaps on Greece (English translation here). Generally, speaking, these CDSs lead to credit downgrades by ratings agencies, which drive spreads higher. In other words, Wall Street, led here by Goldman and AIG, helped to create the debt, then helped to create the hysteria about possible defaults. As CDS prices rise and Greece's credit rating collapses, the interest rate it must pay on bonds rises-fueling a death spiral because it cannot cut spending or raise taxes sufficiently to reduce its deficit. Having been bailed out by the Obama Administration, Wall Street firms are already eyeing other victims (and for allowing these kinds of activities to continue, the US Treasury remains indirectly complicit, another good reason why one shouldn't expect any action coming out of Washington). Since the economic collapse is causing all Euronations to run larger budget deficits and at the same time is raising CDS prices and interest rates, it is easy to pick off nation after nation. This will not stop with Greece, so it is in the interest of Euroland to stop the vampires now. With Washington unlikely to do anything to constrain Goldman, it looks like the European Union, which is launching a major audit, just might banish the bank from dealing in government debt. The problem is that CDS markets are essentially unregulated so such a ban will not prevent Wall Street from bringing down more countries-because they do not have to hold debt in order to bet against it using CDSs. These kinds of derivatives have already brought down an entire continent -- Asia -- in the late 1990s , and yet authorities are still standing by and basically doing nothing when CDSs are being used again to speculatively attack Euroland. The absence of sanctions last year, when we had a chance to deal with this problem once and for all, has simply induced even more outrageous and fundamentally anti-social behavior. It has pitted neighbor against neighbor -- with, for example, Germany and Greece lobbing insults at one another (Greece has requested reparations for WWII damages; Germany has complained about subsidizing what it perceives to be excessive social spending in Greece). Of course, as far as Greece goes, the claim now is that these types of off balance sheet transactions in which Goldman and others engaged were not strictly "illegal" under EU law. But these are precisely the kinds of "shadow banking transactions" that almost brought down the global financial system 18 months ago. Literally a year after the Lehman bankruptcy -- MONTHS after Goldman itself was saved from total ruin, it was again engaging in these kinds of deals. And it wasn't exactly a low-level functionary or "rogue trader" who was carrying out these transactions on behalf of Goldman. Gary Cohn is Lloyd "We're doing God's work" Blankfein's number 2 man. So it's hard to believe that St. Lloyd did not sanction the activities as well in advance of collecting his "modest" $9m bonus for last year's work.

In spite of its new whizz-bang CEO, Prudential is a slow-moving but very reliable organization with a level of integrity that is trusted by policyholders. Frankly, that's what you want in an insurance company. I have had a modest U.K. pension with one of its competitors since 1980, and I am constantly worried that some leveraged buyout (LBO) artist will step in, take it over, change the computer system so that information gets lost, outsource customer service, and drive the company into bankruptcy. If you're buying life insurance or pension services, you want a company that's not going to disappear in the next 30 years, and doesn't change its address or computer system too often. Avoid a company like the plague if it is run by whiz kids. However, that's what AIG was like. We know how AIG operated; a guy who thought betting the ranch on the credit default swap market was a good idea ran it. Its Asian operation is no doubt full of similarly clever ideas. Even in the unlikely event that everything there is on the level, the cultural clash with an old-fashioned British insurance company is huge. And why would you pay a PREMIUM for an AIG operation? Like the Kraft/Cadbury deal, Prudential's takeover of AIA is value-destroying. Also like Kraft/Cadbury, it looks likely to destroy a valuable part of the British economy that millions of people have relied upon for generations - only this time the destruction will be caused by the buyer rather than the target. As shareholders we need a new form of corporate governance. Those in management are hired hands. In the old days, large shareholders used to treat management as they would have treated their butler - and management was equally deferential to the owners of substantial percentages of the company's capital. That's how capitalism is supposed to work - with resources deployed in the interests of the owners of capital. We know that system works; economics shows us why it works. The alternative, with resources deployed to satisfy the egos and fill the pockets of the hired hands, has no theoretical justification and little practicality - just as a big country house run in the interests of the butler would be a mess. As capitalists, we must work together to restore capitalism!